Holcim Indonesia reported a weak 1Q13 results

Holcim Indonesia: Weak 1Q13 results 14.4% to our’ and 13.7% to consensus’ estimates (SMCB, Rp3,725, Sell, TP: Rp3,000)

SMCB reported a weak 1Q13 results booking a net profit of Rp184bn (-26.1%yoy, -58.0%qoq) which is 14.4% to our’ and 13.7% to consensus’ estimates. The company was hit hard on the pretax earnings level which we suspect is due to royalty cost.

Revenue is saw a 7.3% yoy growth, but a 13.5% qoq contraction which we believe is due to decline in sales volume. ASP grew by 5% yoy or 3% qoq. Cost wise, COGS/ton grew by 9% yoy or 10% qoq where salary costs showed the highest jump of 38% yoyo t 21% qoq.

In terms of domestic sales volume, SMCB saw a negative growth of -1.6%yoy or -15.5%qoq. On a yoy basis, Eastern Indonesia and Kalimantan saw the most decline in sales volume growth and Sumatra is the only region which posted a positive growth of 13.7%. If we look on a qoq basis, SMCB saw negative growths in sales volume across the board in all area except for Maluku & Papua.

The most significant decline was seen in Sulawesi where volume decreased by -42.9% qoq.
SMCB is still the most expensive among the three cement players; trading at FY13F PE of 22.4x vs. industry of about 19.6x and EV/ton of US$339. Maintain SELL.

Indonesia Market Summaries, 2 May 2013