CIMB Indocement Result note - Impressive margins

(INTP IJ / INTP.JK, OUTPERFORM - Maintained, Rp5,800 - Tgt. Rp7,000, Construction and Materials)

We maintain Outperform on Indocement. 1Q09 results beat our forecast and consensus expectations on remarkable margin expansion, a good prelude to a demand recovery in 2H09. We are impressed by the results considering its poor sales volume in 1Q09, which highlights its focus on margins over market share. ASP was strong and above our expectation, with EBITDA margin at its highest since 2000, surpassing Semen Gresik's. Indocement has turned net cash, with only a small amount of short-term working-capital loan remaining and no big capex. Adjusting for 1Q09 ASP and sales volumes, we raise our FY09 EPS estimate by 14% and target price to Rp7,000 from Rp6,500, still based on US$125 EV/tonne.