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Monday, February 10, 2014

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.

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