• Indocement reported earnings of Rp854bn for the 2Q10, up 27% YoY and Rp1.64tn for 1H10, up 40% YoY.
• Reveue picked up 10% QoQ as we head into peak seasonal demand; 1H10 revenue is up 24% YoY. This represents all volume growth as there have been no price increases for the past 18 months.
• Margins heald setady at 51% for GPM, 38% for OPM and 30% at the net margin level. We forecast these will be sustained at record levels.
• The company has substantial cash on hand with US$440m in the bank versus short term loans, dividends and loan maturities of US$122m. The company's current ratio stands at 3.1x.
• The company's net cash position of US$375m is now one-third of equity and 5.5% of the company's market cap.
• Overall a solid result for Indonesia's leading private sector cement producer; with additional capacity is also has more operational leverage to domestic demand.
• The stock is up 11% over 3M but remains a strong conviction BUY.
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