SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Thematic (Sector/Industry)

<ul>
<li><strong>SGX lists four stocks mining industrial minerals including tantalite, phosphate, limestone and marble, four coal mining stocks and three gold mining stocks. These 11 stocks are at different stages in the exploration, development, production cycle and have averaged a 19.0% gain in 2017 YTD.</strong></li>
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<strong>Of the three segments, mining industrial minerals has been the strongest performer in the 2017 YTD with an average 30.4% gain, led Alliance Minerals Assets. Coal was the next best performer with the four stocks</strong>…</li>
</ul>


SGX lists four stocks mining industrial minerals including tantalite, phosphate, limestone and marble, four coal mining stocks and three gold mining stocks. These 11 stocks are at different stages in the exploration, development, production cycle and have averaged a 19.0% gain in 2017 YTD.

Of the three segments, mining industrial minerals has been the strongest performer in the 2017 YTD with an average 30.4% gain, led Alliance Minerals Assets. Coal was the next best performer with the four stocks…


Average 19% YTD Gain in Key Mining Stocks

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

Indocement Tunggal Prakarsa / Equity Bottom-Up

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<p><span data-preserver-spaces="true">Given we are now coming out of Indonesia's latest wave of COVID-19 and mobility and economic activity is resuming , we see <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> as an interesting proxy for the recovery, given its exposure to West Java, infrastructure spending, and the recovering residential property market </span></p>
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<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" rel="noopener"><span data-preserver-spaces="true">Indocement Tunggal Prakarsa (INTP IJ)</span></a><span data-preserver-spaces="true"> released a solid set of 1H2021 results, with an increase in revenue of +8.0% YoY on the back of an increase in cement volume.  </span><span data-preserver-spaces="true">EBITDA margins improved from 15.5% to 19.2% due to savings in operating expenses and gains in other operating income, leading to an EBITDA increase of +33.6% YoY to IDR1,280.6bn. <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" rel="noopener"></a></span><span data-preserver-spaces="true"> </span></p>
<section class="figure">One major cost pressure comes from rising coal prices, which have increased significantly over the past year and the company has been continually both increasing its usage of low calorific coal and alternative fuels over the past 5-years to offset this.</section>
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<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> has a strong focus on improving its emissions, with assistance from the Heidelberg Cement Technology Centre, with a road map in place for energy efficiency and CO2 reductions.</p>
<p>The fact that around 78% of cement sales at <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> is in bags makes branding all the more important and as a result the company is quite focused on promoting the brand through TV and social media channels.</p>
<section class="figure">The company continues with its digitalisation and has developed a fully digitalised ordering system with real time data which helps the company's sales to achieve better results both on ordering as well as on pricing.</section>
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<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> estimates that national cement domestic growth will increase by +5% for FY2021 with the resumption of more infrastructure projects and private projects in 2H2021 plus more activity in residential property.</p>
<p>The company's expansion will be focused on expanding its distribution channels through possible new terminals and barge or vessel ownership, as well as potentially exploring M&amp;A opportunities. </p>
<p><span data-preserver-spaces="true"><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> trades on 11.1x FY21E EV/EBITDA and 9.9x FY22E EV/EBITDA versus its 5-year average forward EV/EBITDA of 15x, making the company look attractive from a valuation perspective. </span></p>


Given we are now coming out of Indonesia's latest wave of COVID-19 and mobility and economic activity is resuming , we see Indocement Tunggal Prakarsa (INTP IJ) as an interesting proxy for the recovery, given its exposure to West Java, infrastructure spending, and the recovering residential property market 

Indocement Tunggal Prakarsa (INTP IJ) released a solid set of 1H2021 results, with an increase in revenue of +8.0% YoY on the back of an increase in cement volume.  EBITDA margins improved from 15.5% to 19.2% due to savings in operating expenses and gains in other operating income, leading to an EBITDA increase of +33.6% YoY to IDR1,280.6bn.  
One major cost pressure comes from rising coal prices, which have increased significantly over the past year and the company has been continually both increasing its usage of low calorific coal and alternative fuels over the past 5-years to offset this.



Indocement Tunggal Prakarsa (INTP IJ) has a strong focus on improving its emissions, with assistance from the Heidelberg Cement Technology Centre, with a road map in place for energy efficiency and CO2 reductions.
The fact that around 78% of cement sales at Indocement Tunggal Prakarsa (INTP IJ) is in bags makes branding all the more important and as a result the company is quite focused on promoting the brand through TV and social media channels.
The company continues with its digitalisation and has developed a fully digitalised ordering system with real time data which helps the company's sales to achieve better results both on ordering as well as on pricing.





Indocement Tunggal Prakarsa (INTP IJ) estimates that national cement domestic growth will increase by +5% for FY2021 with the resumption of more infrastructure projects and private projects in 2H2021 plus more activity in residential property.
The company's expansion will be focused on expanding its distribution channels through possible new terminals and barge or vessel ownership, as well as potentially exploring M&amp;A opportunities. 
Indocement Tunggal Prakarsa (INTP IJ) trades on 11.1x FY21E EV/EBITDA and 9.9x FY22E EV/EBITDA versus its 5-year average forward EV/EBITDA of 15x, making the company look attractive from a valuation perspective. 

Indocement Tunggal Prakasa (INTP IJ) - Bulky Recovery in Place

<p>Indonesia's largest cement company <a href="https://www.smartkarma.com/entities/semen-indonesia-persero-tbk" target="_blank" data-smartkarma-citation="entities:11161:1" rel="noopener">Semen Indonesia (SMGR IJ)</a> released a solid set of FY2020 results with a -12.9% decrease in revenues but a +4.3% increase in EBITDA, and a +16.7% increase in net profit with a focus on lowering costs and implementing greater efficiencies.</p>
<p>The company also managed to improve its financial position over 2020 by reducing its overall debt and by refinancing its existing debt at lower interest rates, saving on interest costs and boosting the bottom line. </p>
<p><a href="https://www.smartkarma.com/entities/semen-indonesia-persero-tbk" target="_blank" data-smartkarma-citation="entities:11161:1" rel="noopener">Semen Indonesia (Gresik) (SMGR IJ)</a> is the largest cement company in Indonesia with a total capacity of 52.6m tonnes per annum and with more than 50% market share. It has suffered more than its competitors due to the decline in bulk cement demand but at the same time will see a greater benefit from the rebound driven by increased infrastructure spending. </p>
<p>The stock now trades on 9.7x FY21E EV/EBITDA and 8.4x FY22E EV/EBITDA versus its 5-year average forward EV/EBITDA of 10.72x. EPS is forecast to grow by +20.2% in FY21E and +13.1% in FY22E, suggesting a strong recovery in earnings in line with the overall economy and especially the bulk cement market. </p>

Indonesia's largest cement company Semen Indonesia (SMGR IJ) released a solid set of FY2020 results with a -12.9% decrease in revenues but a +4.3% increase in EBITDA, and a +16.7% increase in net profit with a focus on lowering costs and implementing greater efficiencies.
The company also managed to improve its financial position over 2020 by reducing its overall debt and by refinancing its existing debt at lower interest rates, saving on interest costs and boosting the bottom line. 
Semen Indonesia (Gresik) (SMGR IJ) is the largest cement company in Indonesia with a total capacity of 52.6m tonnes per annum and with more than 50% market share. It has suffered more than its competitors due to the decline in bulk cement demand but at the same time will see a greater benefit from the rebound driven by increased infrastructure spending. 
The stock now trades on 9.7x FY21E EV/EBITDA and 8.4x FY22E EV/EBITDA versus its 5-year average forward EV/EBITDA of 10.72x. EPS is forecast to grow by +20.2% in FY21E and +13.1% in FY22E, suggesting a strong recovery in earnings in line with the overall economy and especially the bulk cement market. 

Semen Indonesia (SMGR IJ) - Catch the Infrastructure Wave?

<p><a href="https://www.smartkarma.com/entities/semen-indonesia-persero-tbk" target="_blank" data-smartkarma-citation="entities:11161:1" rel="noopener">Semen Indonesia Persero Tbk (SMGR IJ)</a> hosted a call to run through its 1Q2020 results, which saw a marginal impact from COVID-19. What was more interesting were the company's views on the outlook for the Indonesian cement market, which is likely to have a choppy few months. </p>
<p>The achieved positive volume growth in 1Q2020 mainly due to the inclusion of <a href="https://www.smartkarma.com/entities/pt-solusi-bangun-indonesia-tbk" target="_blank" data-smartkarma-citation="entities:3671:1" rel="noopener">PT Solusi Bangun Indonesia Tbk (SMCB IJ)</a> and strong performance from the company's Vietnamese operations. </p>
<p>It saw profitability improve due to synergies and scale benefits on logistics and procurement specifically on <a href="https://www.smartkarma.com/entities/pt-solusi-bangun-indonesia-tbk" target="_blank" data-smartkarma-citation="entities:3671:1" rel="noopener">PT Solusi Bangun Indonesia Tbk (SMCB IJ). </a> The company expects to maintain margins in 2020 versus FY19. </p>
<p>COVID-19 has started to impact volume in April but even more so in May. Smaller operators are concentrating on their home markets and customers with solid credit record. This has opened up some gaps and opportunities which <a href="https://www.smartkarma.com/entities/semen-indonesia-persero-tbk" target="_blank" data-smartkarma-citation="entities:11161:1" rel="noopener">Semen Indonesia Persero Tbk (SMGR IJ)</a> will look to fill. </p>
<p>The company has improved its debt structure in 2H19, bring the average interest rates down and It is also looking to sell a 15% stake in <a href="https://www.smartkarma.com/entities/pt-solusi-bangun-indonesia-tbk" target="_blank" data-smartkarma-citation="entities:3671:1" rel="noopener">PT Solusi Bangun Indonesia Tbk (SMCB IJ)</a> to Japanese cement company Teiheiyo Cement Corporation. </p>
<p><a href="https://www.smartkarma.com/entities/semen-indonesia-persero-tbk" target="_blank" data-smartkarma-citation="entities:11161:1" rel="noopener">Semen Indonesia Persero Tbk (SMGR IJ)</a> is trading on 7.8x FY21E EV/EBITDA is the 10-year average of 9.8x and a high of 14x forward EV/EBITDA. This a key recovery play once the government starts to reopen the economy.</p>

Semen Indonesia Persero Tbk (SMGR IJ) hosted a call to run through its 1Q2020 results, which saw a marginal impact from COVID-19. What was more interesting were the company's views on the outlook for the Indonesian cement market, which is likely to have a choppy few months. 
The achieved positive volume growth in 1Q2020 mainly due to the inclusion of PT Solusi Bangun Indonesia Tbk (SMCB IJ) and strong performance from the company's Vietnamese operations. 
It saw profitability improve due to synergies and scale benefits on logistics and procurement specifically on PT Solusi Bangun Indonesia Tbk (SMCB IJ).  The company expects to maintain margins in 2020 versus FY19. 
COVID-19 has started to impact volume in April but even more so in May. Smaller operators are concentrating on their home markets and customers with solid credit record. This has opened up some gaps and opportunities which Semen Indonesia Persero Tbk (SMGR IJ) will look to fill. 
The company has improved its debt structure in 2H19, bring the average interest rates down and It is also looking to sell a 15% stake in PT Solusi Bangun Indonesia Tbk (SMCB IJ) to Japanese cement company Teiheiyo Cement Corporation. 
Semen Indonesia Persero Tbk (SMGR IJ) is trading on 7.8x FY21E EV/EBITDA is the 10-year average of 9.8x and a high of 14x forward EV/EBITDA. This a key recovery play once the government starts to reopen the economy.

Semen Indonesia Persero Tbk (SMGR IJ) - Its Not All Bad News After All

<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> recently released its 1Q2020 cement sales numbers, which reflected a slow start to the year but only a partial impact from COVID-19, given the admission of Indonesia having a problem only came in early March. The worst is yet to come in 2Q2020 but the company is braced and using this time as an opportunity for maintenance shutdowns in readiness for a recovery in 2H2020.</p>
<p>The tentative number for Industry cement sales for 1Q2020 saw a decline of 5.0% YoY, with bagged sales down -3.5% and bulk down by -8.9%. The month of March alone saw a 6.9% decline, with bagged cement down -4.2% and bulk down -13.9%. The first two months of the year were affected more by heavy rainfall followed by an impact from COVID-19 from mid-March. </p>
<p>In March, <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)'</a>s market share stood at 25.8% whilst its market share for the Java market stood at 36.8% versus 34.7% in March 2019. The company saw better performance from its home market, especially in Jakarta, due to much drier weather.</p>
<p>The impact of COVID-19 started to take effect in mid-March. In terms of performance year to date, the company sees that environment as challenging, with more impact on the bulk market demand from infrastructure and property sectors as construction slows down. </p>
<p>Management confirmed in a recent call that there was still activity in a number of infra project and bagged cement demand was still there from ongoing projects. 2Q2020 will be a very weak quarter given social distancing and travel restrictions and it also includes the Lebaran holidays. The latest company projections are below the fold. </p>
<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> is now trading close to GFC levels from a PBV perspective on 1.7x FY20E PBV versus the average valuation since 2007 of 3.5x PBV and a high of 6x PBV. Once the economy does start to function again, it will be at the forefront of that recovery. </p>

Indocement Tunggal Prakarsa (INTP IJ) recently released its 1Q2020 cement sales numbers, which reflected a slow start to the year but only a partial impact from COVID-19, given the admission of Indonesia having a problem only came in early March. The worst is yet to come in 2Q2020 but the company is braced and using this time as an opportunity for maintenance shutdowns in readiness for a recovery in 2H2020.
The tentative number for Industry cement sales for 1Q2020 saw a decline of 5.0% YoY, with bagged sales down -3.5% and bulk down by -8.9%. The month of March alone saw a 6.9% decline, with bagged cement down -4.2% and bulk down -13.9%. The first two months of the year were affected more by heavy rainfall followed by an impact from COVID-19 from mid-March. 
In March, Indocement Tunggal Prakarsa (INTP IJ)'s market share stood at 25.8% whilst its market share for the Java market stood at 36.8% versus 34.7% in March 2019. The company saw better performance from its home market, especially in Jakarta, due to much drier weather.
The impact of COVID-19 started to take effect in mid-March. In terms of performance year to date, the company sees that environment as challenging, with more impact on the bulk market demand from infrastructure and property sectors as construction slows down. 
Management confirmed in a recent call that there was still activity in a number of infra project and bagged cement demand was still there from ongoing projects. 2Q2020 will be a very weak quarter given social distancing and travel restrictions and it also includes the Lebaran holidays. The latest company projections are below the fold. 
Indocement Tunggal Prakarsa (INTP IJ) is now trading close to GFC levels from a PBV perspective on 1.7x FY20E PBV versus the average valuation since 2007 of 3.5x PBV and a high of 6x PBV. Once the economy does start to function again, it will be at the forefront of that recovery. 

Indocement Tunggal Prakarsa (INTP IJ) - High-Quality Recovery Play on GFC Valuations

Indonesia

PT Solusi Bangun Indonesia Tbk engages in the production and distribution of cement, ready-mixed concrete, and aggregates in Indonesia and internationally. The company also provides other construction and consulting services, including mining activities and waste management. It was founded in 1971 and is headquartered in Jakarta, Indonesia.

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Solusi Bangun Indonesia (SMCB IJ)

Average 19% YTD Gain in Key Mining Stocks

SGX lists four stocks mining industrial minerals including tantalite, phosphate, limestone and marble, four coal mining stocks and three gold...

Singapore Exchange Ltd (SGX)

Indocement Tunggal Prakasa (INTP IJ) - Bulky Recovery in Place

We see Indocement as an interesting and high-quality proxy to the recovery in the Indonesian economy, given its exposure to infrastructure through...

Angus Mackintosh

Semen Indonesia (SMGR IJ) - Catch the Infrastructure Wave?

Semen Indonesia remains a key proxy for the recovery in the Indonesian economy and especially as infrastructure spending picks up driving renewed...

Angus Mackintosh

Semen Indonesia Persero Tbk (SMGR IJ) - Its Not All Bad News After All

Semen Indonesia Persero Tbk (SMGR IJ) hosted a call to run through its 1Q2020 results, which saw a marginal impact from COVID-19. What was more...

Angus Mackintosh

Indocement Tunggal Prakarsa (INTP IJ) - High-Quality Recovery Play on GFC Valuations

Indocement Tunggal Prakarsa (INTP IJ) recently released its 1Q2020 cement sales numbers, which reflected a slow start to the year but only a...

Angus Mackintosh

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