DBS Indocement Tunggal Prakarsa: Buy; Rp14,150; TP Under review; INTP IJ

Allocates up to US$275m for FY10-12F capex

The media reported that Indocement (INTP) has allocated up to US$275m (or Rp2.59tr) of capital expenditure for the next three years to develop a cement mill and power plant. We previously reported that INTP plans to build one additional cement mill in Citereup with capacity of 1.5m tons p.a., a new cement factory with capacity of 2-3m tons p.a., and 2x50 MW power plants. According to the news article, the capital expenditure allocations are as follow: US$35m for cement mill, US$60-90m for cement factory, and US$100-150m for power plant. The company expects to finance capex needs from internal cash, which as of end-Dec09, amounted to Rp2.6tr.

Plan for the new cement mill construction is in 2H10, while the new cement factory is within the next 3-4 years considering high demand growth for domestic cement. At the same time, INTP has also acquired 100% stakes in PT Bahana Indonor, a sea transportation company, in order to strengthen its distribution network and floating cement terminal.