Analysts bullish about shares of cement producers
Analysts bullish about shares of cement producers
JAKARTA (JP): Analysts estimated yesterday that the shares of
cement manufacturers listed on the Jakarta Stock Exchange (JSX)
will exceed the average performance of other shares this year.
The research director of PT HG Asia Indonesia, Jonathan
Harris, told The Jakarta Post yesterday that cement manufacturers
will enjoy a steady increase in profits until 1998 because of the
current under supply situation.
Jonathan said that cement producers predicted a 10 percent
increase in the retail reference price of cement by June this
year. The price of cement in Indonesia is set by the government
for each provice. The national average is average retail
reference price.
"HG Asia expects the earnings per share of PT Indocement to
grow by 21 percent, PT Semen Cibinong by 23 percent and PT Semen
Gresik by 60 percent. So, fundamentally cement shares should
continue to outperform the market this year," said Jonathan.
He added that the average price earning ratio for cement
shares is predicted at 16.5 times that of last year.
An American-born analyst at Bahana Securities, who asked not
to be named, told the Post yesterday that the earnings per share
of cement manufacturers is likely to grow by 27 percent this
year, as compared to an average growth of 24 percent for all
shares listed on JSX.
On Dec. 28, 1995, the last trading day of last year,
Indocement shares closed at Rp 7,675 (US$3,3), Semen Cibinong at
Rp 4,275 and Semen Gresik at Rp 6,700.
Last week, the Indocement and Semen Gresik shares closed 17.2
percent and 23 percent higher at Rp 9,000 and Rp 7,900
respectively.
The analyst disagreed with the notion that the price rises
were being pushed up by rumors that the cement manufacturers had
asked the government to raise the local reference cement prices
early this year.
"It could be a speculative buying action, but I would say that
the fundamentals of the cement industry in Indonesia are very
positive compared with other countries," the analyst said.
The analyst said that the earnings per share of Indocement
would grow by 15 percent this year, while that of Semen Gresik
might grow by 83 percent this year and about 43 percent in 1997.
Semen Gresik
"We estimate Semen Gresik to have booked a total of Rp 157
billion in net profit last year. The amount is likely to increase
to an estimate of Rp 287 billion this year and Rp 410 billion
next year," he said.
The dramatic increase in Semen Gresik's profits will be
generated by its acquisition of state-owned cement plants in
Padang, West Sumatra, and in Ujungpandang, South Sulawesi, which
catapulted its total capacity to 10.6 million tons a year or 40
percent of the national capacity.
Therefore, the analyst added, the earning per share of Semen
Gresik, which was estimated at Rp 381 last year, will increase to
Rp 484 this year and Rp 691 next year.
"Our estimate assumes that the local reference prices of
cement will increase by only 8 percent this year, as compared to
30 percent last year," he said.
He reckoned that the Indonesian government has become more
careful and prudent in setting the new reference prices of cement
as they might increase inflationary pressures.
He said although the new reference prices might be higher than
Bahana's estimate, the impact would not be far different from his
predictions because the construction industry would not be as
strong as last year.
Bahana predicted that the price earning ratio of Semen Gresik
will rise 16.5 times this year and 11.6 times next year and
Indocement 19.2 times this year and 16.7 times next year.
An analyst from Sigma Batara, Indyarta Daminanus, however,
told the Post that the prices of cement shares were already
overvalued.
"We predict the average price earning ratio to decline to 20
times from an estimate of 22 times last year, with an average
earning per share growth of 22.7 percent," Damianus said.
Sigma Batara estimated that Indocement booked Rp 473.8 billion
in profits last year, Semen Cibinong Rp 91.3 billion, and Semen
Gresik Rp 148.1 billion.
Indocement yesterday announced that it booked Rp 475.9
billion in net income for all last year. It surpassed Sigma
Batara's estimation of Rp 473.8 billion.
HG Asia estimated that Semen Cibinong's net profit will reach
Rp 125 billion this year and about Rp 174 billion next year. (08)