Global Market Highlights
The DJIA weakened -0.48% on Thursday (31/08), followed by the S&P500 (-0.16%) while the Nasdaq (+0.11%). Wall Street closed mixed, influenced by the release of PCE deflator data. In addition, investors were also adopting a ‘wait and see’ approach ahead of the release of labor market data, which can provide insights into the Fed's monetary policy going forward. Today, the market will be looking toward several data releases such as: 1) US ISM Manufacturing PMI Aug-2023; 2) US Non Farm Payrolls Aug-2023; 3) US Unemployment Rate Aug-2023.
Domestic Update
• Consensus estimates suggest that the annual inflation rate will rise in Aug-2023, but there will be deflation on a monthly basis. MNCS Comment: The consensus estimate for the inflation rate in Aug-2023 is projected to be +3.3% YoY, an increase when compared to the figure in Jul-2023 which stood at +3.08% YoY. We believe this will be driven by the exposure to food commodity prices and the educational sector components as the new academic year begins, especially for higher education levels.
Company News
1. CLEO IJ recorded a net profit growth of +23.2% YoY, amounting to IDR126.1 billion in 1H23 (vs IDR102.4 billion in 1H22) (IQ Plus). MNCS Comment: This increase in net profit is supported by a revenue increase of +14.9% YoY to IDR752.3 billion (vs IDR655.1 billion in 1H22). Additionally, cost efficiency has been effectively managed, resulting in improved margins. The company's GPM/NPM rose to 40.6%/16.8%, respectively (vs 40.1%/15.6% previously). Currently, CLEO is traded at a level of 33.31x/6.50x PER/PBV.
2. AKRA IJ has entered into a strategic partnership by signing a conditional land purchase agreement and a letter of intent for the establishment of a joint venture company in JIIPE with Sichuan Hebang Biotechnology Co., Ltd (Hebang) (Kontan). MNCS Comment: We view the company's strategic efforts positively, which could boost its future performance. Hebang plans to set up a factory for chemical production worth USD800 million, covering an area of 67 Ha in JIIPE, and will hold a 10% ownership stake in the JV to be established. We expect this to enhance the company's revenue stream going forward. Currently, AKRA is traded at the level of 13.63x/2.56x PER/PBV.
3. ERAL IJ will form a JV with MST Golf Group Berhad (MST Golf) to operate a business focused on golf equipment, accessories, and golf apparel in Indonesia. It is noted that the investment value reaches IDR10.1 billion (Emiten News). MNCS Comment: We have observed that MST Golf has a strong track record, with revenues/net profit achieving a CAGR of +8.3% and +38.8% respectively for FY19-21. Furthermore, MST Golf also commands a 52% market share in terms of import volume in Malaysia. We view this business expansion positively as it can enhance the company's value in the future. Currently, ERAL is traded at level of 8.06x/2.03x PER/PBV.
IHSG Updates
JCI weakened -0.19% to 6,953.26 on Thursday (31/08), followed by net foreign sell reaching IDR847.18 billion. A number of sectors experienced weakness and weighed on the index, led by the health sector (-1.66%) followed by the infrastructure sector (-1.19%). On the other hand, the sectors that experienced strengthening were led by the technology sector (+0.74%) followed by the financial sector (+0.61%). The index weakened amidst a mixed Asian market, where investors tend to take profits and adopt a 'wait-and-see' approach in anticipation of the release of domestic macroeconomic data in early Sep-2023. The Rupiah closed higher at IDR15,230/USD. We estimate that the JCI will move in the price range of 6,932-6,976 pending the release of Inflation Rate Aug-2023, Core Inflation Rate Aug-2023, and Tourist Arrivals YoY Jul-2023 data. Today's recommendation: ADRO, AKRA, PGAS, SMGR.
Corporate Actions
RUPS: MDLN
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