JAKARTA (TheInsiderStories) - Publicly listed firm, PT Indocement Tunggal Prakarsa Tbk (IDX: INTP), hold the development of new factory in this year, even has secured a permit to set up a factory in Pati, Central Java. The reasoned, the national cement industry has experienced an overcapacity up to 46 percent.
“This has become unhealthy, so we asked the regulators why there were new permits. We also have permits in Pati, but we haven’t built them yet because of the oversupply (problem),” president director of the cement producer, Christian Kartawijaya told Investor on Thursday (03/26).
Due to the problem, he asked the government to temporarily stop granting the new investment permits in Indonesia. From the supply side, the national cement capacity now reached 115 million tones (MT) of cement. With the present of two new players, Hongshi Cement and PT Semen Grobogan and will adding the total production to 120 MT of cement.
Kartawijaya revealed, the presence of the two cement factories adding the competition in East Java and Central Java regions and will suppress the margins of cement players from 30 percent to 15 percent. He said, from the total production of 16 producers in Indonesia, the consumption only 62.5 MT of cement.
In this year, the consumption is estimating only grow low single digit to 65 MT of cement. Currently, he reported, Indocement hold 21 percent of the national market, PT Semen Indonesia Tbk (IDX: SMGR) and PT Solusi Bangun Indonesia Tbk (IDX: SMCB), controlled 44 percent of the total market.
From the export side, said Kartawijaya, of the total 9.3 MT of national cement exports in 2020, Indocement only exported 200,000 tones of cement to Brunei Darussalam. He continued, now the manufacturer looking Southeast Asian and other markets to increases the sales volume.
The Salim Group’ company plans to open a new export destination such as the Philippines, Brunei Darussalam, Malaysia and other neighboring countries. The issuer is targeting the sales growth by 5 - 8 percent in 2021. According to him, the development in the region will move faster this year after the COVID-19 pandemic.
He also believed that the sovereign wealth fund formed by the government would be a positive catalyst for the infrastructure industry, including cement producers. Indocement now prepared the factories and terminals to support the targets.
In 2020, the manufacturer booked a sales volume around 16.5 million tones (MT) of cement or down 8 percent from 2019. However, the realization of the cement sales volume higher than the 10 percent dropped in the industry’ average sales volume. The “Tiga Roda” producer is on alert to seize the market to improve the depressed performance during of last year.
He also sees positive sentiment in the cement consumption from the ratification of the Omnibus Law for Job Creation. With the enactment of the bill, its estimated that more factories will be reallocated to industrial estates in Indonesia. Currently, he said, several factories have started moving their factory locations to industrial areas in the Cikampek areas in West Java.
US$1: Rp14,400
Written by Editorial Staff, Email: theinsiderstories@gmail.com
