NISP Indocement revises up capex to US$100mn (INTP, Rp15,350, Buy)

• Indocement is boosting its 2010F capex budget from US$75mn to US$100mn. Around 60% of the amount will be used for general expenditures, while the remaining budget will be used to finance its new cement mill construction in Citeureup. As for now, the company will use its internal cash to finance the capex as the company currently has Rp2.7tn cash position.

• In the meantime, Indocement’s shareholder has approved Rp225/share cash dividend for 2009 net profit or translates for only 30% payout ratio, relatively inline with our expectation. We understand that the company needs to conserve its cash as for the next 4 years the company might need around US$750mn to finance its expansion plans.

• Besides its plan to build 2 new cement mills with annual capacity of 2mn tons, the company also plans to build a coal-fired power plant worth US$100-150mn in Citeureup which is slated for 2011F. For longer term, the company is planning to build new cement plant worth US$450mn with 2-3mn tons annual capacity to anticipate domestic cement demand boom in the next 4 years.

• Currently INTP is trading at 2010F PER of 13.4x and EV/EBITDA of 7.8x, buy.

Mandiri Sekuritas Indocement: To build 2mn tons cement mills (INTP, Rp15,350, Neutral, TP: Rp16,600)

􀂄 Aside from the new 1.5mn tons cement mill which will start operating this May, they will build another cement mill with a capacity of 2mn tons. This is sooner than their previous plan, given unexpectedly strong demand. They budgeted around US$100mn for FY10 capex, from previously US$70mn.

􀂄 Other than that, the company will give out cash dividend of around Rp828bn, or equal to Rp225/share. It reflects a dividend yield of 1.5%. The payout ratio of around 30% is inline with our expectation. Cum dividend date will be on 21 June 2010, and it will be distributed 7 July 2010. On valuation basis, the company is currently trading at PER10F of 16.9x.