JP Morgan - Semen Cibinong – cement laggard

The stock has lagged peer stocks INTP by 7% and SMGR by 10% over the past one month. Monthly volume data (domestic) up to August highlights SMCB as the fastest grower among the 3 listed cement companies, with 16.3% yoy for 8M10 (versus SMGR at 3% and INTP at 13.8%). In terms of converting export sales into domestic sales (that commands higher margin), SMCB offers best upside. Up to 8M10, export to total volume sales stood at 21% for SMCB, 1% for SMGR, and 7% for INTP. On consensus number (Not Rated by JPMorgan), the stock trades on 17.4x and 13.8x FY10-11, versus INTP at 19.8x and 16.3x, versus SMGR at 15.0x and 13.0x. SMCB offers the best operating and financial leverage in the sector, when businesses are doing well. Trades about US$3mn per day.