SMGR IJ / SMGR.JK | NEUTRAL - Downgrade | Share Price Rp12300 - Tgt. Rp13000
Cement | - by Lydia TOISUTA
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SMGR’s attempt to keep its market leadership position at home while ensuring sufficient supply ex-Java meant sacrificing margins that caused the weaker 1Q12 results. With valuations having also caught up with earnings, upside potential would appear to be limited. 1Q12 core profit was below our estimate by 7% but ahead of consensus by 3%. The production shortage’s impact on cost was behind the deviation to our forecast. We cut our FY12-13 EPS, and lower our target price (unchanged 14.3x CY13, premium over index to reflect up cycle). Our rating is also downgraded
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