Global Market Highlights
Wall Street closed on Thursday (04/07) in the celebration of US Independence Day (the Fourth of July). The Fed released the FOMC minutes of the 7th consecutive meeting in Jun-2024, maintaining the fed funds target range at 5.25%-5.50%. Meanwhile, for the next rate-cut policy, the Fed is seeing at most one potential rate cut this year and four reductions in 2025 (previously three cuts in each 2024 and 2025). Following this, investors are mainly eyeing for the job market reports as one of the key indicators to weigh the rate cut expectations. Today the market will be looking forward to several data releases such as: 1) Indonesia Foreign Exchange Reserves Jun-2024; 2) Japan Household Spending May-2024; 3) US Unemployment Rate Jun-2024.
Domestic Update
The Indonesian government and the Budget Agency (Banggar) DPR agreed on the economic growth rate expectation for 2025 to range from 5.1%-5.5%. MNCS Comment: To achieve this target, the government plans to allocate state spending on more productive programs in social spending. In addition, the meeting also concluded on a number of other macroeconomic targets, including the inflation rate (1.5%-3.5%), the Rupiah exchange rate (IDR15,300-IDR15,900/USD), the 10Y SBN yield (6.9%-7.2%), ICP (USD75-USD85/bbl), oil lifting volume (580-605kbpd), and natural gas lifting (1.003-1.047mboepd).
Company News
1. PTPP IJ has achieved new contract values totaling IDR9.5 trillion as of June 28 (Kontan). MNCS Comment: The new contract values for PTPP have decreased by approximately -18.2% YoY (compared to IDR 11.6 trillion in Jun-2023). Meanwhile, with a target of IDR32 trillion for new contracts in FY24E, the realization as of June 28, 2024, stands at 29.7%. We anticipate the addition of new contracts in the coming quarter, following the acceleration post-election period in 1Q24. PTPP is currently trading at 5.44x/0.17x PER/PBV.
2. SPRE IJ targets revenue growth of +20% YoY in FY24E (Kontan). MNCS Comment: With revenues of IDR49.1 billion in FY23, SPRE's estimated revenues for FY24E are IDR59 billion. We believe this target will be driven by expansion in marketing lines through agents. Additionally, the utilization of proceeds post-IPO is expected to support working capital and machinery upgrades. This has the potential to enhance profitability in the future. SPRE is currently trading at 6.77x PBV.
3. PTBA IJ aims for 30% revenue contribution from EBT business by FY30 (Kontan). MNCS Comment: To achieve this target, the company is developing several PLTS by utilizing a number of former mining lands, including Ombilin (West Sumatra), Tanjung Enim (South Sumatra), and Bantuas (East Kalimantan), with potential capacity reaching 200 MWp. These ongoing projects are expected to add capacity to the current PLTS, 400kWp on Bali-Mandara Toll Road and 241kWp in the AOCC Building Soetta Airport. We view the developments as management’s effort to diversify the coal business following potential shifting demand to greener energy in the future, aligning with the Net Zero goals. As of 1Q24, the coal business segment primarily dominates PTBA’s revenue (98.8%). PTBA is currently trading at 1.29x PBV.
IHSG Updates
The JCI strengthened by +0.34% to 7,220.89 on Thursday (04/07), followed by a net foreign buy of IDR784.05 billion. Almost all sectors experienced gains, driving the index higher, led by the technology sector (+1.88%) and followed by the cyclical sector (+1.31%). On the other hand, the sector that weakened was the healthcare sector (-0.40%). The index continued its upward trend in line with the majority of Asian markets. The increase in the index was in line with growing investor optimism about a rate cut, following weak US macroeconomic data indicating a potential rate cut in Sep-2024. The Rupiah closed higher at IDR16,330/USD. We estimate that the JCI will move in the price range of 7,176-7,270. Today's recommendations: ASII, CPIN, HRTA, PNLF.
Corporate Actions
Cum Dividend: LSIP (IDR39/share), MAPA (IDR5/share), MAPI (IDR8/share)
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