SMGR Shares Seen Undervalued Amid Housing Push and Cement Demand Recovery
Main Takeaways
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JAKARTA, Investortrust.id — Shares of PT Semen Indonesia Tbk, or SMGR, are considered undervalued and poised for a rebound, with analysts citing the government’s flagship 3 million homes program and strengthening cement demand as key catalysts.
The company is projected to play a central role in the large-scale housing initiative, which aims to support national economic growth above 5% annually. With its expansive distribution network, state-owned backing, and large operational scale, SMGR is seen as an ideal supplier for building materials in the program.
In a research note published Wednesday, Cheryl Jennifer Wang, an analyst at Sucor Sekuritas, said, “SMGR shares are currently trading at a very cheap valuation—just 0.4 times price-to-book and 8.6 times price-to-free cash flow. At these levels, downside risk is highly limited.”
She added that the valuation implies as much as 35% upside potential, with the stock trading at a significant discount to its estimated fair value of Rp 3,700 per share.
Margins Set to Improve
The cement maker’s earnings outlook is also showing signs of improvement as sales volume recovers and operational cost-efficiency efforts begin to pay off. Roughly half of SMGR’s cost structure comprises fixed costs, making its margins highly sensitive to volume fluctuations. With demand gradually rebounding, analysts expect operating margins to expand by as much as 2.6 percentage points over the next three years—even without factoring in direct gains from the housing program.
Despite a projected slight dip in annual revenue—from Rp 36.18 trillion to Rp 35.77 trillion—SMGR’s net profit is expected to rise to Rp 772 billion this year, up from Rp 720 billion in the same period last year.
Strategic Positioning in Government Push
The 3 million homes initiative has been positioned as a cornerstone of President Prabowo Subianto’s economic strategy. SMGR’s strategic advantage, derived from its national footprint and government affiliation, places it in a strong position to capitalize on rising cement demand as construction activity intensifies.
With macroeconomic recovery underway and cement consumption expected to grow alongside it, SMGR could reverse the downtrend seen in the past three years. Analysts are optimistic that the housing program will serve as a strong external catalyst to accelerate the company’s turnaround.