Global Market Highlights
The DJIA closed lower by -0.08% on Monday (08/07). Meanwhile, the S&P 500 gained (+0.10%) along with the Nasdaq (+0.28%). Wall Street closed mixed with limited swing as investors are waiting for the testimony of Fed Chair Powell before the US Congress, while the slower consumer inflation expectations at 3% in Jun-2024 (vs 3.2% in May-2024) seemed to increase the hope for rate cut potential. Today the market will be looking forward to several data releases such as: 1) Indonesia Retail Sales YoY May-2024; 2) US NFIB Business Optimism Index Jun-2024; 3) US Fed Chair Powell Testimony.
Domestic Update
Bank Indonesia released the result of the Consumer Confidence Survey at 123.3 in Jun-2024, softer than the previous month at 125.2 (-1.52% MoM). MNCS Comment: The declining performance was mainly driven by the decrease of jobs availability component to 106.8 (-6.0% MoM) and the purchase of durable goods component (-1.4% MoM). Meanwhile the current income metric experienced a slight growth to 120.8 (+0.8% MoM). The Consumer Expectations Index (IEK) remains in the optimist zone, with the income expectations at 138.0, the jobs expectation at 131.7, and the business activity expectation at 131.5.
Company News
1. ERAA IJ has expanded its digital segment by opening three stores in Papua through the Erafone Cloud Retail partnership scheme (Kontan). MNCS Comment: We view ERAA's expansion positively, especially through the "Erafone Cloud Retail" partnership concept to minimize capital expenditure. We believe this expansion can enhance the company's branding in Eastern Indonesia and drive positive volume growth. We project revenue/net profit growth in FY24E to be +11.8% YoY/+34.9% YoY, respectively. ERAA is currently trading at 6.00x/0.81x PER/PBV.
2. IPCC IJ has allocated IDR116.93 billion for a buyback (Emiten News). MNCS Comment: We see this buyback effort as having a positive impact on the stock price performance. Currently, IPCC is trading at its 3-year PE mean. In terms of profitability, its TTM NPM stands at 26.0%, higher than the 5-year average of 15.7%. Despite the sluggish domestic 4W automotive market, we believe IPCC will benefit from positive opportunities in car exports/imports. IPCC is currently trading at 7.93x/0.97x PER/PBV.
3. ELPI IJ prepares IDR1 trillion capex in FY24E to acquire 5 new tug and barge ships (Kontan). MNCS Comment: While the purchase of these additional ships is transacted in FY24E, the handover is expected to complete in 1H25. This transaction is done through ELPI’s subsidiary, ELPI Nusantara Armada (ENA), which will result in 25 total operating ships owned by ENA. We view the expansion may contribute to the company’s performance. In 1Q24, ELPI successfully booked +41.4% YoY growth of revenue and +56.7% YoY of net income, driven by all vessel segments (owned and chartered). ELPI is currently trading at 1.11x PBV.
IHSG Updates
The JCI was relatively flat at -0.03% to 7,250.98 on Monday (07/08), amidst a net foreign sell of IDR137.85 billion. Several sectors weakened, holding back the index's movement, led by the energy sector (-0.44%) and followed by the basic materials sector (-0.22%). Meanwhile, the sectors that strengthened were led by the property sector (+2.25%) and followed by the infrastructure sector (+1.55%). The index closed flat amidst weakening Asian markets, as investors focused on the release of the consumer confidence index (CCI) for Jun-2024, which remained at its optimistic level but fell to a 4-month low of 123.3. The Rupiah closed higher at IDR16,255/USD. We estimate that the JCI will move in the price range of 7,213-7,264. Today's recommendations: ANTM, ARTO, ICBP, PANI.
Corporate Actions
IPO: GUNA (IDR150/share)
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