Global Market Highlights
DJIA rose by +0.15% on Tuesday (18/06), followed by the S&P500 (+0.25%), while the Nasdaq remained relatively flat (+0.03%). Wall Street mainly strengthened, supported by the release of industrial production data for May-2024, which rose by +0.9% MoM, exceeding the consensus estimate of +0.3% MoM. Additionally, retail sales performance for May-2024 also increased by +0.1% MoM, from -0.2% MoM in April-2024. Today the market will be looking forward to several data releases such as: 1) Indonesia Balance of Trade May-2024; 2) GB Inflation Rate YoY May-2024; 3) US NAHB Housing Market Index Jun-2024.
Domestic Update
The government has disbursed the 13th salary for civil servants and pensioners amounting to IDR38.03 trillion as of June 14. MNCS Comment: We estimate that the realization of the 13th salary as of June 14 is at ~76% of the target. We believe the disbursement of the 13th salary can act as a buffer for the economy, particularly in boosting consumption for the expenditure group with IDR1-3 million. In May-2024, the expenditure proportion of IDR1-2 million increased in terms of consumption from 74.7% to 75.0%. Meanwhile, the expenditure proportion of IDR2-3 million decreased from 75.0% to 73.1%, the lowest year-to-date.
Company News
1. ERAL IJ will distribute dividends for FY23 amounting to IDR51.9 billion, equivalent to IDR10 per share (Kontan). MNCS Comment: We estimate ERAL will offer a dividend yield of 4.9%. We note that the payout ratio reaches ~24%. In FY23, ERAL recorded a net profit increase of +14.4% YoY to IDR211.0 billion (vs IDR184.4 billion in FY22). The net profit growth is in line with revenue, which increased by +22.8% YoY to IDR3.7 trillion (vs IDR3.0 trillion in FY22). NPM in FY23 was recorded at 5.7% (vs 6.1% in FY22). ERAL is currently trading at 6.58x/0.71x PER/PBV.
2. DRMA IJ aims for IDR600 billion net profit in FY24E (Kontan). MNCS Comment: This target reflects a slowdown of -1.9% YoY from the net profit obtained in FY23 at IDR611.8 billion. Meanwhile from the revenue stance, the company aims for ~10% growth this year. In 1Q24, DRMA booked IDR1.3 trillion of sales (-7.4% YoY), reflecting 48.8% of the annual target, followed by a net profit of IDR133.4 billion (-38.3% YoY), reflecting 22% of the goal. The slowdown was in line with the decline in the automotive industry. However, management is optimistic that the 2H24 will be better, supported by the automotive demand. DRMA is currently trading at 5.90X/0.36x PER/PBV.
3. SUNI IJ targets the building of its second factory to be completed in the early 1Q25 (Kontan). MNCS Comment: This ongoing project takes place in Batam with an investment value of IDR432 billion and is aimed to double the company’s current production capacity to 60,000-70,000 tons/year. In 1Q24, SUNI successfully recorded IDR162.7 billion of sales (+15.1% YoY) followed by a net profit of IDR33.7 billion (+70.6% YoY). Hence, we expect the completion of the new plant will support the company’s performance in the future considering the potential market demand for seamless tubing. SUNI is currently trading at 2.15x PBV.
IHSG Updates
The JCI closed following the holiday for Eid al-Adha commemoration. Most of the Asian markets strengthened as investors gave a positive response to China’s better-than-expected retail sales and Singapore’s balance of trade for May-2024, while they are also waiting for the release of BoJ monetary policy meeting minutes. The Rupiah closed lower at IDR16,400/USD as of June 14th, 2024. We estimate that the JCI will move in the price range of 6,700-6,776. Today's recommendations: AVIA, ICBP, ISAT, PGAS.
Corporate Actions
AGMS: CTRA, ERAA
Cum Dividend: ACES (IDR33,5/share)
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