Global Market Highlights
The DJIA corrected sharply by -1.29% on Thursday (18/07), followed by the S&P 500 (-0.78%) and the Nasdaq (-0.70%). Wall Street tumbled amidst soft-landing indications provided by higher-than-expected initial jobless claims as of July 13, 2024, at 243k (vs 223k/230k previous/consensus). Sell-offs actions seemed to drive the index down, as investors are doing the profit taking after the rally while also waiting for the 1H24 earnings releases. Today the market will be looking forward to several data releases such as: 1) Japan Inflation Rate Jun-2024; 2) GB Retail Sales Jun-2024; 3) EA Current Account May-2024.
Domestic Update
Bank Indonesia read the result of the Business World Activities survey (SKDU) with a Net Weighted Balance (SBT) of 17.20% in 2Q24 (vs 14.11% in 1Q24). MNCS Comment: This increase was mainly supported by the positive performance in the sectors of Agriculture, Forestry, and Fisheries, in line with the shift in the harvest season of food crop commodities. The business fields of Big Retail Trade and Motorcycle Repair, as well as the Provision of Accommodation and Eating and Drinking also contributed to the expansion, following the increasing demand during the mass leave period for several national religious days. Following this, the production capacity used in 2Q24 rose slightly to 73.70% (vs 73.61% in 1Q24). However, the business activities are expected to slow down with an SBT of 15.91% in 3Q24, in line with the normalization period.
Company News
1. ANTM IJ experienced a decline in its production in 1H24 (Kontan). MNCS Comment: In line with geopolitical tensions which resulted in fluctuations in demand and commodity prices, we noted that the company experienced a decline in production volumes of gold (-26.1% YoY), nickel (-39.5% YoY), ferronickel (-3.5% YoY), bauxite (-36.2% YoY), alumina (-19.2% YoY), silver (-37% YoY) in 1H24. However, the sales volume of several ANTM commodities increased, such as gold that rose by +18.2 YoY, in line with higher demand for gold as a safe haven asset amidst the uncertainty that occurred in 1H24. ANTM is currently trading at 1.07x PBV.
2. DEWI IJ has used IPO funds worth IDR 54.3 billion (Emiten News). MNCS Comment: We note that the proceeds from this IPO used 84.5% of the total proceeds. Furthermore, 11.7% of these funds were used for the purchase of affiliated land, 5.7% for the purchase of non-affiliated land, 0.2% for the construction of RPA facilities, 10.1% for the construction of Broiler Commercial Farm facilities and 56.7% for working capital. In addition, the remaining IPO funds amounting to IDR 66.6 billion or 15.5% of the total proceeds were deposited in a checking account. DEWI is currently trading at 0.84x PBV.
3. PRDA IJ is eyeing a profit increase of +3% YoY after acquiring 39% of Proline shares (Emiten News). MNCS Comment: We estimate the FY24E profit target reaching IDR267.7 billion. Furthermore, the company has achieved 14.6% of the FY24E profit target as of 1Q24. Additionally, the acquisition value reached IDR72 billion. Management stated that the acquisition was aimed at showing the company's commitment to supporting local industry and reducing dependence on imports. PRDA is currently trading at 17.23x/1.13x PER/PBV.
IHSG Updates
The JCI rose significantly by +1.34% to 7,321.07 on Thursday (18/07), followed by a net foreign buy of IDR1.16 trillion. The majority of sectors experienced gains, led by the energy sector (+1.70%) and followed by the infrastructure sector (+1.15%). On the other hand, the sectors that experienced declines were led by the technology sector (-0.81%) and followed by the property and real estate sector (-0.40%). The index successfully rebounded amidst mixed closures in Asian markets, as investors remained optimistic ahead of the release of 2Q earnings and solid non-resident inflows. Additionally, the fire at the Grosvenor coal mine in Australia is anticipated positively by the market, potentially strengthening the demand for Indonesian coal exports and serving as a positive catalyst for the trade balance going forward. The Rupiah closed lower at IDR16,157/USD. We estimate that the JCI will move in the price range of 7,288-7,330. Today's recommendations: INDF, ITMG, LSIP, UNTR.
Corporate Actions
AGMS: KIJA
EGMS: HEXA, URBN
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