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PT SEMEN INDONESIA TBK / SMGR - JAKARTA. Rumors circulated among market participants that PT Holcim Indonesia Tbk's (SMCB) controlling shareholder, LafargeHolcim, would sell their shares in PT Holcim Indonesia.
The news that blew also said that one of the interested parties in this offer was PT Semen Indonesia Tbk (SMGR). It is said that the price requested by LafargeHolcim was Rp. 28 trillion.
Several other entities that were also mentioned were interested, among others, Taiheyo Cemen, YTL Corp, Indocement, and the Salim Group.
Panin Sekuritas analyst William Hartanto said, if this rumor was truly realized, it would boost SMGR's cement market share. "Their market reach will be wider," William told Kontan.co.id on Wednesday (10/24).
Kornelis Wicaksono, Analyst of Reliance Securities, also argued similarly. SMGR's acquisition of SMCB has the potential to significantly increase SMGR's market share.
Please note, in the third quarter of 2018, SMCB's cement market share reached 15% of the total market. The SMGR market share reaches 40%. If the acquisition occurs, it means that the control of the SMGR market will not be deterred.
For comparison, currently the second largest market share is held by Indocement Tunggal Prakarsa, which controls a 25% portion.
SMCB also still has large capacity leftovers. The SMCB utilization rate is only around 80%, under the SMGR utility which has reached 95%.
If the acquisition of the two cement giants really takes place, it means that SMGR no longer needs to build a new factory to increase production capacity.
"However, it should be noted that since 2016 SMCB always loses. Until the second quarter of 2018 it is also still negative. SMGR should be able to spend less money if it wants to acquire SMCB because of poor performance," said Kornel.
Apart from the matter of this rumor, William Hartanto recommended to buy the shares of SMGR with a medium-term price target reaching Rp 9,300-Rp 9,500 per share.
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