Global Market Highlights
The DJIA closed flat by +0.20% on Thursday (25/07), while the S&P 500 weakened (-0.51%) and the Nasdaq (-0.93%). Wall Street closed relatively lower as investors are digesting the mixed results from economic indicators reading before deciding the position in rate-cut expectations. The real Personal Consumption Expenditure (PCE) increased to 2.3% YoY in 2Q24 (vs 1.5% in 1Q24), indicating stronger purchasing power. Meanwhile, the initial jobless claims were reported at 235,000 as of July 20, lower than 245,000 in previous period, signaling a softer job market. Additionally, the market will wait for more evidence from several macroeconomic results today, such as: 1) US Core PCE Price Index Jun-2024; 2) US Michigan Consumer Sentiment Final Jul-2024; 3) US Michigan Inflation Expectations Final Jul-2024.
Domestic Update
The World Bank predicts that the economy of Indonesia will continue growing by 5% in FY24E, while the world economic growth is expected in the range of 2.6-2.7%. MNCS Comment: The World Bank’s optimistic projection indicates an appreciation towards Indonesia’s steady economic growth that sits above 5%. In 1Q24, our economy grew by 5.11%, with an inflation rate of 2.51 in Jun-2024. This outlook is in line with the government's target to reach a GDP growth of 5.2% in FY24E and between 5.1%-5.5% in FY25F, supported by the plan of higher state spending allocation in social spending.
Company News
1. UNVR IJ reported a net profit decline of -10.6% YoY to IDR2.5 trillion in 1H24 (Kontan). MNCS Comment: UNVR's net profit performance remains disappointing, with revenue down -6.2% YoY to IDR19.0 trillion in 1H24. The revenue decline is attributed to contractions in UPG by -5.2% and UVG by -1.8%. We also note that UNVR expects the impact of consumer sentiment to potentially continue into 2H24. We believe this will affect the company's top-line going forward and result in higher AMP spending to maintain market share. UNVR is currently trading at 19.26x PER.
2. CEKA IJ recorded a net profit of IDR143.8 billion (+99.0% YoY) in 1H24 (Emiten News). MNCS Comment: This significant increase was driven by a +15.1% YoY rise in revenue, primarily driven by the growth across all domestic sales segments in 1H24. Additionally, selling expenses declined by -7.0% and CEKA reported a gain in foreign exchange of IDR4.6 billion (vs. a net loss of IDR1.1 billion in 1H23) & an interest income of IDR13.5 billion (vs. IDR1.5 billion in 1H23). Consequently, NPM grew from 2.4% to 4.1% in 1H24. CEKA is currently trading at 4.22x/0.70x PER/PBV.
3. AKRA IJ recorded a decline in net profit of -2.7% YoY in 1H24 (Kontan). MNCS Comment: The decrease in net profit is in line with a drop in sales of -6% YoY to IDR18.7 trillion in 1H24 (vs. IDR19.9 trillion in 1H23), due to normalization of ASP and weather conditions which led to lower demand volume. Following this, management trimmed the target of bottom-line growth to +4-7% YoY (previously +12-15% YoY). However, the company will distribute interim dividends amounting to IDR987 billion (IDR50/share) with a payout ratio of 98.4% and a potential yield of 3.3%. AKRA is currently trading at 15.11x/2.68x PER/PBV.
IHSG Updates
The JCI weakened by -0.31% to 7.240,28 on Thursday (25/07), amid a net foreign buy of IDR398.28 billion. Almost all sectors experienced declines, weighing down the index, led by the transportation and logistics sector (-1.72%) followed by the basic materials sector (-1.70%). On the other hand, the health sector was the only one to strengthen (+0.54%). The index's decline was in line with other Asian markets, influenced by disappointing 2Q24 earnings reports from banking. Additionally, investors were monitoring the release of South Korea's 2Q24 GDP data, which contracted by -0.2% QoQ, generating negative sentiment for the index. The Rupiah closed lower at IDR16,250/USD. We estimate that the JCI will move in the price range of 7,218-7,262. Today's recommendations: AKRA, HEAL, ITMG, UNTR.
Corporate Actions
EGMS: GGRP
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