United States

Analyst Research Report Snapshot


Semen Indonesia - Some silver lining




Bahana Securities


05 Feb 2014





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Electricity tariff hikes likely to be offset by higher ex-factory prices The gradual lifting of PLN’s (state-owned electricity company) industrial electricity subsidy (exhibit 6), leading to increased electricity tariff to IDR1,191/kWh at end 2014, up 65% y-y, is expected to cause 1-4% higher 2014-15 total cement production costs. While this should lower SMGR’s 2014-15 earnings by 2-8%, management’s plan to raise average ex-factory prices by 1-3% should offset this negative impact. That said, we retain our earnings forecasts despite total usage of subsidized electricity accounting for 30% of total electricity consumption. Note that SMGR’s Padang plant will be the most impacted from the tariff

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