Semen Indonesia to Add Capacity Starting 2016

PT Semen Indonesia (SMGR IJ, Neutral , TP: IDR18,150) will build additional production facility in Aceh, North Sumatra with estimated capacity of 3m tonnes. Management stated that the construction will begin in 2H15 or 2016 and the factory will cater to demand from Aceh, Riau, and its surrounding. On the other hand, the company also plan to build a factory in Papua with estimated capacity of 1m tonne and investment value of USD150m. Overall, the company intends to raise capacity to reach 40m tonnes per annum by 2017 backed by the positive sentiment from future infrastructure development. On another note, the company will also raise ASP by IDR15,000-20,000 per tonne in October to offset higher electricity tariff and weaker IDR.