Better Performance in 3Q18
In 3Q18, SMGR’s sales and net profit soared by 21.8% q-q to IDR8.15 trillion and 99.3% q-q to IDR1.1 trillion, respectively thanks to the increment of 25% q-q to 9.1 million tons in cement sales and the decline of 48% q-q in sales costs. Overseeing the increment of 9.7% m-m and 7.8% y-y in October’s sales volume, we are sanguine about its stellar performance at the end of 2018.

Challenging Acquisition
SMGR acquired 80.6% shares of PT Holcim Indonesia Tbk (SMCB) from the LafargeHolcim’s shares ownership amounting to USD917 million. It ploughed USD1.28 billion, facilitated by loans into the acquisition. The acquisition is foreseen to strengthen SMGR’s position as the market leader.

In 9M18, SMCB posted the loss of IDR630 billion and debts of IDR8.6 trillion (1.33x DER). This profitless backdrop is likely to trouble SMGR’s FY19 consolidated financial performance. Amid the over-supply backdrop, SMGR will face headwinds: improvement in its subsidiary’s performance to create synergies and obligations to settle interest expenses and principal debts.


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