Global Market Highlights
DJIA declined -1.07% on Thursday (06/07), followed by the S&P500 (-0.79%) and the Nasdaq (-0.82%). This weakening in Wall Street was driven by negative sentiment from The Fed's minutes, suggesting an ongoing hawkish monetary policy. Notably, the market predicts a 0.25% rise in the Federal Funds Rate (FFR) at the FOMC meeting in Jul-2023, with an 89% probability. Today, the market will be looking toward several data releases such as: 1) US Non Farm Payrolls Jun-2023; 2) US Unemployment Rate Jun-2023; 3) France Balance of Trade May-2023.
Domestic Update
• The Ministry of Trade intends to introduce corn subsidies to curb the rise in chicken feed prices. MNCS Comment: This led to an increase in chicken meat prices. As of July 7, the average price of chicken meat across all provinces had risen by 8.6% MoM, reaching IDR46,100/Kg. We view this subsidy as an effective method to counter these price hikes. Additionally, we anticipate that chicken meat prices will start to stabilize as we approach the first month of the Islamic calendar, helping to keep inflationary pressure low in Jul-2023.
Company News
1. CLEO IJ is currently undergoing expansion by constructing 2 new factories in Lampung and Manado, thereby opening the possibility for inorganic business development through company acquisitions (Emiten News). MNCS Comment: The new factory expansion could potentially increase production capacity to 5.5 billion liters annually and broaden market coverage, expected to enhance the company's future performance. Currently, CLEO is traded at the level of 31.20x/6.07x PER/PBV.
2. TLKM IJ targets to gain 1 million new customers through FMC Telkomsel-IndiHome products (Market Bisnis). MNCS Comment: This could elevate IndiHome's customer base to approximately 10 million. Anticipated future spin-offs are expected to enhance the company's performance. Currently, TLKM is traded at the level of 15.27x/2.89x PER/PBV.
3. AMMN IJ will be publicly listed today, having been oversubscribed by 13.6x (CNBC Indonesia). MNCS Comment: AMMN, which specializes in copper and gold mining, raised IDR10.73 trillion through the IPO. Of this, IDR1.8 trillion will bolster AMIN’s capital, IDR3.0 trillion will go towards AMNT debt repayment, and the remaining funds will support AMNT's factory expansion and gas and steam power plant projects.
IHSG Updates
JCI strengthened +0.57% to 6,757.33 on Thursday (06/07), followed by net foreign buy reaching IDR260.22 billion. Almost all sectors experienced strengthening and boosted the index rate, led by the cyclical sector (+2.17%) followed by the energy sector (+1.98%). On the other hand, the sector that experienced weakness was the health sector (-0.19%). The index rose despite weakening Asian markets, influenced by negative sentiment from the Fed's minutes. Investors seem optimistic prior to the release of Jun-2023's foreign exchange reserves data, which is anticipated to be robust. The Rupiah closed lower at IDR15,045/USD. We estimate that the JCI will move in the price range of 6,730-6,772 pending the release of Foreign Exchange Reserves Jun-2023 data. Today's recommendation: EXCL, SRTG, UNIQ, UNTR.
Corporate Actions
IPO: AMMN (IDR1,695/share)
Cum Dividend: GGRM (IDR1,200/share), IMAS (IDR10/share)
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