Global Market Highlights
The DJIA gained +0.07% on Monday (14/08), followed by the S&P500 (+0.57%) and the Nasdaq (+1.05%). Wall Street managed to compactly close in the positive zone, where investors were watching expectations for consumer inflation in Jul-2023 which fell to 3.5% (vs 3.8% previously). Today, the market will be looking toward several data releases such as: 1) US Retail Sales MoM Jul-2023; 2) Germany ZEW Economic Sentiment Index Aug-2023; 3) UK Unemployment Rate Jun-2023.
Domestic Update
• The Ministry of Finance reported that the State Revenue and Expenditure Budget in Jul-2023 recorded a surplus of IDR153.5 trillion, equivalent to 0.72% of GDP. MNCS Comment: The surplus was influenced by state revenue which increased +4.1% YoY, or reached 65.6% of the FY23E target. Meanwhile, the spending budget in July-2023 increased +1.2% YoY, or a new realization of 47.7%. With this surplus, the government still has room to maintain economic stability (pro-stability), especially ahead of exposure to El-Nino and supply risk of food staples.
Company News
1. ARCI IJ recorded a decrease in net profit -48.4% YoY to USD7.3 million in 1H23 (vs USD14.2 million in 1H22) (Emiten News). MNCS Comment: We recorded a decrease in net profit in line with: 1) decreased revenue -3.5% YoY; 2) decrease in other operating income -56.8% YoY; 3) increase in financial expenses +73.1% YoY. GPM managed to increase to 35.9% (vs 33.8% in 1H22), however OPM/NPM contracted to 24.7%/6.3% respectively (vs 26.2%/11.8% in 1H22) . Currently, ARCI is traded at the level of 43.77x/2.51x PER/PBV.
2. WIFI IJ plans to conduct a rights issue by issuing a total of 4.96 billion new shares, with exercise price of IDR260-280 (Market Bisnis). MNCS Comment: With proceeds in the range of IDR1.29-1.38 trillion, this can support the company's business expansion, especially in the wider fiber optic network coverage going forward. We hope that through this expansion it can boost the company's performance going forward. Currently, WIFI is traded at the level of 5.68x/0.72x PER/PBV.
3. ERAA IJ remains optimistic of the sales growth in 2H23, supported by the release of a new brand towards the end of the year (Kontan). MNCS Comment: In FY21-22, the company's average revenue in 2H was more dominant, namely 52% (vs 48% in 1H). We project ERAA's revenue in FY23E to reach IDR56.3 trillion, or an increase of +13.8% YoY. One of the products that will be looked forward to is the Iphone 15, Realme 11 pro 5G, and OPPO Reno 10. Currently, ERAA is traded at the level of 8.66x/1.16x PER/PBV.
IHSG Updates
JCI strengthened +0.44% to 6,910.17 on Monday (14/08), followed by net foreign sell reaching IDR539.99 billion. A number of sectors experienced strengthening and boosted the index rate, led by the raw materials sector (+1.69%) followed by the energy sector (+1.32%). On the other hand, sectors that experienced weakness were led by the transportation sector (-0.27%) followed by the cyclical sector (-0.06%). The movement of the index outperformed other Asian exchanges, where investors tend to be optimistic ahead of the release of the Jul-2023 trade balance data which is expected to maintain its surplus. The Rupiah closed lower at IDR15,315/USD. We estimate that the JCI will move in the price range of 6,876-6,920 pending the release of Balance of Trade Jul-2023, Exports YoY Jul-2023, and Imports YoY Jul-2023 data. Today's recommendation: AALI, ADRO, UNVR, WIFI.
Corporate Actions
RUPS: MPMX, GTSI, GOOD
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