Broker sees easing competition for cement industry in Indonesia next year

Recent deals changed the landscape for the industry.

Some deals locked by cement firms will ease the competition of the sector in industry by 2023, CGS-CIMB said.

In September 2022, two deals occurred in Indonesia's cement industry that changed the supply dynamics.

SMGR announced that it would conduct a rights issue to acquire Semen Baturaja, and INTP announced that it signed a 3-year lease agreement to operate Semen Bosowa's integrated plant in Maros.

After these deals, it is estimated that SMGR and INTP combined would have 83.2mtpa of integrated capacity, or approximately 80% of total domestic cement supply in Indonesia.

This is expected to improve pricing competition, particularly in Sumatra, eastern Java, and Sulawesi.

The impact on SMGR's financials will depend on the synergies from the acquisition and the number of shares issued during the rights issue, while INTP is likely to see a positive impact on its financials due to attractive lease costs.

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