PT Semen Gresik – Q2 2009

Posted on Thursday, October 15, 2009
Filed under Semen Gresik, Stalk the Winner, Value Stalking

Let's stalk the winner by stalking PT. Semen Gresik tbk

Who is Semen Gresik?
an Indonesian Cement company, specialized in:
Ordinary Portland cement type I, II, III and V;
Portland Pozzalana cement, gypsum and pozzolanic materials; Portland composite cement; Super Mansory cement; oil well cement class G high sulfate resistant, and special blended cement.

Or to cut it short, this is all-about-cement company.

 

Price @ 14 Oct 09 = Rp 6800

STALK THE WINNER (see the above tabulation image for reference)
From the tabulation, you may notice of the following:

5 Years Growth Rate (2004 – 2008)

Earning growth is at astonishing 37% average per year.

Net Margin is improving from 8% to 20%.
The indicator tells us that:
* company is gaining more moat advantageous over the years as it positions itself as the market leader.
* company is managed well and more efficiently.

Cash Flow is always positive and growing for 5 years
Although the company is expanding aggressively, the cash flow is managed extremely well.
This is achieved amid pressure to pay dividend regularly as normally required from state-owned company.

ROE growing from nice 14% to great 31%.
ROE is a good indicator of the return from our invested money.
To put bluntly, it is basically telling us that you get 30% return of your money invested in the companies.

Debt level
Until Q2 2009, total debt is Rp 230,578 compared to total cash of Rp 4,750,930. The debt level is just <5% of cash on hand.
Note: the healthy debt level is normally set as 30%

What could go wrong?
Now, everything is perfectly pointing to a Winner company.
So you ask me, what are you worrying about?
Let’s be paranoid, let’s ask ourselves, what is the consequences of being wrong?
Let give ourselves some margin of safety. Should we?
I would consider the company is valuable if the PE is less than 15.
Let’s see where is it now?
Price as @ 14 Oct 2009 is Rp 6800, with this price, PE is about 13.

What could be the catalyst?
Improvement in revenue will be the catalyst for the company.
Since it has achieved the awesome level of Profit Margin and efficiency.
It is now all up to the revenue.
If the revenue picks up strongly then just relax and watch the growth story.

If that is so, all you need to do is relax, get a pack of heci (a nice food from my hometown) and watch the great show ahead.

”If the job has been correctly done when a common stock is purchased, the time to sell it is … almost never”
~ Philips Fisher