UOB Kay Hian said it maintains its "hold" rating on the country’s third largest cement maker, PT Holcim Indonesia, after the company swung to a profit in the nine months to September from a loss last year largely on the back of foreign exchange gains.
UOB said Holcim is now trading at a premium to the cement sector, and is less attractive compared to its peers mainly because of its lack of earnings power and huge debt position.
"On the flip side, Holcim Indonesia may benefit the most should cement demand increase due to its excess capacity," the brokerage said in a note.
Holcim Indonesia, majority owned by Swiss firm Holcim AG, posted nine months to September net profit of 124.67 bln rupiah, reversing the year-ago loss of 435.50 bln.
The stronger rupiah allowed it to post forex gains of 264.25 bln rupiah, compared to currency-related losses of 462.14 bln in the same period last year.
UOB said Holcim’s nine-month sales of 2.21 trln rupiah, down slightly from 2.27 trln a year ago, came in below its expectation. UOB said it was looking at full-year sales of 3.2 trln rupiah.
The brokerage said Holcim ’s market share dropped to 12.2 pct in the first nine months from 15.7 pct last year, while competitors Semen Gresik saw market share rise to 46.7 pct from 44.8 while Indocement maintained its share at 30 pct.