National cement sales volume in 1Q25 reached 13.16 million tons (-7.8% YoY ; -25.9% QoQ), missing both our forecast (20.6%) and the five-year average
(23.1%). The weak performance was mainly driven by prolonged rainy weather and fewer effective working days caused by clustered public holidays and the Ramadan–Eid period shifting into the first quarter, which dampened construction activity.

Bulk cement experienced the steepest decline, with volume falling to 3.72 million tons (-15.3% YoY; -31.5% QoQ). Demand weakened broadly across regions, with Java down -4.1% YoY and non-Java areas contracting sharply by -30.4% YoY. Kalimantan was the hardest hit, posting a -36.9% YoY decline (-19.2% QoQ), largely due to delays in the Nusantara Capital City (IKN) project.

Meanwhile, bagged cement sales volume reached 9.44 million tons (-4.4% YoY ; -23.4% QoQ). The decline was more pronounced in Java (-8.0% YoY), while non-Java regions showed more resilience with only a -1.2% YoY drop. At the company level, SMGR’s volume decreased to 8.57 million tons (-6.6% YoY; -16.6% QoQ), whereas INTP demonstrated relatively stronger performance at 3.96 million tons (-6.0% YoY; -24.4% QoQ).

Despite market headwinds, Indocement strengthened its market share to 30.7% in 3M25 (vs 29.5% in 2M25). Conversely, SMGR’s share slipped to 46.0% in 3M25 (vs 48.0% in 2M25), reflecting its sales volume contraction and a weakening bagged cement segment contribution (69.4% in 3M25 from 72.0% in 2M25), pressured by softer retail demand. Indocement also faced challenges, with volume down -5.9% YoY, driven by declines in both bagged (-3.2%) and bulk cement (-12.1%).

We expect cement demand to recover as the low season ends and drier weather returns historically supporting increased construction activity. Accordingly, we anticipate stronger results in Q2 and Q3. However, government budget cuts constrain upside potential, with volume growth forecast at a modest 0.5%–1% for FY25F (Indust : 1%–2% in FY25F). Bulk cement’s contribution is projected to contract to ~28% in FY25F (vs 30.7% in FY24).

We assign a Neutral rating to the cement sector given the headwinds from budget reductions and stagnant bagged cement demand, combined with a declining bulk cement contribution and lack of overall volume recovery momentum. However, we give a BUY recommendation on INTP with a target price of IDR 6,500, supported by an attractive EV/EBITDA valuation of 5.33x/4.70x for FY25E/FY26F. Downside Risks: 1) Larger or prolonged government infrastructure budget cuts, 2) Volatility in raw material and energy prices, 3) Intensified price competition affecting margins and market share.

By PHINTRACO SEKURITAS | Research
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