BUY, 29% Upside

13th August 2026

Price Rp 5,325

Target price Rp 6,880

Investment Consideration

Double Digit Growth in Domestic Cement Demand

• Indonesia’s cement industry recorded strong growth in 1H26, with domestic demand increasing 10.2% YoY to 29.9 million tons (mt), supported by improving construction activity during the dry season. Growth was broad-based across product segments, with bag cement demand increasing 10.0% YoY to 21.52 mt and bulk cement demand rising 10.6% YoY to 8.4 mt.
• INTP also recorded a solid recovery in 1H26, with total domestic cement sales volume increasing 4.9% YoY to 8.39 mt. Growth was mainly driven by bulk cement sales, which rose 8.6% YoY to 2.44 mt, supported by stronger demand in both Java and outside Java. Bag cement sales also increased 3.5% YoY to 5.96 mt. Drier weather conditions helped accelerate construction activity across several regions.
• Export volume nearly doubled, increasing 99.7% YoY to 473 thousand tons, primarily supported by higher clinker shipments. Management highlighted Australia as an attractive export market due to more favorable pricing.
• INTP’s sales growth outpaced the industry in June, supported by earlier bag cement price adjustments, while several competitors implemented increases later. Indocement progressively raised prices during April, May, and June to pass through higher logistics costs and the impact of rupiah depreciation. Meanwhile, INTP’s domestic market share remained broadly stable at around 28.1%.
• Looking ahead, management remains cautiously optimistic on the industry outlook, supported by seasonally stronger construction activity and infrastructure-related demand from toll road projects, MRT and LRT development, and coastal and sea wall projects.
• Demand is expected to remain relatively strong through August, partly supported by increased activity ahead of Independence Day. However, September to November are typically seasonally weaker months, which could result in softer sequential volumes toward year-end.
• Management currently targets FY2026 sales volume growth of around 4%–6% YoY. Key risks include persistently high foreign exchange rates and elevated energy prices, which could affect both construction activity and input costs. Regulatory uncertainty surrounding the coal Domestic Market Obligation (DMO) also remains a concern, as management indicated that Indocement may not receive a DMO coal allocation until January 2027.

Q2 2026 Results: Margins improve on Higher ASP and Volumes

• INTP reported revenue of IDR4.60 trillion in 2Q26, increasing 13.6% YoY and 19.8% QoQ, supported by progressive selling-price increases during the quarter and a sharp increase in export volumes.
• Net profit increased 22.0% YoY and 61.1% QoQ to IDR374 billion, resulting in an improved net profit margin of 8.1%. Gross profit rose 15.2% YoY to IDR1.41 trillion, while gross profit margin expanded to 30.6%, reflecting stronger pricing and improved operating leverage.
• Cost of revenue increased 12.8% YoY, reflecting higher raw material costs (+17.1% YoY), logistics costs (+25.9% YoY), packaging costs (+8.3% YoY), and fuel and power expenses (+6.5% YoY). Despite these cost pressures, progressive selling-price adjustments helped protect profitability and support margin expansion.
• Looking ahead, we expect stronger volumes and higher average selling prices to remain the principal earnings drivers. INTP is well positioned to benefit from the recovery in domestic cement demand, supported by its strong market position, disciplined pricing strategy, and healthy balance sheet.

Valuation: Maintain BUY TP 6,880 (+29% Upside)

• We maintain our BUY recommendation on INTP with a 12-month target price of IDR6,880, implying 29% upside potential.
• Our valuation is based on a 2027F P/E multiple of 10.0x. We believe INTP’s improving margins, stronger pricing, recovering sales volumes, healthy balance sheet, and ongoing cost-efficiency initiatives should support earnings growth and position the company to benefit from a broader cement industry recovery.