Sep-26 domestic cement demand

Domestic cement consumption reached 6.0mn tons in Sep-26 (+0.1% MoM; +3.0% YoY), primarily driven by stronger bulk demand (+3.9% MoM; +8.2% YoY), while bag demand softened (-1.5% MoM; +0.8% YoY). Cumulatively, 9M26 consumption reached 48.1mn tons (+7.9% YoY), with bulk (+9.3% YoY) outpacing bag (+7.4% YoY). Regionally, bulk demand strengthened across both Java and outside Java, supported by favorable dry weather, project completion targets, and accelerated budget realization toward year-end, while bag demand growth was limited to Java.

- For INTP, volumes are broadly in line with industry trends. Sep-26 domestic volume reached 1.91mn tons (+1.7% MoM; +11.1% YoY), bringing 9M26 sales to 14.1mn tons (+7.8% YoY). YTD market share remained stable at 29.3% (vs. 29.3% in 9M25), while monthly market share improved to 31.6% (vs. 29.3% in Sep-25), indicating a recovery following earlier market share losses.

- Meanwhile, SMGR has yet to release its Sep-26 figures. However, Its Aug-26 domestic volume declined by –4.1%MoM; -5.6% YoY, with market share falling to 44.1% (vs. 48.6% in Aug-25), as coal supply constraints limited its ability to fully capture recovering demand. We believe this weakness could persist into Sep-26, as Management indicated coal supply disruptions have continued throughout the month.

Maintain NEUTRAL on cement sector

We maintain NEUTRAL on the cement sector, as demand recovery remains overshadowed by structural overcapacity, limited pricing power, and cost pressures. We maintain our recommendations as follows:

- INTP: BUY with lower TP at IDR 6,700/sh (from IDR 8,200/sh), implying 29% upside and 12.0x FY27F P/E. We favor its stronger earnings resilience and cost efficiency, while its 9% FY26F dividend yield provides an attractive income cushion.

- SMGR : Neutral with lower TP at IDR 1,700/sh (from IDR 2,800/sh), implying 3% upside and 16.0x FY27F P/E. We remain cautious, given weaker margins and coal supply constraints, with earnings recovery dependent on supply normalization and cost optimization.

We fine-tune our FY26F/27F earnings forecasts for INTP by -0.7%/+7.0%, while cutting that of SMGR by -56.1%/-29.5%, respectively, reflecting weaker-than-expected profitability amid persistent cost pressures.

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