Global Market Highlights
The DJIA increased by +0.91% on Thursday (15/02), followed by the S&P 500 (+0.58%) and the Nasdaq (+0.30%). Wall Street continued its strengthening in the middle of US macroeconomy dataset release. Retail Sales shrank -0.8% MoM or +0.6% YoY in Jan-2024 (vs +5.3% YoY Dec-2023) followed by decreasing in manufacturing production (-0.9% YoY) and flat industrial production (0% YoY) in the same period, showing economy weakening but on the other hand increase the expectation for rate cut. Today the market will be looking forward to several data releases such as: 1) US Producer Price Inflation (PPI) Jan-2024; 2) US Housing Starts Jan-2024; 3) GB Retail Sales Jan-2024.
Domestic Update
The Ministry of Industry recorded that the investment value in the non-oil and gas processing industry sector reached IDR565.6 trillion. MNCS Comment: The cumulative investment value for the past 10 years was recorded at IDR3,031.9 trillion. If we look closely, the sharpest investment growth over the last 10 years occurred in the 2021 - 2023 period, where growth reached 48.8%. We see this in line with the enacted investment policies, especially the downstream policy of industrial metal commodities such as nickel and the ban on exports of raw materials. Investment also flows in line with the growth of the electric vehicle ecosystem and the green energy transition.
Company News
1. AMRT IJ received an AA (idn) rating with a stable outlook by Fitch Ratings (Emiten News). MNCS Comment: We see that the rating reflects a very low risk of default relative to other stocks and debt securities in Indonesia. This is reflected in the projected stable revenue growth going forward through the opening of 1,200 outlets per year in FY24 - FY25. AMRT's internal cash flow is also considered sufficient to accommodate operational expenditure, capital expenditure and dividends, with FCF growth of ~1% in the next few years. Currently AMRT is trading at 38.39x/9.25x PER/PBV.
2. ARNA IJ reported a decline in net profit of -22.7% YoY to IDR445.3 billion in FY23 (Market Bisnis). MNCS Comment: The decrease in net profit mainly due to a -5.4% YoY decline in revenue, or in line with our estimates, achieved 99.4% of the FY23 target. The drop in revenue is influenced by weakened demand in the construction materials industry. Additionally, the increase in prices of certain industrial gases also weighed on the company's profitability, with GPM declining to 36.9% (vs. 40.7% in FY22). ARNA is currently trading at 11.38x/2.78x PER/PBV.
3. CMNT IJ estimates cement sales to grow up to 7% in FY24E (Kontan). MNCS Comment: We view the projection of sales growth is mainly driven by the acceleration of IKN development and optimism of normalizing commodity prices this year that can reduce production costs. The expectation of rate cut and tax exemption for property purchase under IDR2 billion also give incentives to the business. The positive catalysts are likely to boost the company's revenue after dropping -0.71% YoY in 9M23. CMNT is currently trading at 4.99x PBV.
IHSG Updates
The JCI strengthened by +1.30% to 7,303.28 on Thursday (15/02), followed by a net foreign buy reaching IDR2.73 trillion. Almost all sectors experienced gains and driving the index, led by the basic materials sector (+2.38%), followed by the consumer non-cyclical sector (+2.08%). On the other hand, the technology sector experienced a decline (-0.91%). The index's strengthening aligns with other Asian markets, as investors responded positively to The Fed's dovish tone regarding optimism about the future slowdown in US inflation. Additionally, investors noted the release of the trade balance data in Jan-2024, maintaining a surplus of USD2.02 billion. The Rupiah closed lower at IDR15,620/USD. We estimate the IHSG will move within the price range of 7,261-7,325. Today's Recommendations: ACES, CPIN, HEAL, WIIM.
Corporate Actions
EGMS: CSMI
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