Five Banks ready to provide US$800m fund to Semen Gresik

Five Banks ready to provide US$800m fund to Semen Gresik
Published: 24 November 2008

Five banks jointly in the syndication readied to disburse US$800m or IDR9.2 trillion loans to PT Semen Gresik Tbk for new plant construction.

President Director of Semen Gresik Dwi Sutjipto said the company will have negotiation with some banks with their commitment so as to meet the required funds amidst the tightened bank liquidity.

"The committed banks here are from state owned and national private banks. However, we will select overseas bank to get the loan," he said this week adding the loan is in IDR and USD currencies.

The negotiation with some banks is projected to finish by this end of year up to early next year despite the would-be gradual redemption later.

"We will immediately finalize the talks in anticipation of the next financial problems. We will further use our internal fund for the new plant construction," he said.

The management predicted the allocation of corporate capital expenditure for the construction of power plant and new plants is about US$1 billion or lower than the early projection of US$1.6 billion.

He said the company keeps studying the capital expenditure amendment which will be promptly finalized in the near future.

"We are indeed evaluating the figure of US$1-1.3 billion," he said.

Up to 30 September 2008, the company fresh money stands at IDR3.3 trillion which is believed to increase along with the soaring company performance.

"The composition of internal fund is by 30 percent at minimum. The management is optimistic the amount could cover the funding needs of all projects the company are working out," he said.

However, considering the global economy condition at present, the company will optimize more on the funding resource composition.

Semen Gresik could book IDR8.8 trillion sales in quarter III/2008 or rose 24.1 percent as from IDR7.1 trillion last year.

"The company net profit stands at IDR1.8 trillion or rose 41.4 percent as from IDR1.3 trillion at the same period last year," he said.

Stock analyst of PT NISP Sekuritas Miranda H. Tanjung said despite the sluggish macro economy growth, the company return on equity (ROE) will reach 22.4 percent or higher than the ROE of cement sector. The highest dividend return and attractive valuation is deemed promising.

She said the company also anticipated the sales growth by increasing cement price as from IDR561.500 per ton into IDR671.300 per ton or rose 19.5 per cent as from last year.

This will boost up the operational profit margin into 27.2 percent and net profit margin into 20.4 per cent as from 24.5 per cent and 17.9 per cent respectively last year.

The SMGR stock price declined 3.17 per cent into IDR3,050 as from the closing on November 19. The market capitalization stands at IDR18.09 trillion with price to earnings ratio (PE) of 7.86 times.