Global Market Highlights
The DJIA climbed by +0.88% on Wednesday (15/05), followed by the S&P 500 (+1.17%) and the Nasdaq (+1.40%). Wall Street boasted solid gains as slower-than-expected inflation data result in Apr-2024 at 3.4% YoY or 0.3% MoM (vs 3.5% YoY or 0.4% MoM in Mar-2024), which fuelled investors’ hopes for interest rate cuts to take place. Additionally, the softer retail sales growth at +3% YoY (vs 3.8% YoY in Mar-2024) also bolstered the expectation. Today the market will be looking forward to several data releases such as: 1) Japan GDP Growth Rate Preliminary 1Q24; 2) US Initial Jobless Claims 11-May; 3) US Manufacturing Production Apr-2024.
Domestic Update
BPS reported Indonesia’s trade balance performance in Apr-2024 scored a surplus of USD3.56 billion, slowing down from USD4,58 billion in Mar-2024 (-22.27% MoM). MNCS Comment: We noted that the trade surplus in Apr-2024 exceeded the consensus expectation of USD3.30 billion and marked 48 consecutive months of surplus. Both export and import activities declined to USD19.62 billion (-12,97% MoM) and USD16.06 billion (-10.60% MoM) respectively. We anticipate the trade surplus to continue growing at ~USD3,50 billion up to 2Q24.
Company News
1. ADRO IJ will distribute a final dividend of USD400 million or the equivalent to IDR6.84 trillion (exchange rate IDR16,028 as of 15 May 2024) for the 2023 financial year (CNBC). MNCS Comment: This dividend distribution is estimated resulting in DPS of ~IDR209.7/share (USD/Rp16,028 as of 15 May 2024) with a potential yield of ~7.4%. Even though the amount of dividends distributed is lower at USD800 million for FY23 (vs USD1 billion for FY22 ), yet the dividend payout ratio FY23 is higher than FY22, at 48.7% (vs 40.1% in FY22). ADRO is currently trading at 3.81x/0.8x PER/PBV.
2. DRMA IJ will start its first export of automotive components to Hyundai and KIA in the US (Market Bisnis). MNCS Comment: We view the company's export efforts positively, as they can drive the company's future performance. We estimate potential export revenue of IDR255 billion for FY24E and IDR415 billion for FY25F (Exchange rate: IDR15,500/USD). We believe that potential export revenue can offset the weakening demand in the domestic market, as reflected by a -7.4% YoY decline in revenue in 1Q24. DRMA is currently trading at 7.76x/2.03x PER/PBV.
3. EXCL IJ signed MoU of merger plan with FREN IJ on May 15, 2024 (Kontan). MNCS Comment: The long-planned merger is finally starting to take shape, despite the unbinding agreement is still in an early stage of this transaction to finalize. We anticipate the result of this consolidation, namely Merge Co, to bode well, not only for the healthy competition in the telecommunication industry, but also for both EXCL and FREN if priced fairly. This merger is expected to emphasize the market share and the operational subscribers base to ~93.7 million (vs 98.8 million/159.3 million of ISAT/TSEL). EXCL is currently trading at 1.25x PBV.
IHSG Updates
The JCI strengthened by +1.36% to 7.179,83 on Wednesday (15/05), amidst a net foreign sell reaching IDR 36.13 billion. Most sectors experienced gains and supported the index's pace, led by the basic materials sector (+2.43%) and followed by the financial sector (+0.92%). On the other hand, the sectors that experienced declines were led by the industrial sector (-0.23%) and followed by the property sector (-0.19%). The index strengthened amidst mixed closures in Asian markets, with investors responding positively to the release of Indonesia's trade balance data for April 2024, which recorded a surplus (48 consecutive months) of USD3.56 billion. The Rupiah closed higher at IDR16,028/USD. We estimate that the JCI will move in the price range of 7,130-7,220. Today's recommendations: MAPA, SMRA, TINS, TOBA.
Corporate Actions
AGMS: AMRT, KLBF, SRTG
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