Global Market Highlights
The DJIA strengthened by +0.20% on Thursday (06/06), while the S&P 500 relatively flat (-0.02%) and the Nasdaq dipped slightly (-0.09%). Wall Street's limited gains came as investors focused on the release of the trade balance data for Apr-2024, which showed a deficit of USD-74.6 billion, negatively impacting 2Q24 GDP growth. Additionally, initial jobless claims for June 1st were recorded at 229k, higher than the previous 221k. This reinforced investor expectations for a rate cut. Today the market will be looking forward to several data releases such as: 1) China Balance of Trade May-2024; 2) Germany Balance of Trade Apr-2024; 3) US Non Farm Payrolls May-2024.
Domestic Update
The government and the DPR have agreed on the macroeconomic assumptions for the 2025 State Budget Draft (RAPBN), targeting economic growth in the range of 5.1% YoY to 5.5% YoY, an exchange rate of USD/IDR IDR 15,300-15,900, and a 10-year government bond yield of 6.9%-7.2%. MNCS Comment: We note that several macroeconomic assumptions have been adjusted from previous figures, such as the USD/IDR range of IDR 15,300-16,000 and the government bond yield of 6.9%-7.3%. We see this reduction aligning with the more favorable outlook for the Fed's FFR, given the weakening indicators like spending power and the labor market in the US. Additionally, we believe Indonesia's stable macroeconomic conditions will continue to support these adjustments, bolstered by strong export performance in key commodities like coal.
Company News
1. ARNA IJ is targeting a net profit of IDR461 billion for FY24E, reflecting a growth of +4.0% YoY (Kontan). MNCS Comment: In 1Q24, ARNA's net profit realization was recorded at IDR104.8 billion (-27.9% YoY), representing 22.7% of the management's target for 2024. We believe that increasing the company's sub-distribution expansion is necessary to drive sales volume growth and a better product mix, which could enhance revenue growth that declined by -4.2% YoY in 1Q24. Additionally, maintaining stable gas prices and improving efficiency will be key drivers for future profitability. ARNA is currently trading at 10.68x/2.80x PER/PBV.
2. KLBF IJ acquired 49% of Alliance Pharma shares (Kontan). MNCS Comment: The agreement has been signed through its subsidiary Kalbe International Pte. Ltd. and is expected to be effective in 1H24. Through this deal, the management targets prescription drug business expansion and market penetration of Kalbe products in the SEA region. We view this transaction as a positive effort from management to sustain the business performance. In 1Q24, KLBF recorded growths in revenue (+6.3%) and net income (+11.9%). KLBF is currently trading at 3.02x PBV.
3. DOID IJ signed a Share Purchase Agreement (SPA) to acquire Atlantic Carbon Group Inc (ACG). (Emiten News). MNCS Comment: This transaction was done through its subsidiary, PT Bukit Makmur International (BUMA International) and is expected to be completed in Jun-2024. ACG is named the second largest producer of UHG anthracite in the US, hence this USD122.4 million deal is expected to make DOID one of the leading UHG anthracite producers in the world, as it will have 4 UHG anthracite mines in Pennsylvania once the acquisition is completed. Additionally, this deal is aimed to diversify the Group’s revenue, lowering dependency on thermal coal to less than 50% by FY28. DOID is currently trading at 5.83x PBV.
IHSG Updates
The JCI rebounded by +0.39% to 6,974.90 on Thursday (06/06), despite a net foreign sell of IDR592.03 billion. Most sectors gained and drove the index up, with the basic materials sector leading at +1.23% and followed by the technology sector (+0.96%). Meanwhile, the corrected sectors were led by the infrastructures sector (-1.55%) and followed by the industrials sector (-1.32%). The index strengthened while investors are waiting for the Foreign Exchange Reserves data in Indonesia for May-2024. The other Asian market closed mixed as investors are eyeing for China’s Balance of Trade for May-2024, as well as the condition of the US employment field that could indicate the rate cut potential. The Rupiah closed higher at IDR16,260/USD. We estimate that the JCI will move in the price range of 6,939-7,013. Today's recommendations: CTRA, ICBP, MYOR, PGAS.
Corporate Actions
AGMS: ACES, HRUM
Cum Dividend: PGAS (IDR148.31/Share)
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