SMGR 2015

Macro
In 2015 the global economic growth declined as china’s economic growth at the lowest point in the 18 years. The slower growths were also occurred in India, Japan and Brazil. The positive growth was reached by USA as the government was successfully developing shale oil exploration in US. As the result of that the oil price dropped due to booming of shale oil production in US.
The slower global economic growth also decreased the commodity price as the demand for commodity dropped.

The fed fund rate increased on December 2015 as the central bank saw the positive trend in economic condition at US. Therefore, the rupiah exchange rate in 2015 was weaker than the exchange rate in 2014. The higher interest rate in US and the decrease of commodity price weakened rupiah exchange rate 12 % in comparison with exchange rate in 2014. The situation got the central bank decided to not decrease the interest rate in 2015. With that strategy central bank was successfully controlling the inflation rate in 2015. It was at 3.35 percent, in 2014 the inflation rate was higher than 2015, it was at 8.36 percent.

The economic growth of indonesia in 2015 was at 4.7 percent or it was lower than the growth in 2014 which was at more than 5 percent. the high interest rate decreased loan growth in 2015, the loan growth in 2015 only reached 10.1percent, and it compelled the investment declined.
In 2015 the total production of cement decreased 2.48 % due to slower growth indonesia. The consumption of cement slightly increased 0.85 % in 2015. In 2014 the consumption reached 6.75 %, higher than 2015. The higher consumption growth was from east indonesia region which contributed more than 6.7 % growth.

Company
In 2015 the company experienced a decline in its total sales; it dropped 0.1 percent down in comparison with total revenue in 2014. However, for non cement product, the sales increased more than 20 percent.

The decrease in sales growth was occurred due to slower economic growth in 2015, the slower growth of consumption decreased the revenue of cement product. Although slower trend was occurred in 2015, the company developed two factories in 2015 in Padang, west Sumatra and in Rembang, central java. The new factories will add the production capacity from  29.5 million tons to 35.5 million tons.

The market share of the company decreased from 43.7 % in 2014 in to 43 % in 2015, even though the company still could defense its market share in Java island which was at 38.7 % of total market share.

In spite of the sales dropped, the volume of sales increase, its organic growth was at 0.6 % up. COGS and operating expenses in 2015 declined compared to COSG and operating expense in 2014. The higher cost was happening due to higher exchange rate in 2015, the company should import spare part and higher electricity cost.

The company has 4 locations of integrated cement plant, 2 locations of grinding plants, 30 location of warehouses, 26 location of packing plant and 12 location of ports.
The company is also having subsidiary in Vietnam which run in cement business, Thang Long cement joint stock company.

SMGR

Inflation rose more than 7.15 percent in May

The month of ramadhan will arrive in the middle of June and commonly consumption of goods and service will be double in quantity at ramadhan, as the result of that, the demand will pull the inflation rate. Aggregate demand will increase and the price level of goods and services are expected rise in month of ramadhan. In May of 2015, the inflation rate rose 7.15 %(source :  kompas) annually and it will be worst if the government do not anticipate it with more supply of goods in the market especially for consumption. Among of Indonesian citizen are Muslim who have duty to conduct fasting in that month.

The Fed rate may be increased in 2015?

The Fed rate is predicted increase in 2015 due the better economic indicator in US. The Fed would like to decrease inflation rate and money supply with higher interest rate. As the increase of fed rate the capital inflow is expected to be rose, the investor tend to look gain in US at Bond Market as the interest rate may be advanced.

Loan for Infrastructure project increased four times since 2007

Despite the loan for infrastructure project from bank increased four times since 2007, it is only covering 32% of total financial needs for the national infrastructure project.  Accordance to RJPM the infrastructure funding will allocate for various infrastructure project include Maritime, electricity, roads, housing, Oil and gas, water, Railroads, telematics and other transportations. The biggest portion is electricity project which is 20 % of total. The second is maritime sector (17.9%), followed by roads (16%) and housing (10%) (source : Indonesian update of Mandiri).

Cement consumption is predicted increase in 2015 due to the infrastructure project in Indonesia.

Financial Analysis

Semen Indonesia is a state owned company which is the biggest cement producer in Indonesia. In 2014, the sales growth was 10.1 % up compared to sales in 2013. The gross margin was 47.4 % of sales in 2014 which was less than gross margin in 2013 which was at 48.7 %. The activity ratio was stable; the company could maintain its business despite of the economic situation was slowing down.

The cost of operating may be added up by the higher price of energy. Semen Indonesia has several factories both in Indonesia and at abroad. The company had done acquisition of Thang Long cement at Vietnam in 2012 and at the same year the company has built new factories in Tuban and Sulawesi island. According its annual reports in 2012, the market share was more than 40 % in Indonesia.

expressed in rupiah (SMGR)	2013	2014	2015F	2016F	2017F
Revenue	24,501,240,780.0	26,987,035,135.0	29,415,868,297.2	32,063,296,443.9	34,948,993,123.8
COGS	-12,577,694,219.0	-14,195,968,934.0	-15,296,251,514.5	-16,672,914,150.8	-18,173,476,424.4
Gross Profit	11,923,546,561.0	12,791,066,201.0	14,119,616,782.6	15,390,382,293.1	16,775,516,699.4
Operating Expense	-3,902,612,073.0	-4,565,707,889.0	-4,976,621,599.0	-5,424,517,542.9	-5,912,724,121.8
Depreciation n amortization	-1,048,549,677.0	-1,271,618,313.0	-1,363,204,978.6	-1,439,842,114.5	-1,511,312,751.2
Other Income / - expense	288,183,490.0	519,945,090.0	566,740,148.1	617,746,761.4	673,343,970.0
Interest Expense	-340,168,567.0	-382,919,122.0	-22,198,008.7	-22,500,000.0	-22,500,000.0
Pretax Income	6,920,399,734.0	7,090,765,967.0	8,324,332,344.4	9,121,269,397.1	10,002,323,796.5
Taxes	-1,566,101,213.0	-1,517,188,688.0	-1,781,130,970.5	-1,951,649,062.2	-2,140,165,475.5
Net Income	5,354,298,521.0	5,573,577,279.0	6,543,201,373.9	7,169,620,334.9	7,862,158,320.9
Cash	4,070,492,871.0	4,925,949,551.0	10,312,208,723.2	16,369,631,770.5	23,186,379,894.2
Short Term Investment	142,434,379.0	105,569,233.0	105,569,233.0	105,569,233.0	105,569,233.0
Trade Receivable	2,238,452,900.0	2,553,653,508.0	2,783,482,323.7	3,033,995,732.9	3,307,055,348.8
Inventories	2,645,892,517.0	2,811,704,405.0	3,029,630,310.1	3,302,297,038.0	3,599,503,771.4
Other Current Asset	874,837,703.0	1,251,667,978.0	1,364,318,096.0	1,487,106,724.7	1,620,946,329.9
Total  Curr Asset	9,972,110,370.0	11,648,544,675.0	17,595,208,686.0	24,298,600,499.0	31,819,454,577.3
Net Property, Plants and equipment	18,862,518,157.0	20,221,066,650.0	21,357,861,671.4	22,418,019,556.9	23,406,706,805.7
Other Non Curr Asset	1,958,255,565.0	2,445,054,702.0	2,665,109,625.2	2,904,969,491.4	3,166,416,745.7
Total Non Curr Asset	20,820,773,722.0	22,666,121,352.0	24,022,971,296.6	25,322,989,048.4	26,573,123,551.4
Total Asset	30,792,884,092.0	34,314,666,027.0	41,618,179,982.6	49,621,589,547.3	58,392,578,128.7
Short Term Debt	320,926,026.0	81,808,678.0	90,000,000.0	90,000,000.0	90,000,000.0
Account Payable	1,672,272,211.0	2,160,613,721.0	2,328,075,741.5	2,537,602,558.2	2,765,986,788.5
Curr Portion of Long term debt	519,274,300.0	516,069,752.0	530,000,000.0	530,000,000.0	530,000,000.0
Other Curr Liabilities	2,785,158,000.0	2,514,776,971.0	2,741,106,898.4	2,987,806,519.2	3,256,709,106.0
Total Curr Liabilities	5,297,630,537.0	5,273,269,122.0	5,689,182,639.9	6,145,409,077.5	6,642,695,894.4
Long Term Debt	113,093,127.0	131,988,819.0	130,000,000.0	130,000,000.0	130,000,000.0
Deferred Taxes	7,219,730.0	58,201,897.0	58,201,897.0	58,201,897.0	58,201,897.0
Other Non Curr Liabilities	3,570,964,823.0	3,848,754,253.0	4,195,142,135.8	4,572,704,928.0	4,984,248,371.5
Total Non Curr Liabilities	3,691,277,680.0	4,038,944,969.0	4,383,344,032.8	4,760,906,825.0	5,172,450,268.5
Total Liabilities	8,988,908,217.0	9,312,214,091.0	10,072,526,672.6	10,906,315,902.5	11,815,146,162.9
Minorities	921,432,547.0	960,414,183.0	960,414,183.0	960,414,183.0	960,414,183.0
Common Share	593,152,000.0	593,152,000.0	593,152,000.0	593,152,000.0	593,152,000.0
Additional Paid Up Capital	1,458,257,900.0	1,458,257,900.0	1,458,257,900.0	1,458,257,900.0	1,458,257,900.0
Retained Earning	18,480,910,979.0	21,630,157,442.0	28,173,358,815.9	35,342,979,150.9	43,205,137,471.8
Other	350,222,449.0	360,470,411.0	360,470,411.0	360,470,411.0	360,470,411.0
Share holder Equity	20,882,543,328.0	24,042,037,753.0	30,585,239,126.9	37,754,859,461.9	45,617,017,782.8
Share holder Equity & Min Interest	21,803,975,875.0	25,002,451,936.0	31,545,653,309.9	38,715,273,644.9	46,577,431,965.8
Total SE,Min Interest and Liabilities	30,792,884,092.0	34,314,666,027.0	41,618,179,982.6	49,621,589,547.3	58,392,578,128.7
Financial Ratio	2013	2014	2015F	2016F	2017F
ROA	17.39	16.24	15.72	14.45	13.46
ROE	25.64	23.18	21.39	18.99	17.24
Gross Margin	48.67	47.40	48.00	48.00	48.00
Profit Margin	21.85	20.65	22.24	22.36	22.50
Current Ratio	1.88	2.21	3.09	3.95	4.79
Debt to asset	0.03	0.02	0.02	0.02	0.01
Dividend Pay Out Ratio	41.2	-	-	-	-
Days Payable	49	56	56	56	56
Days Inventory	77	72	72	72	72
Days Receivable	33	35	35	35	35
Free Cash Flow		3,453,984,102.0	5,366,126,421.2	6,057,423,047.3	6,816,748,123.7
EBITDA	8,309,117,978.0	8,745,303,402.0	9,709,735,331.7	10,583,611,511.6	11,536,136,547.6
EPS	905.00	938.00	1103.12	1208.73	1325.49
Revenue Growth		10	9	9	9