DBS Indocement Tunggal: Rp14,900; recommendation - TP under review; INTP IJ

1Q10 net profit up 56.4%
Indocement posted strong 1Q10 net profit of Rp786.4b (+56.4%yoy) on the back of strong revenue growth and more efficient production. The result was inline with our full year net profit estimates of Rp2.9t. Revenue rose by 16.4%yoy to Rp2.6tn while cost of production only rose by 4%yoy to Rp1.2t, as such gross margin rose to 52% from 46% in the same period last year.
In the meantime, INTP’s balance sheet remains healthy with a net cash position of Rp2.9t. The company plans to spend up to US$275m of capex for the next three years to develop a cement mill with capacity of 1.5mt p.a. a new cement factory with capacity of 2-3m tons p.a., and 2x50 MW power plants.