Global Market Highlights
The DJIA increased by +0.08% on Thursday (11/07). Meanwhile the S&P 500 weakened (-0.88%) along with the Nasdaq (-1.95%). Wall Street closed mixed amidst soft-landing indications from the reading of inflation rate at 3% YoY for Jun-2024 (vs 3.3% YoY in May-2024). We note that the lower number of jobless claims for the period ending Jul/06 might act as a downside to the index, reflecting a more resilient than expected job market. Additionally, profit-taking actions from the heavyweights tech companies also added pressure to the index. Today the market will be looking forward to several data releases such as: 1) China Balance of Trade Jun-2024; 2) Japan Industrial Production Final May-2024; 3) US Core PPI Jun-2024.
Domestic Update
The government decided to extend the implementation of Certain Natural Gas Prices (HGBT) or cheap gas policy at USD6/MMBtu. MNCS Comment: This decision was prolonged as the government stated that the added value for the national economy was tripled by this implementation in 2023 (IDR157.2 trillion), compared to the amount of cheap gas prices issued (IDR51.0 trillion). This decision will be carried towards 7 initial sectors, namely the fertilizer, petrochemical, oleochemical, steel, ceramic, glass and rubber gloves industries. Meanwhile, the government is evaluating the possibility of this incentive to be expanded to 24 other manufacturing subsectors. We view that this decision will benefit those 7 sectors, while the margins of mid and upstream gas companies are at our concern.
Company News
1. DSSA IJ will conduct a stock split with a ratio of 1:10 (Emiten News). MNCS Comment: We note that the nominal value per share will change from IDR250 (before stock split) to IDR25 (after stock split) with an increase in the number of outstanding shares from 770.6 million shares to 7.7 billion shares. The initial date for trading shares with a new nominal value in the regular market and negotiated market on July 18th, 2024. DSSA is currently trading at 9.31x PBV.
2. TOTL IJ obtained a contract worth IDR3.3 trillion in 1H24 (Kontan). MNCS Comment: We note that the contract acquisition value in 1H24 has reached approximately ~94.3% of the company's target contract value for FY24E. Management stated that the contract value rose +44% YoY and the project value in the tender was around IDR10.4 trillion in 1H24. Thus, we are optimistic that the company's target for FY24E can be achieved. In 1Q24, the company posted an increase in net profit (+77.6% YoY) driven by revenue growth (+32.3% YoY). TOTL is currently trading at 8.89x/1.67x PER/PBV.
3. MBMA IJ has spent a budget of IDR19 billion for exploration activities in 2Q24 (Emiten News). MNCS Comment: This exploration resulted in 353 drill holes with a total depth of 8,639 meters. This activity also includes a 45.3 km ground penetration radar (GPR) survey, geological mapping and sampling of 270 ha.Total funds used for exploration activities in 2Q24 was lower than the previous year at IDR31.3 billion in 2Q23 (-39.3% YoY). MBMA is currently trading at 1.13x PBV.
IHSG Updates
The JCI went up +0.18% to 7,300.41 on Thursday (11/07), followed by a net foreign buy of IDR602.53 billion. Several sectors experienced gains and drove the index upward, led by the transportation and logistics sector (+2.02%) and followed by the property and real estate sector (+1.21%). Meanwhile, the sectors that weakened were led by the industrial sector (-0.24%) and followed by the healthcare sector (-0.36%). The index solidly strengthened along with other Asian markets. Positive catalysts remain from investor optimism ahead of the release of US inflation data for Jun-2024, which is anticipated to slow down, thus boosting expectations for a Fed rate cut in Sep-2024. Notably, the probability of a rate cut in Sep-2024 increased to 85% from 47% in the previous month. Additionally, investors are also paying attention to the release of Japan's machinery orders data for May-2024, which rose by +10.8% YoY (vs +7.2% YoY consensus). The Rupiah closed higher at IDR16,195/USD. We estimate that the JCI will move in the price range of 7,267-7,333. Today's recommendations: AUTO, HRTA, KLBF, ULTJ.
Corporate Actions
AGMS: FIRE
EGMS: CNMA, SSIA
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