ELNUSA - ELSA

Macro economy in Indonesia

The Central Bank expected GDP growth in 2013 is approximately at 5.5 % - 5.9 %, this is lower than economic growth in 2012 which is at 6.2 %. BI Rate at recent is at 7.5 %, it has been increased from 5.75 % in December of 2012, BI seems continue in conducting tight money policy until the elections end at 2014. Central Bank expects that GDP growth in 2014 will in range 5.8 – 6.2 %.

The quality of economic growth has to be prior concerns. Who are growing reach and who are downing poor?  Some strategy has been done such as direct cash support for the poor citizen who has been done in the last three years.  Each person was given cash amounting to IDR 300 thousands rupiahs.

Meanwhile Organization for economic and Development (OECD) in last October that Indonesia’s economy would grow at an average growth of 6 % during the period 2014 – 2018. I think the prosperity of Indonesia is still questionable; it depends on the elected president who will determine policies as the one of key driver of the advancement.  In other side, the nation gets several volcano disasters at few places, so far it does not ruin significantly. 

Based on the data at the last three years, proven reserves of oil in Indonesia tend to decline. Inversely with proven reserves of gas, it tends to rise. According to ministry of energy and mineral resources the energy supply in 2012 amounted to 1,776 million Barrels. The petroleum based fuel is 13.83 % of total energy mix and the Natural gas is 23.18 % of total energy mix. Natural gas will be more dominated than oil in the future.

In 2012 Indonesian upstream oil and gas business executive board is dissolute by the constitutional court based on its resolution no. 36/PUU-x/2012 on 13rd November 2012. The government made new council, the Provisional Executive Work Unit (SKSP Migas). That event did not affect all contracts which are called as PSC as existing contracts.

Key Driver

The contracts of Pertamina are the main source of revenue.  Pertamina has 41 % share of PT. Elnusa. Pertamina is Oil Company which is owned by government and it has many oil and gas projects in Indonesia. The growth of the company depends on performance of pertamina. Pertamina also has many affiliates such as Patra Niaga, pertamina E & P, pertamina hulu and etc.

In 2011 – 2012 the company performs its growth with 1.3 % up in its revenue. The slow growth is affected by the number of oil and gas projects in 2012.

In 2011 -2012 the company has available cash more than 10 % of its sales. It means the company tends to allocate the cash in to the Bank as time deposit, call deposit and saving account. It seems they has no new project yet which need fund to be allocated in.

I adjust that the company will able to increase its sales with the same growth because there are no new reserves found. Its revenue will come from repeated order from existing project..

               

Semen Indonesia - SMGR

Semen Indonesia

Strategic Holding company as its business strategic 

Semen Gresik Group has already changed its name to be Semen Indonesia in 2012. The company was established in 1953 as NV Pabrik Semen Gresik. The company runs its business in cement industry at Indonesia and Vietnam. The company has several cement plant in Gresik, Tuban, Indarung, pangkep and quang ninh in Vietnam. The major shares holder as its controller is government of republic Indonesia.

In order to advance its growth, semen Indonesia is made as  company holding of companies under the Semen Gresik group includes semen tonasa, semen padang and semen gresik.

With this strategic holding company, the company will increase its value, reduce operating costs, strengthen its brand equity, increase capacity and expand to south East Asia such as Vietnam.

Financial condition

In 2012 revenue increases 19.7 %compared in 2011. The increase is caused by better volume of cement which had been sold. The volume of sales is up 40,9 % higher than 2011. The increase in sales is followed by increase in net profit, it is 23,5 % higher. The company has very strong position in market; it has 41 % of market share of cement industry in Indonesia. The position is stronger with additional plant which could increase its capacity. The company built 2 plant and buy new company in Vietnam in 2012.

Higher revenue with higher profit means the company could make better sales with better profit margin.

But there was a question about increase of its intangible asset from IDR 4.8 billion to IDR 1 trillion in between 2011-2012. This is the massive increase. The big portion of this increase comes from license and trademark of Thang long cement of Vietnam which has been bought in 2012.

In 2012 the day receivable is 38 days slower than 2011 which is 33 days. The same happen with its Days inventory which is become slower in 2012 compared to 2011, but its cash to cash cycle is faster, which is at 64 days compared to previous year which is at 83 days. 

Forecasting

I estimated increase of revenue in 2013 is at high growth rate after purchase thang long cement in Vietnam with 19 % up, I think the real sales of 2013 has been appeared, it is just my estimation based on economic situation in 2013 which is has lower growth of GDP than 2012. In 2014 the economic condition may be at lower growth because of election of president and senate. We need to watch interest rate, inflation and economic growth in Vietnam.    

Key Person

Dwi Soetjipto has already done his job as CEO since 2005. He joined semen padang in 1981, his previous job is as CEO of semen Padang. Dwi Soetjipto has doctoral degree of university of Indonesia.  He got great experience in cement industry since 1981. Within his expertise the new holding company will be able to advance its value more at the future.

My opinion

My analysis needs more improvement especially in its depreciation rate in 2011. Increase of fixed asset  (gross) in 2011 – 2012 is IDR 6.18 trillion.