Global Market Highlights
The DJIA climbed by +0.85% on Thursday (02/05), followed by the S&P 500 (+0.91%) and the Nasdaq (+1.51%). Wall Street showed a solid strengthening as investors responded to The Fed’s more dovish-than-expected signal. Additionally, the several positive jobs reports also support the index, where the non-farm payrolls grew to 303k in Apr-2024 (vs 243k Mar-2024) and the unemployment rate for Apr-2024 stayed at 3.8% as expected. Today the market will be looking forward to several data releases such as: 1) Singapore Retail Sales Mar-2024; 2) US S&P Global Services PMI Apr-2024; 3) US Unemployment Rate Apr-2024.
Domestic Update
BPS reported Indonesia’s inflation rate at 3.0% YoY in Apr-2024 (vs 3.06%/3.1% consensus/forecast), marking a slowdown from 3.05% in Mar-2024. While on a monthly basis, the inflation rate declined from 0.52% in Mar-2024 to 0.25% in Apr-2024 (vs 0.21%/0.3% consensus/forecast). MNCS Comment: We note that the volatile food group experienced an inflation of 9.63% YoY (vs 10.33% YoY in Mar-2024), meanwhile the administered prices group increased to 1.54% YoY (vs 1.39% YoY in Mar-2024). We see that the lower-than-expected inflation figure was influenced by the increasing supplies of volatile food commodities with ongoing harvest season and the slowdown in consumption demand after the Ramadan season ended. With a manageable inflation rate within BI’s target range of 1.5%-3.5%, we anticipate BI to still have room for 1x rate cut until the end of this year.
Company News
1. SMIL IJ recorded a revenue increase of +55.3% YoY in 1Q24 to IDR97.5 billion (vs IDR62.8 billion) (Kontan). MNCS Comment: The revenue increase is in line with the rise in rental income, alongside operational enhancements in the forklift unit. Revenue growth is also accompanied by expense efficiency, reflected in the increase in GPM/OPM to 41.7%/29.7% in 1Q24 (vs 36.3%/18.4% in 1Q23). Consequently, the company's net profit increased by +200.6% YoY to IDR26.9 billion (vs IDR8.9 billion in 1Q23). SMIL is currently trading at 14.49x/1.76x PER/PBV.
2. RALS IJ posted a net profit growth of +254.0% YoY to IDR106.8 billion in 1Q24 (vs IDR30.2 billion in 1Q23) (Kontan). MNCS Comment: The significant increase in net profit was primarily driven by a revenue increase of +42.0% YoY to IDR829.1 billion (vs IDR583.8 billion in 1Q23). Additionally, OPEX was reasonably controlled with a +10.2% YoY increase, thereby boosting OPM to 12.7% (vs 2.3% in 1Q23). We see that the momentum of Eid al-Fitr celebrations held on April 9-10 also contributed to the performance increase in 1Q24, so we anticipate moderation in figures in 2Q24. RALS is currently trading at 7.81x/0.91x PER/PBV.
3. INDF IJ recorded a net profit of IDR 2.44 trillion in 1Q24 (Market Bisnis). MNCS Comment: Whilst experiencing a growth in gross profit of +10.81% YoY driven by a steady increase in revenue (+0.81% YoY) and the decrease in COGS (-3.69%), the bottom-line showed a plunge of -36.36% YoY. The company’s financial income fell by -79.76% YoY while the financial expenses spiking by +202.17% YoY, added a pressure to the net profit, resulting in a lower NPM of 7.69% (vs. 12.6% in 1Q23). Currently INDF is trading at the level of 22.31x/0.53x PER/PBV.
IHSG Updates
The JCI weakened by -1.61% to 7,117.43 on Thursday (02/05), followed by a net foreign sell reaching IDR2.60 trillion. Most sectors experienced declines, exerting pressure on the index, led by the financial sector (-2.78%) followed by the transportation & logistics sector (-2.02%). Meanwhile, sectors that saw gains were led by the healthcare sector (+0.12%), followed by the industrial sector (+0.11%). The index decline aligned with other Asian markets weakening, as the return of increased outflow volume in the banking sector coincided with earnings releases below consensus estimates. Additionally, investors will also watch for The Fed and BoJ's steps regarding future interest rate policies. Furthermore, investors tend to wait and see ahead of the release of US labor market data. The Rupiah closed higher at IDR16,185/USD. We estimate that the JCI will move in the price range of 7,075-7,177. Today's recommendations: GOTO, MARK, MDKA, INCO.
Corporate Actions
AGMS: EXCL, TLKM
Cash Dividend: UNTR (IDR1,569/Share)
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