Global Market Highlights
DJIA gained +0.14% on Thursday (13/07), followed by the S&P500 (+0.85%) and the Nasdaq (+1.58%). Wall Street continued to gain strength after the release of Jun-2023 inflation rate data which stood at +0.1% MoM, lower than the consensus estimate of +0.2% MoM. This thereby boosted hopes for the Fed to end the era of FFR hike. Today, the market will be looking toward several data releases such as: 1) US Michigan Consumer Sentiment Prel Jul-2023; 2) Germany Wholesale Prices YoY Jun-2023; 3) Japan Industrial Production YoY Final May-2023.
Domestic Update
• Bank Indonesia (BI) reported the retail sales performance in May-2023 contracted -4.5% YoY/-8.0% MoM. MNCS Comment: The decline in performance aligns with a decrease noted across the majority of groups, including cultural and recreational goods (-6.6% YoY), food and beverages, and tobacco (-2.7% YoY), as well as other household equipment (-8.4% YoY). We view this unusual anomaly during the Eid celebration period as the majority of salaries, holiday allowances, and employee bonuses were distributed in Mar-2023, leading to an expenditure spike in the March to April 2023 period.
Company News
1. NCKL IJ has realized IDR5.8 trillion or 60.1% of the IPO funds of IDR9.9 trillion (Market Bisnis). MNCS Comment: We positively assess the rapid realization of the use of IPO funds, which is expected to quickly accelerate the company's business operations. The remaining IPO funds are allocated for expansion at its associate, PT Obi Nickel Cobalt, which includes the construction of a Phase III HPAL factory boasting a capacity of 65k tons of nickel sulfate and 75k tons of cobalt. Full production is targeted to commence by the 1Q24F. Doing so, the company anticipates a boost in its future performance. Currently, NCKL is traded at the level of 9.26x/5.59x PER/PBV.
2. ELSA IJ has realized IDR200 billion capex for the allocation of new tanker cars (Market Bisnis). MNCS Comment: With a capex allocation target of IDR500 billion in FY23E, the realization has already reached 40%. We view this utilization as a positive catalyst for ELSA's business in the energy distribution and logistics services segment. Moreover, through this investment, ELSA seeks to secure a long-term contract for managing fuel oil transportation. In 1Q23, the distribution and logistics services segment recorded revenue of IDR1.7 trillion or contributed 55.2% of total revenue. Currently, ELSA is traded at the level of 5.94x/0.65x PER/PBV.
3. AKRA IJ has sold around 36.6 Ha of land at JIIPE in 1H23, equivalent to reaching 49-52% of the FY23E target (Kontan). MNCS Comment: We are optimistic that the company can achieve the sales target for the JIIPE of 70-75 Ha. This accomplishment could bolster the company's profit margins moving forward. Note, the gross profit margin contribution from JIIPE reached 50.4% in 1Q23. Currently, AKRA is traded at the level of 12.02x/2.53x PER/PBV.
IHSG Updates
JCI closed relatively flat +0.03% to 6,810.21 on Thursday (13/07), followed by net foreign sell reaching IDR 192.19 billion. A number of sectors experienced strengthening, led by the health sector (+2.13%) followed by the raw materials sector (+0.81%). On the other hand, sectors that experienced weakness were led by the property sector (-1.20%) followed by the cyclical sector (-1.01%). The index appears to remain flat despite the positive catalyst presented by a slowing US inflation rate. This catalyst has prompted investors to re-evaluate the global economic outlook following the release of China's export performance data for Jun-2023, which showed a contraction of -12.4% YoY. The Rupiah closed higher at IDR14,968/USD. We estimate that the JCI will move in the price range of 6,780-6,840. Today's recommendation: ESSA, INDY, JSMR, SIDO.
Corporate Actions
Cum Stock Split: MAPA (1:10)
RUPS: MMIX, WOWS
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