Nomura Equity Research raised its target price on cement maker PT Indocement Tunggal Prakarsa Tbk to 26,900 rupiah from 23,400 rupiah and kept its ‘buy’ recommendation on higher production volume and improved enterprise value/earnings before interest taxes depreciation and amortization (EV/EBITDA).
“Despite recent outperformance of the cement sector and INTP’s share price, we still favour the sector, as in our view the cement sector and INTP will continue to benefit from rising infrastructure spending and a strong property market,” Nomura analyst Andy Lesmana wrote in a note on Monday.
Given high demand and tight supply, Nomura said it expects cement companies, including INTP, to raise prices, partly to pass on the impact of potentially higher operating costs.
“We also expect that additional volume from INTP’s new plant, which INTP expects to complete in 4Q13, to be a catalyst for the share price,” it added
Indocement’s selling price has rsien 6.4 percent as of September, the fastest in the past three years due to strong demand and tight supply, which helped improve the company’s operating margins and mitigate potential rising operating costs, the note said.
Shares of the cement firm were down 0.45 percent at 22,300 rupiah, while the broader index was up 0.37 percent. 1045 (0345 GMT) (Reporting by Andjarsari Paramaditha, Editing by Sunil Nair)