The Ministry of Industry’s plan to apply energy refund program to boost exports of textile and textile products (TPT) is projected to lower the cost of goods sold (COGS) of PT Sri Rejeki Isman Tbk (SRIL) by 7%. Energy refund program is provided by the government to the industry to replace the electricity costs incurred during production. This program applies only to export products.
In a research report, PT Bahana Securities said the energy refund will be positive for Sri Rejeki Isman or Sritex, which has an export contribution of 47% of the total gross sales of the company last year. Bahana SRIL recommends buying shares with a target price of Rp 340 per share. At the close of trading on Thursday (9/6), SRIL stock price was at Rp 270 per share, down by 0.73% compared to the previous day’s closing price.
Sritex’s financial statements as per March 31, 2016 showed total gross sales reaching US $ 168.2 million, higher by 0.9% compared with the same period in 2015 which amounted to US $ 166.7 million. Meanwhile, the cost of goods sold or COGS rose by 6.99% from US $ 124.45 million in March 2015 to US$ 133.15. With COGS declining by 7%, the gross profit margin is expected to rise from 20.7% in March 2016 to 26.2% if other financial assumptions remain unchanged. (*)
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