Global Market Highlights
The DJIA closed flat by +0.01% on Friday (24/05), followed by the strengthening of the S&P 500 (+0.70%) and the Nasdaq (+1.10%). Wall Street rebounded following the reading of the new orders for manufactured durable goods which improved by +0.7% MoM, beating the consensus of -0.8% MoM. Meanwhile, the final Michigan 1Y ahead inflation expectation rose to 3.3% in May-2024, marking a six-month high (vs 3.2% in Apr-2024), but below the estimation of 3.5%. Today the market will be looking forward to several data releases such as: 1) Indonesia M2 Money Supply Apr-2024; 2) China Industrial Profits Apr-2024; 3) Japan BoJ Governor Ueda Speech.
Domestic Update
Bank Indonesia decided to maintain BI-Rate at 6.25% through the Board of Governors meeting (RDG). MNCS Comment: Additionally, BI decided to hold the interest rates of Deposit Facility and Lending Facility at 5.50% and 7.00%, respectively. This decision is aimed to ensure the stability of the Rupiah exchange rate and inflation rate within the target of 2,5±1% for 2024 and 2025. We view that the previous BI-Rate increase contributed to the strengthening of Rupiah and SBN yield in Apr-2024, with 10Y SBN yield of 7.21% (vs 6.86% in Mar-2024).
Company News
1. ISAT IJ will distribute dividends for FY23 amounting to IDR2.16 trillion, or IDR268.4 per share. The cum dividend date for the regular and negotiated markets on May 31, 2024 (Emiten News). MNCS Comment: We estimate a potential dividend yield of approximately ~2.7%. The DPS has increased compared to the previous year, which was IDR255.7 per share, in line with the increase in the payout ratio for FY23 to 48.0% (vs 43.6% in FY22). This comes despite a net profit decline in FY23 of -4.6% YoY. ISAT is currently trading at the level of 15.68x/2.53x PER/PBV.
2. SMBR IJ plans to expand its business activities to include the production of Portland cement and its derivatives through an AGMS on May 29, 2024 (Emiten News). MNCS Comments: We view positively the company's plan to add new business activities, which can drive revenue streams in the future. This also has the potential to boost the company's marketing utilization rate. The addition of these business activities is projected to generate a net present value (NPV) of IDR15.5 billion. SMBR is currently trading at 0.66x PBV.
3. UNTR IJ remains optimistic to reach 4,000 units for the heavy equipment sales in FY24E (Kontan). MNCS Comment: As of 4M24, the company has sold 1,400 units or 35% of the total target. However, this number declined -33.8% YoY compared to 4M23. As a reflection of the dropping sales volume, the company reported a -7.1% YoY in revenue in 1Q24, mainly driven by the construction machinery segment (-24.8% YoY) and the coal mining segment (-23.2% YoY). The bottom-line also experienced a fall of -14.6% YoY. UNTR is currently trading at 18.05x/2.96x PER/PBV.
IHSG Updates
The JCI closed on May 23-24, 2024, in observance of Waisak Day and a public holiday. Asian markets ended the week collectively corrected, as investors monitored the release of the Fed's FOMC minutes from early May-2024. Moving forward, investors will wait-and-see ahead of the release of China's industrial profits data for Apr-2024. Additionally, investors will be paying attention to various views and projections regarding the benchmark interest rate from the Bank of Japan (BoJ) in response to Japan's inflation rate in Apr-2024, which slowed to +2.5% YoY (vs +2.7% YoY previously). The Rupiah closed higher at IDR15,993/USD. We estimate that the JCI will move in the price range of 7,186-7,254. Today's recommendations: MARK, PTBA, TLKM, UNTR.
Corporate Actions
Cum dividend: ABMM (IDR295/share), ELSA (IDR27.57/share), SIDO (IDR18/share)
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