Global Market Highlights
DJIA rose by +0.77% on Thursday (20/06), while the S&P 500 (-0.25%) and Nasdaq (-0.79%) experienced corrections. Wall Street closed mixed as investors reacted to weak housing market data. Notably, preliminary building permits for May 2024 decreased by -3.8% MoM to 1.39 million, falling short of the consensus expectation of a +0.7% MoM increase to 1.45 million. Furthermore, initial jobless claims for the week ending June 15 were recorded at 238k, higher than the consensus estimate of 235k, reflecting a relatively weak labor market. Today the market will be looking forward to several data releases such as: 1) Indonesia M2 Money Supply YoY May-2024; 2) GB Retail Sales MoM May-2024; 3) US S&P Global Manufacturing PMI Flash Jun-2024.
Domestic Update
Bank Indonesia maintained its benchmark interest rate (BI rate) at 6.25%, the deposit facility rate at 5.50%, and the lending facility rate at 7.00%. MNCS Comment: BI's decision to maintain the benchmark interest rate aligns with consensus expectations, despite the contrasting backdrop of a 5.9% YTD depreciation in the USD/IDR exchange rate. We view the depreciation of the USD/IDR as a short-term phenomenon driven by global sentiment. On the other hand, we observe that the current attractive yield on government bonds and the substantial rate differential may support the strengthening of the USD/IDR. Additionally, the increase in foreign exchange reserves to USD139 billion in May 2024 is anticipated to underpin rupiah stability going forward.
Company News
1. TRGU IJ sets +10% YoY revenue growth for FY24E (Kontan). MNCS Comment: In the 1Q24, the company booked a revenue of IDR1.8 trillion (+49,5% YoY), reflecting 18.5% of the revenue target this year at IDR6.5 trillion (vs realization of IDR5.9 trillion in FY23). The net income experienced a significant decline -90.8% YoY due to higher COGS (+55.1% YoY) and pressured Rupiah exchange rates. However, management remains optimistic to perform well this year supported by the additional 600MT/day wheat flour production from new machines to cater the increasing demand in the wheat business segment as animal feed ingredients. TRGU is currently trading at 0.38x PBV.
2. UNVR IJ sets a dividend payout ratio of 111% (Kontan). MNCS Comment: The payout ratio for FY23 is higher than the previous year (vs 99.3% in FY22) as the company managed to record positive performance in FY23. As a result, the company will distribute a final dividend of IDR77/share for FY23 with a potential yield of approximately ~2.5%. In 1Q24, the company booked a net profit increase of +3.1% YoY (vs IDR 1.4 billion in 1Q23) despite a slowdown in sales (-5.0% YoY). UNVR is currently trading at 23.94x PBV.
3. NICE IJ allocates capex of IDR114.7 billion for FY24E (Kontan). MNCS Comment: This capex allocation is larger than the realization in previous year (vs IDR25.6 billion in FY23). As a result, the company decided to not distribute dividends for FY23. Management explained this capex allocation will be used for the construction of hauling, building facilities and other company activities to support their production due to higher production growth target of ~24.4% YoY in FY24E. NICE is currently trading at 28.27x PBV.
IHSG Updates
The JCI rebounded by +1.37% to 6,819.32 on Thursday (20/06), despite a net foreign outflow of IDR102.89 billion. Most sectors strengthened and supported the index, with the transportation & logistic sector leading the gain (+1.55%) and followed by the infrastructures sector (+1.51%). Meanwhile the properties & real estate sector led the loss (-0.18%) and followed by the consumer non-cyclicals sector (-0.09%). The index increased as the market responded positively to BI’s decision to maintain the interest rate at 6.25% in Jun-2024. On the other hand, most of the Asian markets contracted as investors are waiting for Japan’s inflation rate in May-2024. The Rupiah closed lower at IDR16,430/USD. We estimate that the JCI will move in the price range of 6,767-7,060. Today's recommendations: BRIS, DOID, KLBF, SMGA.
Corporate Actions
AGMS: BSDE, DOID, MBMA
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