SMGR CORP Presentation March 2017 for investors UBS R2

(1)

(2)

-• Design Capacit y

: 106.3 m t

• Product ion Capacit y : 74.0 m it

• Dom est ic Grow t h

: 5.0%

• Dom est ic Ut ilizat ion: 70%

• Supply

Dom est ic

: 69 m t

Export

: 5 m t

Im port

: 3 m t

Domestic Capacity (2017)

2017F

Cement companies in Indonesia

1. Semen Indonesia

35.5 mt

2. Indocement TP

24.9 mt

3. Lafarge Holcim Indonesia 14.5 mt

4. Semen M erah Put ih

7.5 mt

5. Semen Bosowa

7.0 mt

6. Semen Anhui Conch

4.5 mt

7. Semen Bat uraja

3.8 mt

8. Semen Pan Asia

1.9 mt

9. Siam Cement Group

1.8 mt

10. Semen Jui Shin

1.5 mt

11. Semen Serang (Haohan)

1.2 mt

12. Semen Jakart a

1.0 mt

13. Semen Hippo (Sun Fook)

0.6 mt

14. Semen Kupang 0.3 mt

15. Semen Puger 0.3 mt

TOTAL

106,3 mio ton

* ) Source: SM GR int emal calculat ion

* ) Source: SM GR int emal calculat ion


(3)

3


(4)

Source: Com pany dat a, Indonesia Cem ent Associat ion

Semen Indonesia’ sales volume

M illion t onnes

Jan-17

Jan-16 Cha nge (%)

Indonesia

Semen Indonesia

1.23

1.20

2.7%

Semen Padang

0.44

0.52

-16.0%

Semen Tonasa

0.45

0.43

3.3%

Total domestic

2.12

2.16

-1.7%

Export s

0.07

0.03

91.7%

Total volume from Indonesia

2.18

2.19

-0.3%

Vietnam

Dom est ic Viet nam

0.11

0.11

-4.2%

Export s

0.12

0.03

258.6%

Total volume from Vietnam

0.22

0.14

56.3%


(5)

5

Source: Com pany dat a, Indonesia Cem ent Associat ion

Indonesia cement sales volume

Semen Indonesia:

Bag 77%

(-2.3% YoY)

Bulk 23%

(+0.4% YoY)

Indust ry:

Bag 77.5%

(-3.6% YoY)

Bulk 22.5%

(+2.4% YoY)

SM GR sales volume (million tons)

Jan-17

Jan-16

Change (%)

Domestic

Sem en Indonesia

1.23

1.20

2.7%

Sem en Padang

0.44

0.52

-16.0%

Sem en Tonasa

0.45

0.43

3.3%

Total domestic

2.12

2.16

-1.7%

Export

0.07

0.03

91.7%

Total volume

2.18

2.19

-0.3%

Indonesia domest ic sales volume (million tons)

Area

Jan-17

Jan-16

Cha nge (%)

Jakart a

0.39

0.42

(7.6)

Bant en

0.25

0.29

(12.8)

West Java

0.74

0.78

(4.9)

Cent ral Java

0.68

0.64

5.6

Yogyakart a

0.09

0.08

5.2

East Java

0.80

0.75

6.5

Tot al Java

2.95

2.96

(0.6)

Sumat era

1.03

1.10

(6.3)

Kalimant an

0.31

0.36

(13.8)

Sulaw esi

0.43

0.43

(0.1)

Nusa Tenggara

0.31

0.32

(2.7)

M aluku & Papua

0.14

0.12

21.0

Tot al out side Java

2.23

2.33

(4.5)

Tot al Indonesia

5.17

5.29

(2.3)

Export

Cement

0.06

0.03

74.0

Clinker

0.08

0.00

100.0

Tot al export

0.14

0.03

310.0


(6)

Ret ail (resident ial) sector is t he largest consumer of cement

in Indonesia

Bag

77.5%

Bulk

22.5%

Ready-mix (infrast ruct ure):

±

60%

Fabricat or (pre-cast , fiber cement , cement based indust ry):

±

35%

Project s (mortar, render):

±

5%

Ready-mix (infrast ruct ure):

±

60%

Fabricat or (pre-cast , fiber cement , cement based indust ry):

±

35%

Project s (mortar, render):

±

5%

Housing:

±

90%

Cement based indust ry:

±

10%

Housing:

±

90%

Cement based indust ry:

±

10%

±

±

Source: Int ernal Research


(7)

7

M arket by Geography

Source: Company dat a, Cent ral Bureau of St at ist ics, Indonesia Cement Associat ion Source: Company dat a, Cent ral Bureau of St at ist ics, Indonesia Cement Associat ion

Domestic M arket Share

Semen Indonesia’ market destinations


(8)

Current overcapacity condition


(9)

9

Source: Com pany dat a, Indonesian Cem ent Associat ion & BPS St at ist ic


(10)

Infrast ruct ure Spending Planned for 2015 – 2019

(USD Bn)

Infrastructure Development

Commercial and Industrial

High grow t h in retail, commercial and

inst it ut ional sector in urban and semi-urban area

High grow t h indust ry segment (precast , light brick,

cement fiber, pave, ready mixed concrete)

Housing

Populat ion Grow t h

Rising per Capita Incom e

M ass urbanizat ion

Cement Consumption (kg/ capita)

Rapidly Grow ing

Product ive Populat ion

Key factors supporting domestic cement demand

172

42

106

113

433

Cent ral

Govt

Regional

Govt

SOEs

Privat e

Tot al

Potential M arket

The fourt h largest populat ion in t he world: 240

m illions people (2014)

Demographic Bonus


(11)

11

Arising infrastructure activities

Source: Company dat a, Indonesia Cement Associat ion Source: Company dat a, Indonesia Cement Associat ion


(12)

Strategic Projects

These st rategic project s are to ensure t he

Strategic Proj ects

Capacity

Investment

(US$mn)

Construction

Start up commercial

Start

Completion

Indarung

VI-Sumat era Barat

3. 0

Mt

352

Q2-2013

Q4-2016

April 17

Rembang –

Jawa Tengah

3. 0

Mt

403

Q2-2013

Q4-2016

Await ing f or t he new

environment al permit s

Grinding mil l

Jawa Barat

2. 0

Mt

61. 1

Q2-2015

Q4-2016

2Q17

Wast e Heat Recovery


(13)

13

Integrated Cement Plant

4 location

Kiln

15 Unit

Cement M ill

26 Unit

Grinding Plant

2 location

Cement M ill

4 Unit

Warehouse

30 location

Packing Plant

24 location

Sea Port

12 location

Kiln

1 unit

Cement M ill

1 unit

Kiln

5 unit

Cement M ill

8 unit

Kiln

5 unit

Cement M ill

11 unit

Grinding

Plant

1 unit Cement

M ill

Kiln

4 unit

Cement M ill

6 unit

Grinding

Plant

3 unit Cement

M ill


(14)

Financial Summary – FY 2016

EBITDA

Net profit

In Rpbn

2016

2015

Change

Revenue

26,134

26,948

-3.0%

Cost revenue

16,278

16,302

-0.1%

Gross profit

9,856

10,646

-7.4%

Operat ing expenses

4,629

4,700

-1.5%

Operat ing incom e

5,227

5,946

-12.1%

EBITDA

6,962

7,473

-6.8%

Pre-tax profit

5,085

5,851

-13.1%

Net profit after m inority

4,522

4,521

0.0%

EPS (Rp)

762

762

0.0%

Ratio

EBITDA m argin

26.6%

27.7%

-1.1%

Gross m argin

38%

40%

-2%

Int erest coverage - x

19

20

(1)

Cost ratio

80%

78%

2%

Net debt to equit y

0.12

0.00

12%

Debt t o equity

0.22

0.15

6%

Debt t o EBITDA

0.90

0.54

36%

Receivable turnover - days

54

48

6


(15)

15

Balance Sheet

Cash balance (Rpbn)

Total debt (Rpbn)


(16)

M argin & Returns

Ret urn on Equit y (%)

Ret urn on Asset s (%)


(17)

17

Cost structure

Energy prices in US$/ unit

Cash COGS Rp000/ t

Rp000/ t

2016

2015

Change

Raw m at erials

33

35

-6%

Fuel

97

107

-10%

Elect ricit y

94

101

-6%

Labor

53

49

8%

M aint enance

50

50

0%

Depreciat ion

54

47

14%

GA,t ax,insurance

22

20

10%

Packaging

28

27

3%

Transportat ion

62

82

-24%

Ot hers

67

50

34%

Cost of goods sold

559

568

-2%

Unit cash COGS (US$/ t)

505

520

-3%

Selling expense

93

93

1%

G& A

74

73

2%

Tot al cost

598

591

1%


(18)

EBITDA margin vs utilisation rate

Source: Company dat a Source: Company dat a


(19)

19

EBITDA margin vs oil and coal prices

Source: Company dat a Source: Company dat a


(20)

Development New Industrial Estates is a catalyst for

cement demand

Semen Indonesia

Packing Plant

New Indust rial

Estate Area


(21)

21

Infrastructure Projects (2015 – 2019)

If 1% from total project

value w ere spent for

cement , w e est imate

cement requirement for

t hese project s of around

10-12 mt per annum.

Infrast ruct ure budget cut

Rp7t n for 2016, but not

affect ing main t rans road in

Papua and Java.

Sector

Amount % of total

(Rptn)

Road infrastructure

733

15%

Railway infrast ruct ure

226

5%

Sea transport at ion

591

12%

Air t ransportation

144

3%

Land t ransportation

47

1%

Urban transport at ion

86

2%

Elect ricity infrastructure

1,000

21%

Oil & gas infrastructure

507

11%

Telecom m unication and Inform at ion infrast ruct ure

280

6%

Water resources

451

9%

Drinking and w aste wat er

403

8%

Housing

328

7%

Total

4,796

100%

Annual spending

959

20%

APBN-P 2016

2,083

APBN-P for infrastructure 2016

314

33%

Private portion

645

67%


(22)

Infrastructure Spending in State Budget

Source: M inist ry of Finance

Amount in Rp trillion

2017

2015

APBN APBN-P

APBN APBN-P

Economic infrastructure

336.9

307.1

302.3

280.0

M inistrial spending

161.0

151.2

165.5

196.4

M inistry of Public Work and Public Housing

102.9

94.7

101.7

111.1

M inistry of Transport ation

44.9

39.9

45.5

59.1

M inistry of Agricult ure

2.9

4.1

5.3

8.9

M inistry of Energy and M ineral Resoures

3.8

3.7

4.6

8.1

Non-ministrial spending

2.7

5.9

5.3

6.8

Transfer to Region and Village Fund

133.7

88.0

83.4

41.0

Payment Funding

39.5

62.1

48.3

35.7

Social infrastructure

5.5

5.7

6.5

6.5

Infrastructure support

4.2

4.2

4.4

3.9

M inist ry of Agrarian & Spat ial Planning

0.2

0.3

0.3

1.3

M inist ry of Indust ry

0.6

0.4

0.5

0.3

Total

346.6

317.1

313.5

290.3


(23)

23

Instrastructure funding is priority

The infrast ruct ure is t he

government ’ priorit y

Get s funding priorit y despit e t ax

revenue not achieving t arget

Key risks are more on t he project

risks such as land acquisit ion.

Increasing government ’ debt t o

around US$137bn by end of 2015

Government ’s securit ies also

increased t o around Rp1.37t n by

end of 2015


(24)

BRIEF HISTORY

BRIEF HISTORY

SM GR CAPACITY BUILD-OUT (M M TONS)

SM GR CAPACITY BUILD-OUT (M M TONS)

31,8 mn tons

Semen Indonesia highlights

1957 : Inauguration of Gresik I, installed capacity of

250,000 ton cement per annum

1991 : Initial Public Offering, Market Cap.: IDR0.63tn,

resulting shareholding structure post IPO:

Government of Republic of Indonesia: 73%

Public: 27%

1995 : Acquisition of PT Semen Padang (Persero) and

PT Semen Tonasa (Persero)

1998 : Cemex became a strategic partner, Market Cap.:

IDR4.9tn

2006 : Blue Valley Holdings bought Cemex’s 24.9%

stake in SMGR, Market Cap.: IDR21.5tn

2010 : In March 31, Blue Valley Holdings sold all of its

stake ownership in SMGR, Market Cap per April 30,

2010: IDR72.1tn

2011 : Total installed capacity of 20.00mm tons, Market

Cap per June 29, 2012: IDR67.0tn

2012 : Acquisition of Thang Long Cement Vietnam, Total

installed capacity of 2.3mm tons, Market Cap Dec 19

th

,

2012: IDR91.9tn

2013: Transformed to PT Semen Indonesia (Persero)

Tbk as strategic holding co.

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0


(25)

25

Semen Indonesia as strategic holding company

99,9%

99,9%

70,0%

55,0%

SP

ST

TLCC

PT Unit ed Tract ors

Sem en Gresik

97,0%

PT SGG Energi Prim a

60,0%

PT Indust ri Kem asan

Sem en Gresik

65,0%

PT Kaw asan Indust ri

Gresik

99,99%

PT SI Bet on

73,65%

PT Varia Usaha

25%

PT Sw adaya Graha

17,6%

99,9%

SG

N

O

N

C

E

M

E

N

T

C

O

M

P

A

N

Y

50,0%

PT Krakat au Sem en

Indonesia

CEM ENT COM PANY

Komposisi Pemegang Saham Per 31

Desember 2016

85%

PT Et ernit Gresik

PT SISI

No

Shareholders

%

1

Government RI

51.01

2

Foreign Inst it ut ion

37.74

3

Foreign Individual

0.03

4

Domest ic Inst it ut ion

9.26

5

Domest ic Individual

1.97

PT SII


(26)

IMPORTANT NOTICE

THIS PRESENTATION IS NOT AND DOES NOT CONSTITUTE OR FORM PART OF, AND IS NOT MADE IN CONNECTION WITH, ANY OFFER FOR SALE OR SUBSCRIPTION OF OR SOLICITATION, RECOMMENDATION OR INVITATION OF ANY OFFER TO BUY OR SUBSCRIBE FOR ANY SECURITIES NOR SHALL IT OR ANY PART OF IT FORM THE BASIS OF OR BE RELIED ON IN CONNECTION WITH ANY CONTRACT, COMMITMENT OR INVESTMENT DECISION WHATSOEVER.

THE SLIDES USED IN THIS PRESENTATION ARE STRICTLY CONFIDENTIAL AND HAVE BEEN PREPARED AS A SUPPORT FOR ORAL DISCUSSIONS ONLY. THE INFORMATION CONTAINED IN THIS PRESENTATION IS BEING PRESENTED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED OR REDISTRIBUTED TO ANY OTHER PERSON, IN WHOLE OR IN PART.

This presentation includes forward-looking statements, which are based on current expectations and forecast about future events. Such statements involve known / unknown risks uncertainties and other factors, which could cause actual results to differ materially from historical results or those anticipated. Such factors include, among others:

● economic, social and political conditions in Indonesia, and the impact such conditions have on construction and infrastructure spending in Indonesia; ● the effects of competition;

● the effects of changes in laws, regulations, taxation or accounting standards or practices; ● acquisitions, divestitures and various business opportunities that we may pursue; ● changes or volatility in inflation, interest rates and foreign exchange rates;

● accidents, natural disasters or outbreaks of infectious diseases, such as avian influenza, in our markets; ● labor unrest or other similar situations; and

● the outcome of pending or threatened litigation.

We can give no assurance that our expectations will be attained.

DISCLAIMER

The information contained in this report has been taken from sources which we deem reliable. However, none of PT Semen Indonesia (Persero) Tbk and/or its affiliated companies and/or their respective employees and/or agents make any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relation to, the accuracy or completeness of the information and opinions contained in this report or as to any information contained in this report or any other such information or opinions remaining unchanged after the issue thereof.

We expressly disclaim any responsibility or liability (express or implied) of PT Semen Indonesia (Persero) Tbk, its affiliated companies and their respective employees and agents whatsoever and howsoever arising (including, without limitation for any claim, proceedings, action, suits, losses, expenses, damages or costs) which may be brought against or suffered by any person as a result of acting in reliance upon the whole or any part of the contents of this report and neither PT Semen Indonesia (Persero) Tbk, its affiliated companies or their respective employees or agents accepts liability for any errors, omission or mis-statements, negligent or otherwise, in the report and any liability in respect of the report or any inaccuracy therein or omission therefrom which might otherwise arise is hereby expresses disclaimed.

Thank You

M ain Office: M ain Building of Sem en Gresik Jln. Vet eran Gresik 61122 – Indonesia Phone: (62-31) 3981731 -2, 3981745 Fax: (62-31) 3983209, 3972264

Representative Office: The East Building, 18 floor

Jl. Lingkar M ega Kuningan Blok E 3.2 No. 1, JAKARTA – 12950

Telp.: 021 – 5261174, 5261175; Faks : 021 – 5261176


(1)

Infrastructure Projects (2015 – 2019)

If 1% from total project

value w ere spent for

cement , w e est imate

cement requirement for

t hese project s of around

10-12 mt per annum.

Infrast ruct ure budget cut

Rp7t n for 2016, but not

affect ing main t rans road in

Papua and Java.

Sector

Amount % of total

(Rptn)

Road infrastructure

733

15%

Railway infrast ruct ure

226

5%

Sea transport at ion

591

12%

Air t ransportation

144

3%

Land t ransportation

47

1%

Urban transport at ion

86

2%

Elect ricity infrastructure

1,000

21%

Oil & gas infrastructure

507

11%

Telecom m unication and Inform at ion infrast ruct ure

280

6%

Water resources

451

9%

Drinking and w aste wat er

403

8%

Housing

328

7%

Total

4,796

100%

Annual spending

959

20%

APBN-P 2016

2,083

APBN-P for infrastructure 2016

314

33%

Private portion

645

67%


(2)

Infrastructure Spending in State Budget

Amount in Rp trillion

2017

2015

APBN APBN-P

APBN APBN-P

Economic infrastructure

336.9

307.1

302.3

280.0

M inistrial spending

161.0

151.2

165.5

196.4

M inistry of Public Work and Public Housing

102.9

94.7

101.7

111.1

M inistry of Transport ation

44.9

39.9

45.5

59.1

M inistry of Agricult ure

2.9

4.1

5.3

8.9

M inistry of Energy and M ineral Resoures

3.8

3.7

4.6

8.1

Non-ministrial spending

2.7

5.9

5.3

6.8

Transfer to Region and Village Fund

133.7

88.0

83.4

41.0

Payment Funding

39.5

62.1

48.3

35.7

Social infrastructure

5.5

5.7

6.5

6.5

Infrastructure support

4.2

4.2

4.4

3.9

M inist ry of Agrarian & Spat ial Planning

0.2

0.3

0.3

1.3


(3)

Instrastructure funding is priority

The infrast ruct ure is t he

government ’ priorit y

Get s funding priorit y despit e t ax

revenue not achieving t arget

Key risks are more on t he project

risks such as land acquisit ion.

Increasing government ’ debt t o

around US$137bn by end of 2015

Government ’s securit ies also

increased t o around Rp1.37t n by

end of 2015


(4)

BRIEF HISTORY

BRIEF HISTORY

SM GR CAPACITY BUILD-OUT (M M TONS)

SM GR CAPACITY BUILD-OUT (M M TONS)

31,8 mn tons

Semen Indonesia highlights

1957 : Inauguration of Gresik I, installed capacity of

250,000 ton cement per annum

1991 : Initial Public Offering, Market Cap.: IDR0.63tn,

resulting shareholding structure post IPO:

Government of Republic of Indonesia: 73%

Public: 27%

1995 : Acquisition of PT Semen Padang (Persero) and

PT Semen Tonasa (Persero)

1998 : Cemex became a strategic partner, Market Cap.:

IDR4.9tn

2006 : Blue Valley Holdings bought Cemex’s 24.9%

stake in SMGR, Market Cap.: IDR21.5tn

2010 : In March 31, Blue Valley Holdings sold all of its

stake ownership in SMGR, Market Cap per April 30,

2010: IDR72.1tn

2011 : Total installed capacity of 20.00mm tons, Market

Cap per June 29, 2012: IDR67.0tn

2012 : Acquisition of Thang Long Cement Vietnam, Total

installed capacity of 2.3mm tons, Market Cap Dec 19

th

,

2012: IDR91.9tn

2013: Transformed to PT Semen Indonesia (Persero)

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0


(5)

Semen Indonesia as strategic holding company

99,9%

99,9%

70,0%

55,0%

SP

ST

TLCC

PT Unit ed Tract ors

Sem en Gresik

97,0%

PT SGG Energi Prim a

60,0%

PT Indust ri Kem asan

Sem en Gresik

65,0%

PT Kaw asan Indust ri

Gresik

99,99%

PT SI Bet on

73,65%

PT Varia Usaha

25%

PT Sw adaya Graha

17,6%

99,9%

SG

N

O

N

C

E

M

E

N

T

C

O

M

P

A

N

Y

50,0%

PT Krakat au Sem en

Indonesia

CEM ENT COM PANY

Komposisi Pemegang Saham Per 31

Desember 2016

85%

PT Et ernit Gresik

PT SISI

No

Shareholders

%

1

Government RI

51.01

2

Foreign Inst it ut ion

37.74

3

Foreign Individual

0.03

4

Domest ic Inst it ut ion

9.26


(6)

IMPORTANT NOTICE

THIS PRESENTATION IS NOT AND DOES NOT CONSTITUTE OR FORM PART OF, AND IS NOT MADE IN CONNECTION WITH, ANY OFFER FOR SALE OR SUBSCRIPTION OF OR SOLICITATION, RECOMMENDATION OR INVITATION OF ANY OFFER TO BUY OR SUBSCRIBE FOR ANY SECURITIES NOR SHALL IT OR ANY PART OF IT FORM THE BASIS OF OR BE RELIED ON IN CONNECTION WITH ANY CONTRACT, COMMITMENT OR INVESTMENT DECISION WHATSOEVER.

THE SLIDES USED IN THIS PRESENTATION ARE STRICTLY CONFIDENTIAL AND HAVE BEEN PREPARED AS A SUPPORT FOR ORAL DISCUSSIONS ONLY. THE INFORMATION CONTAINED IN THIS PRESENTATION IS BEING PRESENTED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED OR REDISTRIBUTED TO ANY OTHER PERSON, IN WHOLE OR IN PART.

This presentation includes forward-looking statements, which are based on current expectations and forecast about future events. Such statements involve known / unknown risks uncertainties and other factors, which could cause actual results to differ materially from historical results or those anticipated. Such factors include, among others:

● economic, social and political conditions in Indonesia, and the impact such conditions have on construction and infrastructure spending in Indonesia; ● the effects of competition;

● the effects of changes in laws, regulations, taxation or accounting standards or practices; ● acquisitions, divestitures and various business opportunities that we may pursue; ● changes or volatility in inflation, interest rates and foreign exchange rates;

● accidents, natural disasters or outbreaks of infectious diseases, such as avian influenza, in our markets; ● labor unrest or other similar situations; and

● the outcome of pending or threatened litigation.

We can give no assurance that our expectations will be attained.

DISCLAIMER

The information contained in this report has been taken from sources which we deem reliable. However, none of PT Semen Indonesia (Persero) Tbk and/or its affiliated companies and/or their respective employees and/or agents make any representation or warranty (express or implied) or accepts any responsibility or liability as to, or in relation to, the accuracy or completeness of the information and opinions contained in this report or as to any information contained in this report or any other such information or opinions remaining unchanged after the issue thereof.

We expressly disclaim any responsibility or liability (express or implied) of PT Semen Indonesia (Persero) Tbk, its affiliated companies and their respective employees and agents whatsoever and howsoever arising (including, without limitation for any claim, proceedings, action, suits, losses, expenses, damages or costs) which may be brought against or suffered by any person as a result of acting in reliance upon the whole or any part of the contents of this report and neither PT Semen Indonesia (Persero) Tbk, its affiliated companies or their respective employees or agents accepts liability for any errors, omission or mis-statements, negligent or otherwise, in the report and any liability in respect of the report or any inaccuracy therein or omission therefrom which might otherwise arise is hereby expresses disclaimed.

Thank You

M ain Office:

M ain Building of Sem en Gresik Jln. Vet eran Gresik 61122 – Indonesia Phone: (62-31) 3981731 -2, 3981745 Fax: (62-31) 3983209, 3972264

Representative Office: The East Building, 18 floor

Jl. Lingkar M ega Kuningan Blok E 3.2 No. 1, JAKARTA – 12950