Cement Sector. Neutral. Here comes the war. Samuel Equity Research. Sector Update

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1 Sector Update Cement Sector 31March 2016 Samuel Equity Research Neutral Here comes the war Volume penjualan semen domestik di 2M16 tumbuh 7.1% YoY masih in-line dengan ekspektasi pertumbuhan di FY15 sebesar 7%. Meski demikian, tensi kompetisi semakin tinggi khususnya di pasar Jawa seiring mulai beroperasinya dua produsen baru di 2016, Semen Jawa dan Semen Bima, yang mampu meraih market share masing-masing 3.1% dan 2.5% di Jawa. Dengan kondisi ini, kami masih mempertahankan rating Neutral dengan SMGR tetap sebagai stock pick sementara INTP kami upgrade menjadi BUY seiring valuasi yang mulai atraktif. Konsumsi semen domestik tumbuh 7.1% di 2M16. Penjualan semen domestik di Feb 16 mencapai 4.45 juta ton atau tumbuh 4.9% YoY, sementara secara MoM turun 14.6% seiring efek seasonality akibat curah hujan yang lebih tinggi di Feb 16 dan selesainya proyek-proyek carry over dari akhir tahun. Secara kumulatif, penjualan semen domestik tumbuh 7.1% YoY di 2M16, masih relatif inline dengan ekspektasi kami yang sebesar 7% YoY. Pergeseran market share mulai terasa khususnya di Jawa. Di Feb 16, dua produsen semen baru, Semen Jawa (Siam Cement) dan Semen Bima (STAR) masing-masing membukukan market share sekitar 3.1% dan 2.5% di pasar Jawa, meski secara nasional hanya sekitar 1.8% dan 1.3%. Hal ini membuat INTP dan SMGR mengalami penurunan market share menjadi 34.5% dan 36.6% Vs. 36.2% dan 38.2% di FY15. Sementara, market share SMCB relatif bertahan di level 17.6%. Potensi penurunan input cost dari listrik dan energi. Meski menghadapi kondisi oversupply, produsen semen masih akan diuntungkan oleh potensi penurunan cash cost seiring insentif diskon tarif listrik saat off-peak dari pemerintah dan penurunan tarif secara menyeluruh, serta potensi penurunan biaya energi dan logistik seiring penurunan harga BBM dan minyak dunia. Maintain Neutral. Dengan kondisi kompetisi yang semakin nyata khususnya di Jawa, kami masih mempertahankan rating Neutral untuk sektor semen dengan SMGR masih sebagai stock pick. Kami menaikkan rating INTP menjadi BUY seiring valuasi yang mulai atraktif sementara mempertahankan rekomendasi HOLD untuk SMCB seiring dampak negatif dari akuisisi Lafarge Indonesia. Adrianus Bias Prasuryo Page 1 of 15 Please see important disclaimer on the last page of this report.

2 Cement Sector Figure 1. Monthly domestic sales 35% 30% Monthly Domestic Sales (Mn tons) Domestic Consumption Growth (6-m mov average) 7,000 6,000 25% 5,000 20% 4,000 15% 3,000 10% 2,000 5% 1,000 0% - -5% (1,000) -10% Source: ASI, SSI research (2,000) Figure 2. Regional cement sales Regional Sales Feb-16 Feb-15 Jan-16 Growth (%) 2M16 2M15 Growth (in '000 tons) YoY MoM YoY (%) Java 2,382 2,334 2, ,334 4, Sumatera 1, , ,133 1, Kalimantan Sulawesi NTT Maluku & Papua Total Domestic 4,451 4,243 5, ,665 9, Exported Cement Exported Clinker n/a n/a 60 0 n/a Total Export GRAND TOTAL 4,517 4,312 5, ,764 9, Source: ASI, SSI research Page 2 of 15

3 Cement Sector Figure 3. Java Vs. Ex-Java portion 60% 55% 57.5% 55.8% 55.0% 53.8% 55.2% 55.3% 56.4% 56.3% 55.5% 55.2% 50% 45% 42.5% 44.2% 45.0% 46.2% 44.8% 44.7% 43.6% 43.7% 44.5% 44.8% 40% 35% M16 Java Ex-Java Source:ASI Figure 4. Domestic cement sales highlight Domestic Volume ('000 tons) Feb-16 Feb-15 Jan-16 % Chg (YoY) % Chg (MoM) 2M16 2M15 % Chg (YoY) Market Share (%) SMGR 1,811 1,922 2, ,966 4, INTP 1,186 1,215 1, ,647 2, SMCB ,401 1, SMBR Others* , Total 4,451 4,243 5, ,665 9, *Including Siam cement & Semen Bima in 2016 only Source:ASI Page 3 of 15

4 Cement Sector Figure 5. Domestic market share 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 9.4% 9.5% 9.3% 9.0% 9.3% 11.8% 13.8% 16.2% 13.6% 15.5% 15.6% 14.5% 14.6% 14.4% 14.8% 14.2% 30.9% 30.4% 31.5% 32.0% 30.4% 28.0% 28.0% 26.6% 43.3% 40.8% 40.9% 43.9% 43.7% 43.3% 41.3% 40.7% Jan '16 Feb '16 Others SMBR SMCB INTP SMGR Source: Companies Figure 6. Domestic capacity & utilization rate 120 Capacity (mn tons/lhs) 110% 100 Utilization (RHS) 96.2% 100% % 81.7% 82.2% 80.7% 89.5% 81.5% 90% % 71.2% 68.3% 79.2% 72.0% 71.5% 80% 70% 40 60% % 50% 0 '00 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15F '16F '17F 40% Source:Lazada.com (*black color variant device variant only, to avoid data repetition) Page 4 of 15

5 Company Update Semen Indonesia Bloomberg: SMGR.IJ Reuters: SMGR.JK Samuel Equity Research Market share challenge Semen Indonesia mengalami tekanan market share yang cukup signifikan di pasar utamanya di Jawa Timur akibat penetrasi Semen Bima. Namun demikian, SMGR masih akan diuntungkan oleh potensi pertumbuhan demand di pasar luar Jawa seiring penguatan harga komoditas terutama CPO. Kami mempertahankan rekomendasi Buy seiring SMGR akan lebih diuntungkan oleh potensi pertumbuhan demand khususnya dari proyek-proyek infrastruktur di luar Jawa. Laba FY15 jauh di bawah ekspektasi. Pendapatan SMGR di FY15 relatif flat seiring volume penjualan yang juga stagnan, in-line dengan ekspektasi kami. Meski demikian, profitabilitas mengalami penurunan signifikan dengan gross dan net margin masing-masing turun 340bps dan 380bps sehingga laba bersih turun 18.7% YoY, jauh di bawah ekspektasi kami. Hal ini seiring tekanan biaya khususnya beban listrik (+13.2% YoY) dan depresiasi (+11.6% YoY) seiring mulai beroperasinya pabrik baru. Market share di Jawa tergerus di Feb 16. SMGR membukukan penurunan market share khususnya di pasar utama di Jawa Timur dan Jawa Tengah seiring penetrasi dari pemain baru, Semen Bima (PT. STAR). Hal ini membuat market share SMGR di Jawa turun menjadi 36.6% di Feb 16 dari posisi 38.2% di FY15. Proyek pabrik baru di Aceh untuk penetrasi pasar Sumatera. SMGR bermitra dengan PT Samana Citra Agung akan membangun satu pabrik semen berkapasitas 3 juta ton per tahun di Pidie, Aceh yang ditargetkan berproduksi di 2020 dengan total nilai investasi mencapai Rp5 triliun. Pabrik ini dibangun untuk memenuhi pasar di Sumatera bagian utara dan sekitarnya. Di tahap awal, porsi kepemilikan SMGR hanya sekitar 49% di SAI, namun secara bertahap akan berubah dimana SMGR akan menjadi pemegang saham mayoritas dengan porsi minimal 80%. Maintain Buy dengan TP of Rp13,700. Kami mempertahankan rekomendasi Buy seiring SMGR akan lebih diuntungkan oleh potensi pertumbuhan demand khususnya dari proyek-proyek infrastruktur di luar Jawa. SMGR juga masih akan diuntungkan oleh potensi pertumbuhan demand di pasar luar Jawa seiring penguatan harga komoditas terutama CPO di kawasan Sumatera dan Kalimantan. 31 March 2016 Target Price Rp 13,700 Last Price Rp 10,175 Potential Upside 34.6% JCI Index 4,561 Share isued (mn) 5.93 Market Cap. (Rp bn) Weeks High/Low 16,800 / 7,100 Avg Daily Vol (mn) 6.45 Free Float 49.0 Nominal Value Rp 100 Book value/share 16 Rp 5,095 Relative to JCI Chart BUY (Maintain) JCI Company Background Shareholder Structure SMGR 60 Mar-15 Jun-15 Sep-15 PT Semen Indonesia (Persero) Tbk manufactures cement including portland cement, oil w ell cement, and mixed cement. Through its subsidiaries, the Company also develops and operates an industrial estate, mines limestone and clay, and packages and distributes cement. Republic of Indonesia 51.0% Massmutual Financial 2.7% Others 46.3% Adrianus Bias Prasuryo adrianus.bias@samuel.co.id Page 5 of 15 Please see important disclaimer on the last page of this report.

6 Semen Indonesia SMGR.IJ / SMGR.JK Figure 1. SMGR s FY15 results highlight (in Rp bn) 4Q14 3Q15 4Q15 QoQ YoY FY14 FY15 YoY Revenue 7,638 6,474 7, % 2.6% 26,987 26, % 102.7% COGS (4,510) (3,967) (4,700) 18.5% 4.2% (15,408) (16,302) 5.8% Gross Profit 3,128 2,507 3, % 0.2% 11,579 10, % Operating Expenses (1,291) (1,199) (1,333) 11.2% 3.2% (4,632) (4,747) 2.5% Operating Profit 1,837 1,309 1, % -2.0% 6,947 5, % 84.2% Net Finance Income (Cost) (59) (70) (49) -30.2% -16.0% (97) (129) 33.1% Forex Gain (Loss) n/a n/a 0 0 n/a Other inc. (exp.) (2) n/a n/a n/a Other Income, Net 47 (5) (51) % n/a 130 (48) n/a Pre-tax Income 1,884 1,304 1, % -7.2% 7,077 5, % Tax (398) (290) (432) 49.2% 8.4% (1,510) (1,325) -12.2% Net Profit 1,483 1,013 1, % -10.8% 5,560 4, % 81.6% Profitability Gross margin 41.0% 38.7% 40.0% 1.3% -1.0% 42.9% 39.5% -3.4% Operating Margin 24.1% 20.2% 23.0% 2.8% -1.1% 25.7% 21.9% -3.9% Pre-tax margin 24.7% 20.1% 22.3% 2.2% -2.3% 26.2% 21.7% -4.5% Net margin 19.4% 15.6% 16.9% 1.2% -2.5% 20.6% 16.8% -3.8% Operational Figure Sales Volume (Mn Tons) % 6.1% % 102.8% Domestic Sales (Mn Tons) % 6.8% % Export Sales (Mn Tons) % -1.8% % ASP (Rp 000) % -2.8% % COGS/tons (Rp 000) % -1.7% % Source:Company, Bloomberg, SSI Estimates FY15/ '15E Page 6 of 15

7 Semen Indonesia SMGR.IJ / SMGR.JK Key Financials Profit and Loss Cash Flow Rp bn 14A 15A 16E 17E Yr-end Dec (Rp bn) 14A 15A 16E 17E Operating Revenue 26,987 26,948 28,621 31,557 Net income 5,560 4,521 5,265 5,844 COGS -15,408-16,302-17,080-18,919 Depreciation & amort. 1,237 1,366 1,568 1,644 Gross Profit 11,579 10,646 11,542 12,639 Others Operating Expenses -4,632-4,747-4,713-5,231 Working capital (628) 1,239 (50) 252 Operating profit 6,947 5,899 6,829 7,407 Operating cash flow 6,168 7,126 6,783 7,740 Operating margin (%) Net - Capital expenditure (2,595) (6,312) (5,416) (2,046) EBITDA 8,285 7,366 8,396 9,051 Investing cash flow (3,059) (6,297) (5,424) (2,042) EBITDA margin (%) Net - Borrowings (904) Other income (expenses) 98 (83) (130) 32 Other financing (2,306) (2,086) (2,265) (2,613) Pre-tax profit 7,077 5,851 6,732 7,472 Financing cash flow (2,278) (1,779) (1,875) (3,517) Income tax - net (1,510) (1,325) (1,414) (1,569) Net - Cash flow 832 (950) (516) 2,182 Net profit 5,560 4,521 5,265 5,844 Cash at beginning 4,108 4,940 3,989 3,474 Net profit margin (%) Cash at ending 4,940 3,989 3,474 5,655 Balance Sheet Key Ratios Yr-end Dec (Rp bn) 14A 15A 16E 17E Yr-end Dec (Rp bn) 14A 15A 16E 17E Cash & ST Investment 4,940 3,989 3,474 5,655 ROE (%) Receivables 3,301 3,544 3,453 3,617 ROA (%) Inventories 2,812 2,409 2,372 2,496 Revenue growth (%) Others EBITDA growth (%) Total current assets 11,649 10,539 10,007 12,549 EPS growth (%) Net fixed assets 20,221 25,168 29,016 29,418 Interest coverage (x) Other fixed assets 2,462 2,447 2,454 2,451 Debt to equity (%) Total assets 34,332 38,153 41,478 44,418 Net gearing (%) net-cash net-cash Payables 3,032 3,783 3,796 4,204 ST. debt and curr. maturity Major Assumptions Other current liabilities 1,643 1,970 1,893 2,096 14A 15A 16E 17E LT. debt 3,315 3,156 3,779 2,759 Domestic Demand (%) Other long term liabilities Sales Volume (mn tons) Total liabilities 9,327 10,712 11,037 10,746 ASP (Rp. '000/ton) Total equity 24,046 26,420 29,419 32,650 COGS/ton (Rp. '000) Page 7 of 15

8 Company Update Indocement TP Bloomberg: INTP.IJ Reuters: INTP.JK Samuel Equity Research Value starts to emerge Indocement TP (INTP) dengan eksposur yang besar di pasar Jawa akan menghadapi tantangan yang cukup berat dari meningkatnya kompetisi dari pemain baru. Hal ini akan membatasi pertumbuhan volume penjualan di 16E sementara margin akan relatif flat yang bersumber dari efisiensi dan penurunan input cost. Namun dengan kinerja saham yang telah turun 11.7% Ytd dan underperform JCI sebesar 17%, valuasi INTP saat ini cukup atraktif di 14x fwd-pe, 10% discount dari rata-rata valuasi 5 tahun terakhir. Hal ini mendasari kami menaikkan rekomendasi menjadi BUY dengan potential upside sebesar 14% dan potensi dividend yield mencapai 4%. Kinerja FY15 di bawah ekspektasi. Pendapatan INTP di FY15 turun 11% YoY, sedikit di bawah ekspektasi (96%) sementara laba bersih turun 17.6% YoY, 9% di bawah estimasi kami. Hal ini disebabkan oleh penurunan ASP di 4Q15 sebesar 1.8% QoQ, yang diluar ekspektasi kami, terjadi disaat pasar berada di posisi terkuat sepanjang tahun. sehingga ASP turun 4.7% YoY di FY15. Hal ini membuat gross dan net margin masing-masing turun 110bps dan 200bps di FY15. Fokus pada profitabilitas. INTP menyatakan strategi di 2016 akan lebih fokus pada profitabilitas ketimbang penetrasi pasar seiring tensi kompetisi yang meningkat dan berpotensi menurunkan rata-rata harga jual di di pasar Jawa. Target volume penjualan relatif konservatif hanya tumbuh 5-6% dengan eskpektasi margin dapat dijaga dan naik tipis dari FY15 seiring penurunan input cost (listrik dan energi) serta digantikannya operasional pabrik-pabrik yang kurang efisien dengan pabrik baru mulai 3Q16. Valuasi yang atraktif serta deviden yang menarik. Saham INTP telah melemah 11.7% Ytd dan underperform terhadap JCI sebesar 17%. Koreksi ini juga telah menurunkan valuasi INTP menjadi 14.2x fwd-pe, cukup atraktif dengan 10% discount dari rata-rata valuasi 5 tahun terakhir. INTP juga secara konsisten membagikan deviden dengan ekspektasi dividend yield mencapai 4% untuk tahun buku Upgrade menjadi Buy dengan TP Rp22,500. Kami menaikkan rekomendasi menjadi BUY seiring TP kami saat ini telah potential upside 14% dan potensi dividend yield 4%. Beberapa resiko bagi INTP d: 1). Konsumsi semen domestik yang lebih rendah dari ekspektasi, 2) Kenaikan input cost baik dari pelemahan Rupiah maupun naiknya harga komoditas; dan 3) Kompetisi yang lebih buruk dari ekspektasi di pasar Jawa. 31 March 2016 Target Price Rp 22,500 Last Price Rp 19,725 Potential Upside 14.1% JCI Index 4,561 Share isued (mn) 3.68 Market Cap. (Rp bn) Weeks High/Low 5,725 / 16,000 Avg Daily Vol (mn) 2.07 Free Float 36.0 Nominal Value Rp 500 Book value/share 16 Rp 7,319 Relative to JCI Chart BUY (Upgrade) JCI Company Background Shareholder Structure INTP 60 Mar-15 Jun-15 Sep-15 PT Indocement Tunggal Prakarsa Tbk manufactures cement and building materials. Through its subsidiaries, the Company also manufactures and processes ready-mix cement as w ell as ow ns and manages properties and hotels. Heidelberg SA 51.0% PT Mekar Perkasa 13.0% Others 36.0% Adrianus Bias Prasuryo adrianus.bias@samuel.co.id Page 8 of 15 Please see important disclaimer on the last page of this report.

9 Indocement TP INTP.IJ / INTP.JK Figure 1. INTP s FY15 results highlight (in Rp bn) 4Q14 3Q15 4Q15 QoQ YoY FY14 FY15 YoY Revenue 5,829 4,011 4, % -15.7% 19,996 17, % 96% COGS (3,085) (2,253) (2,755) 22.3% -10.7% (10,890) (9,889) -9.2% Gross Profit 2,744 1,758 2, % -21.4% 9,106 7, % Operating Expenses (939) (670) (774) 15.5% -17.6% (3,226) (2,880) -10.7% Operating Profit 1,805 1,088 1, % -23.4% 5,880 5, % 93% Net Finance Income (Cost) % -29.1% % Forex Gain (Loss) n/a n/a 0 0 n/a Other inc. (exp.) 53 9 (11) n/a n/a % Other Income, Net % -50.3% % Pre-tax Income 2,034 1,182 1, % -26.4% 6,815 5, % Tax 2,572 (273) (359) 31.6% % (1,522) (1,288) -15.3% Net Profit 1, , % -27.1% 5,290 4, % 91% Profitability Gross margin 47.1% 43.8% 43.9% 0.1% -3.2% 45.5% 44.4% -1.1% Operating Margin 31.0% 27.1% 28.2% 1.0% -2.8% 29.4% 28.3% -1.1% Pre-tax margin 34.9% 29.5% 30.5% 1.0% -4.4% 34.1% 31.7% -2.4% Net margin 26.8% 22.7% 23.2% 0.5% -3.6% 26.5% 24.5% -2.0% Operational Figure Sales Volume (Mn Tons) % -6.0% % 100.0% Domestic Sales (Mn Tons) % -7.8% % Export Sales (Mn Tons) % n/a 0 0 n/a ASP (Rp 000) 1, % -14.0% 1, % COGS/tons (Rp 000) % -5.0% % Source:Company, SSI Estimates FY15/ '15E Figure 2. INTP s forward PE-band Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Source: Bloomberg, SSI Estimates Average ST dev -2 ST dev +2 ST dev +1 ST dev -1 PER - Roll Page 9 of 15

10 Indocement TP INTP.IJ / INTP.JK Key Financials Profit and Loss Cash Flow Rp bn 14A 15A 16E 17E Yr-end Dec (Rp bn) 14A 15A 16E 17E Operating Revenue 19,996 17,798 19,937 22,886 Net income 5,290 4,357 4,946 5,780 COGS -10,890-9,889-10,872-12,306 Depreciation & amort ,040 Gross Profit 9,106 7,909 9,065 10,580 Others Operating Expenses -3,226-2,880-3,330-3,783 Working capital (42) (231) 295 (223) Operating profit 5,880 5,029 5,735 6,797 Operating cash flow 6,020 4,977 6,153 6,597 Operating margin (%) Net - Capital expenditure (3,610) (2,522) (1,694) (3,617) EBITDA 6,625 6,350 6,647 7,837 Investing cash flow (3,809) (2,558) (1,676) (3,626) EBITDA margin (%) Net - Borrowings (32) 16 Other income (expenses) Other financing (3,691) (5,068) (2,565) (2,992) Pre-tax profit 6,815 5,645 6,411 7,492 Financing cash flow (3,552) (5,019) (2,597) (2,976) Income tax - net (1,522) (1,288) (1,463) (1,710) Net - Cash flow (1,340) (2,600) 1,881 (5) Net profit 5,290 4,357 4,946 5,780 Cash at beginning 12,595 11,255 8,655 10,536 Net profit margin (%) Cash at ending 11,255 8,655 10,536 10,531 Balance Sheet Key Ratios Yr-end Dec (Rp bn) 14A 15A 16E 17E Yr-end Dec (Rp bn) 14A 15A 16E 17E Cash & ST Investment 11,256 8,656 10,536 10,531 ROE (%) Receivables 2,671 2,535 2,587 2,970 ROA (%) Inventories 1,666 1,521 1,567 1,774 Revenue growth (%) Others EBITDA growth (%) Total current assets 16,087 13,134 15,028 15,634 EPS growth (%) Net fixed assets 12,144 13,814 14,596 17,173 Interest coverage (x) Other fixed assets Debt to equity (%) Total assets 28,885 27,638 30,297 33,489 Net gearing (%) net-cash net-cash net-cash net-cash Payables 1,175 1,103 1,090 1,233 ST. debt and curr. maturity Major Assumptions Other current liabilities 2,037 1,524 1,848 2,091 14A 15A 16E 17E LT. debt Domestic Demand (%) Other long term liabilities 971 1, ,010 Sales Volume (mn tons) Total liabilities 4,308 3,772 4,050 4,453 ASP (Rp. '000/ton) ,005 1,035 Total equity 24,577 23,866 26,247 29,035 COGS/ton (Rp. '000) Page 10 of 15

11 Company Update Holcim Indonesia Bloomberg: SMCB.IJ Reuters: SMCB.JK Samuel Equity Research Remain burdened by heavy leverage Holcim Indonesia (SMCB) telah menyelesaikan proses restrukturisasi Holcim-Lafarge Group dengan mengakuisisi Lafarge Cement Indonesia (LCI). Akuisisi ini akan meningkatkan market share domestik menjadi 17.5%, namun disisi lain akan kembali meningkatkan posisi leverage SMCB dari net gearing 0.6x di FY15 menjadi 0.9x pasca akuisisi. Profitabilitas LCI juga relatif lebih buruk dibandingkan SMCB sehingga justru akan menurunkan earnings visibility SMCB. Dengan masih terbebani oleh interest cost yang tinggi ditambah dengan eksposur yang cukup besar di pasar Jawa, kami masih mempertahankan rekomendasi Hold dengan TP Rp950. Core-loss di FY15 lebih buruk dari ekspektasi. Pendapatan SMCB di FY15 turun 2.6% YoY seiring kenaikan volume penjualan (+2.6% YoY) terkompensasi oleh penurunan ASP yang cukup signifikan (-5.2% YoY). Di level operasional, profitabilita menurun drastis dengan EBIT margin turun 950bps sehingga EBIT turun 74% YoY. SMCB mencatatkan laba Rp175 miliar di FY15 yang lebih disebabkan oleh keuntungan dari penjualan Holcim Malaysia senilai Rp583 miliar. Mengeluarkan hal ini, SMCB membukukan core-loss sebesar Rp408 miliar, lebih buruk dari ekspektasi kami yang hanya Rp156 miliar. Proses restrukturisasi berlanjut dengan akuisisi LCI. Melanjutkan proses restrukturisasi Holcim-Lafarge Group, SMCB mengakuisisi Lafarge Cement Indonesia (Semen Andalas) senilai Rp2.14 triliun yang akan dibiayai oleh utang dari Holderfin B.V senilai EUR150 juta atau setara Rp2.47 triliun. LCI di FY15 memiliki market share sekitar 3.1% di pasar semen domestik dan memiliki keunggulan logistik untuk mendistribusikan produknya di Sumatera bagian utara dan timur seperti Aceh, Medan dan Riau. Hal ini dapat memberikan sinergi positif bagi SMCB untuk penetrasi di pasar Sumatera yang selama ini tidak feasible untuk dipasok dari Jawa. Profitabilitas LCI lebih buruk, leverage SMCB naik. Profitabilitas LCI relatif lebih buruk dari SMCB seiring di 9M15, gross dan EBIT margin hanya 20.6% dan 8.5% dengan posisi net-loss Rp68 miliar. Akibat akuisisi ini, profil leverage SMCB juga akan kembali memburuk dengan netgearing 0.9x di 16E yang juga berpotensi meningkatkan beban bunga. Maintain Hold dengan TP of Rp950. Memfaktorkan dampak negatif dari akuisisi LCI, kami menurunkan proyeksi earnings dan TP kami untuk SMCB menjadi Rp950 dan mempertahankan rekomendasi Hold. 31 March 2016 Target Price Rp 950 Last Price Rp 1,070 Potential Upside -11.2% JCI Index 4,483 Share isued (mn) 7.66 Market Cap. (Rp bn) Weeks High/Low 2,355 / 895 Avg Daily Vol (mn) 1.11 Free Float 19.4 Nominal Value Rp 500 Book value/share '16 Rp 1,104 Relative to JCI Chart HOLD (Maintain) JCI Company Background PT Holcim Indonesia Tbk produces cement and operates other related activities. Through its subsidiaries, the Company also manufactures and markets ready-mix concrete, operates stone quarries, and provides transportation services. Shareholder Structure SMCB 60 Mar-15 Jun-15 Sep-15 Holderfin BV 80.6% Aberdeen 7.5% Others 11.8% Adrianus Bias Prasuryo adrianus.bias@samuel.co.id Page 11 of 15 Please see important disclaimer on the last page of this report.

12 Holcim Indonesia SMCB.IJ / SMCB.JK Figure 1. SMGR s FY15 results highlight (in Rp bn) 4Q14 3Q15 4Q15 QoQ YoY FY14 FY15 YoY FY15/ '15E Revenue 2,752 1,698 2,681 58% -3% 9,484 9, % 97% COGS (1,923) (1,282) (2,018) 57% 5% (6,707) (7,100) 5.8% Gross Profit % -20% 2,776 2, % Operating Expenses (513) (308) (566) 84% 10% (1,547) (1,815) 17.4% Operating Profit % -69% 1, % 112% Other Income, Net (138) (363) 665 n/a -580% (301) 26 n/a Net Finance Income (Cost) (81) (133) (234) 75% 188% (277) (559) 101.5% Forex Gain (Loss) (43) (246) 318 n/a -842% (14) 4 n/a Other inc. (exp.) (138) % -519% (9) 582 n/a Pre-tax Income 177 (255) 761 n/a 330% % Tax (95) 35 (203) n/a 114% (310) (151) -51.2% Net Profit 61 (234) 547 n/a 798% % n/a Profitability Gross margin 30.1% 24.5% 24.7% 0.2% -5.4% 29.3% 23.2% -6.1% Operating Margin 11.5% 6.3% 3.6% -2.7% -7.9% 13.0% 3.5% -9.5% Pre-tax margin 6.4% -15.0% 28.4% 43.4% 22.0% 9.8% 3.8% -6.0% Net margin 2.2% -13.8% 20.4% 34.2% 18.2% 7.0% 1.9% -5.1% Operational Figure Sales Volume (Mn Tons) % 5.9% % 99.9% Domestic Sales (Mn Tons) % 4.4% % Export Sales (Mn Tons) % #DIV/0! 0 0 n/a Source:Company, SSI Estimates Figure 2. SMCB s leverage profile Figure 3. LCI s P&L highlight 10,000 8,000 6,000 4, M15 FY14 FY13 Revenue 1,255 1,821 1,774 Gross Profit Operating Profit Net Income (Loss) , FY12 FY13 FY14 FY15 '16E '17E Net-debt (Rp Bn) Net Gearing (x) Gross Margin 20.6% 16.2% 17.1% EBIT margin 8.5% 4.9% 11.0% Net margin -5.4% -5.0% 1.6% Source:Company, SSI Estimates Figure 4. Financial projection changes '16E '17E Rp bn Old New Chg Old New (%) Revenue 10,209 11, ,613 12, EBIT (10.5) (6.7) EBITDA 1,389 1,372 (1.3) 1,672 1,563 (6.5) Net Profit 105 (8) (107.7) (56.9) EBIT Margin (%) (1.1) (0.8) EBITDA Margin (%) (1.4) (1.6) Net Margin (%) 1.0 (0.1) (1.1) (1.1) Source:Company, SSI Estimates Page 12 of 15

13 Holcim Indonesia SMCB.IJ / SMCB.JK Key Financials Profit and Loss Cash Flow Rp bn 14A 15A 16E 17E Yr-end Dec (Rp bn) 14A 15A 16E 17E Operating Revenue 9,484 9,239 11,204 12,245 Net income (8) 95 COGS -6,707-7,100-8,529-9,185 Depreciation & amort Gross Profit 2,776 2,139 2,676 3,059 Others Operating Expenses -1,547-1,815-2,136-2,279 Working capital 327 (170) 86 (1) Operating profit 1, Operating cash flow 1, Operating margin (%) Net - Capital expenditure (2,815) (398) (2,737) (679) EBITDA 1,892 1,245 1,372 1,563 Investing cash flow (2,807) (276) (2,798) (649) EBITDA margin (%) Net - Borrowings 1, ,876 (360) Other income (expenses) (301) 26 (562) (634) Other financing (362) (6) (35) (28) Pre-tax profit Financing cash flow ,870 (396) Income tax - net (310) (151) 7 (44) Net - Cash flow (161) 424 1,023 (131) Net profit Cash at beginning ,661 Net profit margin (%) Cash at ending ,661 1,530 Balance Sheet Key Ratios Yr-end Dec (Rp bn) 14A 15A 16E 17E Yr-end Dec (Rp bn) 14A 15A 16E 17E Cash & ST Investment ,661 1,530 ROE (%) Receivables 1,178 1,210 1,500 1,639 ROA (%) Inventories Revenue growth (%) Others EBITDA growth (%) Total current assets 2,266 2,582 4,129 4,215 EPS growth (%) n/a n/a Net fixed assets 14,498 14,427 16,291 16,150 Interest coverage (x) Other fixed assets Debt to equity (%) Total assets 17,199 17,322 20,793 20,709 Net gearing (x) Payables 1,067 1,082 1,291 1,390 ST. debt and curr. maturity 1,328 1,757 1,812 1,597 Major Assumptions Other current liabilities 1,413 1,119 1,520 1,638 14A 15A 16E 17E LT. debt 4,046 4,205 7,025 6,880 Domestic Demand (%) Other long term liabilities Sales Volume (mn tons) Total liabilities 8,617 8,872 12,385 12,227 ASP (Rp. '000/ton) Total equity 8,578 8,450 8,408 8,482 COGS/ton (Rp. '000) Page 13 of 15

14 Research Team Andy Ferdinand, CFA Head Of Equity Research Strategy, Banking, Consumer Akhmad Nurcahyadi, CSA Analyst Auto, Heavy Equipment, Property, Cigarette, Media, Aviation, Healthcare M. Makky Dandytra, CSA, CFTe Technical Analyst Indices, Equities, Commodities, Currencies, Fixed Income Adrianus Bias Prasuryo Analyst Cement, Infrastructure,Telecommunication Rangga Cipta Economist Marlene Tanumihardja Analyst Retail, Poultry, Consumer, Small Cap Yudi Ilhamsyah Analyst Property, Construction Adde Chandra Kurniawan Research Associate Equity Sales Team Kelvin Long Director of Equities Evelyn Satyono Head of Institutional Equity Sales Lucia Irawati Head of Retail Equity Sales Yulianah Senior Institutional Sales Ronny Ardianto Institutional Equity Sales Ferry Khusaeri Equity Sales Indra S. Affandi Senior Institutional Sales Muhammad Isfandi Institutional Equity Sales Peter Hamsja Equity Sales Jovita Widjaja Equity Sales Clarice Wijana Institutional Equity Sales Iwan Setiadi Equity Sales James Wihardja Equity Sales Online Trading Sales Team Nugroho Nuswantoro Head Of Marketing OLT Rina Lestari SPV Customer Service Page 14 of 15

15 DISCLAIMER Analyst Certification: The views expressed in this research accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst(s) principally responsible for the preparation of this research has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. This document is for information only and for the use of the recipient. It is not to be reproduced or copied or made available to others. Under no circumstances is it to be considered as an offer to sell or solicitation to buy any security. Any recommendation contained in this report may not be suitable for all investors. Moreover, although the information contained herein has been obtained from sources believed to be reliable, its accuracy, completeness and reliability cannot be guaranteed. All rights reserved by PT Samuel Sekuritas Indonesia. Page 15 of 15