Global Market Highlights
The DJIA contracted by -0.55% on Tuesday (29/05), while the S&P 500 closed flat (+0.02%) and the Nasdaq strengthened (+0.59%). Wall Street closed mixed as investors are waiting for several key economic data to be released this week. Additionally, the manufacturing index in Texas showed a new four-month low at -19.4 bps in May-2024 (vs -14.5/-14 bps Apr-2024/Consensus), indicating a weaker manufacturing activity. On the other hand, the better-than-expected consumer confidence index at 102 bps in May-2024 (vs 97/94 bps Apr-2024/Consensus) acted as an upside incentive. Today the market will be looking forward to several data releases such as: 1) US Money Supply Apr-2024; 2) Japan Consumer Confidence May-2024; 3) Singapore Producer Price Index Apr-2024.
Domestic Update
The Indonesian government plans to reduce fuel subsidies by IDR67.1 trillion, as specified in the Macroeconomic Framework and Fiscal Policy Principles (KEM-PPKF) in 2025. MNCS Comment: This subsidies cut will impact on the quota of the Certain Types (JBT) of Solar Fuel and the Specific Fuel Assignment (JBKP) Pertalite. Through this policy, the government aims to reduce air pollution sourced from vehicle exhaust gasses and to address the issues of subsidies incentive enjoyed by wealthy households. This implementation is estimated to cut the volume of Solar and Pertalite consumption by 17.8 million KL/ year. Meanwhile, the allocation of Solar volume is set at 19 million KL and Pertalite is at 31.7 million KL for 2024. We view this program to provide better competitive opportunities for companies like AKRA in its retail petroleum business.
Company News
1. EKAD IJ will distribute dividends for FY23 amounting to IDR31.4 billion, or IDR20 per share. The cum dividend date for the regular market and negotiation market on June 4, 2024 (Emiten News). MNCS Comment: We estimate a potential dividend yield of approximately ~4.01%. Dividend payout ratio is higher than the previous year, at 43.7% (vs 0.62% in FY22) amids a drop in net profit FY23 (-6.23% YoY). EKAD is currently trading at 11.33x/0.69x PER/PBV.
2. CPIN IJ will distribute dividends for the FY23 fiscal year amounting to IDR491.9 billion, or equivalent to IDR30 per share (Emiten News). MNCS Comment: Considering the dividend distribution in Nov-2023 of IDR100 per share, the total DPS for the 2023 fiscal year reaches IDR130 per share. Therefore, the estimated yield is ~2.5%. Furthermore, the payout ratio reached 92.2%, higher than the 48.9% in the 2021 fiscal year. CPIN is currently trading at 30.27x/3.11x PER/PBV.
3. PSGO IJ is eyeing for IDR2.56 trillion net sales in FY24E (Emiten News). MNCS Comment: This revenue target represents +24.9% YoY growth from the realization in FY23. Meanwhile the company booked IDR414.9 billion net sales in 1Q24, reflecting 16.2% of the annual target. The management believes that the raise in CPO production (+41%), FFB (+15%), and PK (+45%) should help achieve the goal. Following this, the gross profit is aimed to increase by 47% YoY (vs 41.7%/0.9% YoY in 1Q24/FY23) and the net profit to expand conservatively by +27% YoY (vs 295.0%/113.2% YoY in 1Q24/FY23). PSGO is currently trading at 1.24x PBV.
IHSG Updates
The JCI increased by +1.08% to 7,253.63 on Tuesday (28/05), despite a net foreign sell reaching IDR587.50 billion. Most sectors experienced gains and supported the index's movement, led by the basic materials sector (+3.64%) and followed by the infrastructure sector (+1.38%). On the other hand, the sectors that weakened were led by the industrial sector (-0.87%) and followed by the consumer cyclical sector (-0.59%). The index managed to strengthen amid the generally corrected movements of Asian markets. We observed that banking stocks rose, which driven by sentiment following the Apr-2024 interest rate hike being priced-in, serving as a positive catalyst for the index's movement. The Rupiah closed lower at IDR16,090/USD. We estimate that the JCI will move in the price range of 7,223-7,230. Today's recommendations: INCO, MIDI, MYOR, PGAS.
Corporate Actions
Cum dividend: BRIS (IDR18.55/share)
AGMS: BREN, CGAS
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