15th June 2026

BUY 75% Upside

Price Rp 1530

Target price Rp 2680

Investment Considerations

Strong Cement Sales Momentum Supported by Improving Domestic Demand

• SMGR delivered a stronger operational performance in 1Q26, supported by improving domestic cement demand and a gradual recovery in retail market activity. Domestic cement demand increased by 4.6% YoY to 13.7 million tons during the quarter, mainly driven by stronger bag cement demand, which grew 6.9% YoY, while bulk cement demand remained relatively stable, declining only 0.1% YoY.
• In line with improving industry conditions, SMGR recorded domestic sales volume growth of 5.4% YoY to 6.54 million tons. The bag cement segment remained the primary growth driver, with sales volume increasing 11.0% YoY. Meanwhile, bulk cement sales declined 8.8% YoY, reflecting the company’s relatively higher exposure to government infrastructure projects in the prior-year period. Regional sales volume declined 8.0% YoY, resulting in overall sales volume growth of 1.7% YoY. SMGR’s domestic market share improved to 46.3% in 1Q26 from 46.1% in 1Q25.
• Although export sales remained lower on an annual basis, export performance showed sequential improvement in 1Q26, with export volume rising 29.4% QoQ. The recovery was supported by stronger demand from key export destinations such as Bangladesh and the company’s continued expansion into African markets. Management also highlighted potential opportunities in the US market but remains cautious given the current weak market conditions and declining cement prices.
• The recovery accelerated in April 2026. Domestic cement demand surged 35.0% YoY to 5.29 million tons, supported by stronger construction activity during the dry season. SMGR’s domestic sales increased 31.2% YoY to 2.52 million tons, while export sales declined 11.7% YoY to 538 thousand tons. Consequently, total group sales volume rose 17.9% YoY to 3.19 million tons.
• On a 4M26 basis, SMGR’s domestic sales increased 11.5% YoY to 9.06 million tons, while export sales declined 15.5% YoY to 2.24 million tons. As a result, total group sales volume reached 11.9 million tons, representing growth of 5.6% YoY.
• In line with stronger sales performance, SMGR recorded revenue growth of 8.3% YoY to IDR 8.28 trillion. The improvement was also supported by better pricing trends, with domestic ASP increasing 2.6% YoY. Bag cement ASP improved 1.1% QoQ, while bulk cement ASP increased 2.4% QoQ. Export ASP also strengthened significantly, rising 13.5% YoY and 5.9% QoQ.
• Following the cement price increase implemented in March 2026 amid higher fuel and packaging costs, management indicated that additional price adjustments remain under evaluation. Management also expects industry peers to gradually implement similar price increases, which could support sector profitability going forward.

Q1 2026: Lower Financing Costs Support Earning Recovery

• SMGR reported net profit of IDR 80.3 billion in 1Q26, increasing 88.7% YoY and 5.7% QoQ. The improvement was supported by better pricing discipline, operational efficiency initiatives, and significantly lower financing costs.
• Cost of revenue increased 8.6% YoY to IDR 6.62 trillion, in line with higher sales volume and rising fuel and energy costs, which increased 4.6% YoY. Variable cost of goods sold also rose by approximately 9%, mainly due to higher fuel and distribution expenses.
• Despite cost pressures, gross profit increased 6.9% YoY, while gross profit margin remained relatively stable at 20.1%. Profit before tax rose 53.9% YoY to IDR 156.3 billion, largely driven by a 35.4% decline in finance costs, which helped offset margin pressure from higher operating expenses. Operating profit margin also improved to 1.9%.
• On the corporate side, SMGR continues to evaluate efficiency initiatives under the Danantara framework, including plans to streamline and potentially consolidate its logistics business by the end of 2026. These initiatives are expected to support operational efficiency and enhance long-term profitability.

Valuation Maintain BUY, higher TP of IDR 2,680

• We maintain our BUY recommendation on SMGR with a revised target price of IDR 2,680, implying 75% upside potential. Our valuation is based on 31.0x 2027F P/E, reflecting expectations of gradual margin recovery, stronger pricing discipline, improving domestic demand, and continued operational efficiency initiatives. We believe SMGR is well positioned to benefit from a recovery in Indonesia’s cement industry while maintaining its leadership position in the domestic market.