So far this year the market share of Semen Indonesia has fallen slightly to 42.8 percent (from 43.7 percent in 2014) due to increased competition in Indonesia's cement industry (and the emergence of a price war). In early 2015 Indonesian President Joko Widodo ordered all state-controlled cement producers to lower their selling prices by IDR 3,000 per bag in order to boost the infrastructure and property sectors (meaning that other cement producers needed to follow suit in order to stay competitive). Semen Indonesia was one of the state-controlled cement producers and as a result of the mandatory price decline it saw its shares tumbling in January as investors were not pleased to see lower profit forecasts. This sudden deep plunge was followed by a eight-month period of gradual decline until a rebound occurred in August when news about improved government spending on infrastructure projects injected some new life into the performance of domestic cement producers.

Stock Quote Semen Indonesia - SMGR:

The fact that Semen Indonesia controls a large portion of the market in combination with an expected surge in infrastructure projects and Semen Indonesia's eagerness to expand production capacity, puts the company in a good position to improve its operational and financial performance in 2016.

Over the next five years Semen Indonesia targets to expand production capacity by 13 million tons from the nearly 32 million tons (annually) at the start of 2015. New cement plants in Padang (West Sumatra) and Rembang (Central Java) are currently under construction and should be completed by 2017. Other plants that are being developed by Semen Indonesia are located in West Java, Kupang, Aceh and Papua. As such, by 2020, the company is estimated to have an annual production capacity of 43 million tons of cement.

Future Forecast of Semen Indonesia's Financial Highlights:

       2013      2014     2015F     2016F     2017F
Net Revenue   24,501.2   26,987.0   27,054.0   29,533.0   32,731.0
Net Income    5,370.2    5,565.0    4,807.0    5,436.0    6,270.0
EBITDA    8,099.0    8,303.4    7,748.0    8,655.0    9,712.0
P/E Ratio (x)       11.3       10.9       12.5       11.1       9.6
P/BV (x)       2.88       2.50       2.29       2.03      1.80

in billion IDR rupiah, except stated otherwise
Source: CIMB Securities

According to the latest data from the Indonesian Cement Association (ASI), Indonesia's cement sales climbed 10.7 percent (y/y) to 6.4 million tons in October 2015 as government-related infrastructure development picked up in the second half of the year. Such projects include the Bayung Lencir and Gorontola power plants as well as toll roads on Sumatra. In the first ten months of 2015, the nation's cement sales have reached 49.8 million tons, up 1.7 percent from sales in the January-October 2014 period.

Indonesian Cement Sales 2008-2015:

 Year    Cement Sales
   YoY Growth
 2015¹        63 million         +5.0%
 2014        60 million         +3.3%
 2013        58 million         +5.6%
 2012        55 million        +14.6%
 2011        48 million        +20.0%
 2010        40 million         +4.2%
 2009       38.4 million         +1.1%
 2008        38 million             -

¹ ASI forecast
Source: Indonesian Cement Association (ASI)