SMGR CORP Presentation October 2016

(1)

UBS Indonesia Corporate Day

Singapore – Hongkong

(2)

• Design Capacit y

: 89.7 mt

• Product ion Capacit y : 75.5 mit

• Domest ic Grow t h

: 5.5%

• Domest ic Ut ilizat ion: 87%

• Supply



Domest ic

: 65 mt



Export

: 4.0 mt



Import

: 1.5 mt

Domestic Capacity (2016)

2016F

Cement companies in Indonesia

1. Semen Indonesia

30 mt

2. Semen Andalas

1.6 mt

3. Semen Bat uraja

2.0 mt

4. Indocement TP

25.9 mt

5. Holcim Indonesia

12.1 mt

6. Semen Bosowa

6.0 mt

7. Semen Kupang

0.5 mt

8. Semen Jui Shin

2.0 mt

9. Semen Puger

0.3 mt

10. Semen M erah Put ih

4.0 mt

11. Semen Anhui Conch

1.7 mt

12. Siam Cement

1.8 mt

13. Semen Pan Asia

1.8 mt

TOTAL

89.7 mio ton

(3)

(4)

Sales volume

M illion tonnes

Aug-16

Aug-15

Change (%)

8M 16

8M 15

Change (%)

Indonesia

Semen Indonesia

1.38

1.28 8.1%

8.78

8.61 2.0%

Semen Padang

0.63

0.56 13.8%

3.95

3.87 2.3%

Semen Tonasa

0.50

0.47 6.9%

3.49

3.29 5.9%

Total domestic

2.51

2.30 9.2%

16.22

15.77 2.9%

Export s

0.09

0.03 187.9%

0.36

0.35 4.1%

Total volume from Indonesia

2.60

2.33 11.6%

16.58

16.11 2.9%

Vietnam

Domest ic Viet nam

0.13

0.12 7.5%

1.15

1.05 9.8%

Export s

0.04 10.6%

0.50

0.51 -3.5%

Total volume from Viet nam

0.17

0.16 8.2%

1.64

1.56 5.4%

(5)

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

Indonesia sales volume

Semen Indonesia:

• Bag 76.4%

• Bulk 23.6%

Indust ry:

• Bag 76.8%

• Bulk 23.2%

Domestic consumption (million tons)

Area

Aug-16

Aug-15

Change (%)

8M 16

8M 15

Change (%)

Jakart a

0.45

0.44

4.4

3.08

3.42 (9.9)

Bant en

0.28

0.30 (7.6)

1.89

2.09 (9.7)

West Java

0.83

0.81

1.8

5.55

5.56 (0.2)

Cent ral Java

0.80

0.70

14.3

4.85

4.34

11.6 Yogyakart a

0.10

0.09

8.9

0.60

0.8 East Java

0.79

0.78

1.4

5.32

5.00

6.3 Total Java

3.25

3.12

4.1

21.29

21.02

1.3 Sumat era

1.36

1.15

17.6

8.40

7.72

8.8 Kalim ant an

0.42

0.39

5.8

2.69

3.05 (11.8)

Sulawesi

0.47

0.41

14.6

3.39

2.79

21.5 Nusa Tenggara

0.36

0.31

17.0

2.32

2.18

6.6 M aluku & Papua

0.12

0.11

9.9

0.98

0.86

13.6 Total out side Java

2.72

2.37

14.7

17.78

16.60

7.1 Total Indonesia

5.97

5.49

8.7

39.07

37.62

3.9 Export

Cement

0.04

0.03

34.7

0.30

0.37 (17.7)

Clinker

0.15

0.13

14.2

0.72

0.30

139.7 Total export

0.19

0.16

18.2

1.02

0.67

52.8

(6)

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

in Indonesia

Bag

77%

Bulk

23%

• 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)

M arket by Geography

Source: Company dat a, Cent ral Bureau of St at ist ics Source: Company dat a, Cent ral Bureau of St at ist ics

Domestic M arket Share

Semen Indonesia’ market destinations

(8)

Current overcapacity condition

(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 Income



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

millions people (2014)













Demographic Bonus

(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

Completion

Indarung

VI-Sumat era Barat

3. 0

Mt

352 Q2-2013

Q4-2016

Rembang –

Jawa Tengah

3. 0

Mt

403 Q2-2013

Q4-2016

Grinding mil l

Jawa Barat

2. 0

Mt

61. 1

Q2-2015

Q4-2016

Wast e Heat

Recovery Power

Generat ion

30. 6 MW

49. 3

Q4-2014

Q4-2016

Project s completed in 2015:

• Packing Plant Pont ianak

• Packing Plant Balikpapan

• Packing Plant Lampung

• Grinding Plant Dumai

• New Coal M ill Tonasa

Rembang Project – Central Java

Pre-heat er area

Indarung Project – West Sumatra

(13)

Integrated Cement Plant

4 location

Kiln

13 Unit

Cement M ill

22 Unit

Grinding Plant

2 location

Cement M ill

4 Unit

Warehouse

30 location

Packing Plant

25 location

Sea Port

12 location

Kiln

1 unit

Cement M ill

1 unit

Kiln

4 unit

Cement M ill

6 unit

Kiln

4 unit

Cement M ill

9 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 – First half 2016

EBITDA

Net profit

In Rpbn

6M 16

6M 15 Change

Revenue

12,470

12,640

-1.3%

Cost revenue

7,483

7,635

-2.0%

Gross profit

4,988

5,006

-0.4%

Operat ing expenses

2,373

2,212

7.3%

Operat ing incom e

2,615

2,794

-6.4%

EBITDA

3,405

3,515

-3.1%

Pre-t ax profit

2,574

2,798

-8.0%

Net profit

1,965

2,185

-10.1%

EPS (Rp)

331

368 -10.1%

Ratio

EBITDA m argin

27%

28%

0%

Gross margin

40%

0%

Int erest coverage - x

21

20

1 Cost rat io

79%

78%

1%

Net debt t o equit y

0.09

0.04 5%

Debt t o equit y

0.18

0.16 1%

Debt t o EBITDA

0.68

0.56 12%

Receivable t urnover - days

53

48

5

(15)

Balance Sheet

Cash balance (Rpbn)

Total debt (Rpbn)

Debt / EBITDA (x)

Net Debt / Equit y

341 252 251 225

769 1,964

3,944 4,083 3,913 3,999

4,648

(16)

M argin & Returns

Ret urn on Equit y (%)

Ret urn on Asset s (%)

(17)

Cost structure

Energy prices in US$/ unit

Cash COGS Rp000/ t

Rp000/ t

6M 16

6M 15

Change

Raw m aterials

35

37 -6%

Fuel

111

117 -5%

Electricity

97

106 -8%

Labor

57

52 9%

M aintenance

53

54 -3%

Depreciation

54

49 10%

GA,tax,insurance

20

21 -5%

Packaging

29

27 7%

Transportat ion

71

84 -15%

Ot hers

22

48 -55%

Cost of goods sold

548

595 -8%

Unit cash COGS (US$/ t)

494

546 -9%

Selling expense

103

93 11%

G& A

74

73 1%

(18)

EBITDA margin vs utilisation rate

Source: Company dat a Source: Company dat a

(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)

Infrastructure Projects (2015 – 2019)

If 1% from total project

value were spent for

cement , we 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

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 Infrastructure support

4.2

4.4

3.9 M inist ry of Agrarian & Spat ial Planning

0.2

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)

Instrastructure funding is priority



The infrast ruct ure is t he

government ’ priorit y



Get s funding priorit y despite tax

revenue not achieving target



Key risks are more on t he project

risks such as land acquisit ion.



Increasing government ’ debt to

around US$137bn by end of 2015



Government ’s securit ies also

increased to around Rp1.37t n by

end of 2015

(24)

Projection of Toll Road Development

(2015 – 2019)

(25)

BRIEF HISTORY

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

_,

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

(26)

Semen Indonesia as strategic holding company

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 SGG Prim a Bet on

24,95%

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 2015

85%

PT Et ernit Gresik

PT SISI

No

Shareholders

%

1 Government RI

51.01

2 Foreign Inst it ut ion

36.94

3 Foreign Individual

0.03

4 Domest ic Inst it ut ion

10.58

(27)

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 Semen Gresik Jln. Veteran 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 Spending in State Budget

Amount in Rp trillion

2017

2015

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 Infrastructure support

4.2

4.4

3.9 M inist ry of Agrarian & Spat ial Planning

0.2

0.3

1.3 M inist ry of Indust ry

0.6

0.4

0.5

0.3

(2)

Instrastructure funding is priority



The infrast ruct ure is t he

government ’ priorit y



Get s funding priorit y despite tax

revenue not achieving target



Key risks are more on t he project

risks such as land acquisit ion.



Increasing government ’ debt to

around US$137bn by end of 2015



Government ’s securit ies also

increased to around Rp1.37t n by

end of 2015

(3)

Projection of Toll Road Development

(2015 – 2019)

(4)

BRIEF HISTORY

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

_,

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

(5)

Semen Indonesia as strategic holding company

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 SGG Prim a Bet on

24,95%

PT Varia Usaha

25%

PT Sw adaya Graha

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 2015

No

Shareholders

%

1 Government RI

51.01

2 Foreign Inst it ut ion

36.94

(6)

IMPORTANT NOTICE

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

● 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

Thank You

M ain Office:

M ain Building of Semen Gresik Jln. Veteran 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