Key points from the report:
Semen Gresik (SMGR IJ), Indonesia’s largest cement producer is in good shape.
SMGR has 44% market share and has proved to be a strong value creator over the past decade with an ROAE of 18% and 29% earnings CAGR.
We expect a cyclical slowdown but the structural outlook remains intact; falling interest rates and public sector infrastructure spending will support demand.
SMGR has the most diversified plant location allowing it to tap demand across Indonesia.
SMGR is increasing capacity to 24m tons by 2014 or up 34% from current to match future demand.
SMGR has bought back approximately Rp200bn worth of stock since October 2008.
While near term growth will slow, the stock should continue to Outperform.Target Rp3,800.
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