Global Market Highlights
The DJIA climbed up +0,25% on Wednesday (05/06), followed by S&P 500 (+1.18%) and Nasdaq (+1.96%). Wall Street showed solid gains as investors responded positively to the release of the ADP employment change data for May-2024, which recorded 152k, lower than both the consensus and the Apr-2024 figures of 175k/188k, respectively. The weakening labor market could boost expectations of a rate cut. Today the market will be looking forward to several data releases such as: 1) EA ECB Interest Rate Decision; 2) US Balance of Trade Apr-2024; 3) US Initial Jobless Claims JUN/01.
Domestic Update
The Ministry of Finance projects tax incentives in 2025 to reach IDR421.28 trillion, an increase from the estimated IDR374.53 trillion in 2024. There are three priority sectors that will receive tax incentives: tourism, manufacturing, and agriculture. MNCS Comment: We assess the allocation of tax incentives positively, particularly for the productive sectors such as manufacturing and agriculture. We expect this to boost output in these sectors, which play a crucial role in GDP growth. We note that the agriculture, forestry, and fisheries sector contributed 10.5% to GDP in 1Q24, while manufacturing accounted for approximately 20%.
Company News
1. DSNG IJ will distribute dividends amounting to IDR233.2 billion for FY23, equivalent to IDR22 per share (Emiten News). MNCS Comment: Thus, we estimate that DSNG will offer a dividend yield of around ~3.4%. The realized DPS for FY23 decreased compared to FY22, which was IDR30 per share, due to a -30.2% YoY decline in net profit. DSNG is currently trading at 7.68x/0.77x PER/PBV.
2. TOWR IJ proposed to IBST shares acquisition on June 5th through its indirect subsidiary, iForte (Bloomberg Technoz). MNCS Comment: Through this proposal, TOWR plans to acquire approximately 90.1% of all issued and paid-up capital in IBST, after its subsidiary, Protelindo, was appointed as the preferred bidder and chose to complete the deal through iForte. As per FY23, IBST owns 17,239 km of fiber optic, 3,234 towers with 5,885 tenants, and a tenancy ratio of 1.82x. TOWR has then signed a credit facility of IDR2 trillion from Bank Mandiri. While the value of this transaction is still undisclosed, we view this deal as a strategic movement for infrastructures expansions. TOWR is currently trading at 2.03x PBV.
3. MEDC IJ completed the divestment of its asset, Area 47 ownership in Libya, to the Libya National Oil Corporation (NOC) on May 24th (Kontan). MNCS Comment: This deal concluded a transfer of all the 50% participation rights in the Area 47 Contract EPSA, as well as the ownership of MEDC (24.5%) in the Joint Operating Company, Nafusah Oil Operations B.V. We view that this divestment will not significantly impact the company’s performance, but instead enable the opportunity to focus on new strategic developments and existing key projects, given that the assets in Libya are not productive, but still in the exploration status. MEDC is currently trading at 0.97x PBV.
IHSG Updates
The JCI plummeted by -2.14% to 6,947.67 on Wednesday (05/06), followed by a net foreign sell of IDR567.65 billion. Most sectors fell and weighed the index down, with the basic materials sector leading the loss at -6.29% and followed by the infrastructures sector (-2.02%). Meanwhile, the healthcare sector was the only one that moved against the index with +0.79% growth. The index contracted following the sell-off actions of big-capped stocks. Most of the Asian markets also closed in the red zone as investors are still digesting the mixed results from the macroeconomic data reading from the regional countries today. The Rupiah closed lower at IDR16,285/USD. We estimate that the JCI will move in the price range of 6,920-6,996. Today's recommendations: ASII, BULL, KLBF, MEDC.
Corporate Actions
AGMS: AISA, AMMN, ARCI
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