DBS Indocement Tunggal: Buy; Rp13,750; TP Rp10,500; INTP IJ

To build additional cement mill by end of 2010

The media reported that Indocement (INTP) plans to build an additional cement mill in Cibinong (West Java) with total capacity of 1.5m p.a., in addition to its two new cement mills, which are expected to commence operations within the next two months. INTP management expects the construction of the new mill to start by end of this year or early next year and operation commencement by 2012. The required capital expenditure reportedly amount to US$60m and will be financed by internal cash. As of end-Sep09, INTP is in net cash position with ending cash balance of Rp1.7tr.

Aside from the cement mill, INTP also plans to build new cement factories with production capacity of 2-3m tons p.a., preferably to be located in Citeureup (West Java), Tarjun (South Kalimantan) and Central Java. The company is also undergoing discussion with regards to its plan to develop a 2x50 MW coal-fired power plant.