Global Market Highlights
The DJIA rose by +0.39% on Wednesday (04/10), followed by the S&P500 (+0.81%) and the Nasdaq (+1.35%). Wall Street successfully rebounded, in line with the decline in UST yields to 4.73%. This reduction in yields is attributed to weak employment market data, where the ADP employment change for Sep-2023 grew by only 89k, which is lower than the consensus of 150k. Moreover, the ISM services for Sep-2023 decreased to a level of 53.6 (vs 54.5 previously). Today, the market will be looking toward several data releases such as: 1) US Balance of Trade Aug-2023; 2) US Initial Jobless Claims 30-Sep-2023; 3) Germany Balance of Trade Aug-2023.
Domestic Update
The government is potentially looking to import an additional 1.5 million tons of rice by the end of FY23E. MNCS Comment: We perceive this added allocation aims to secure rice reserve stocks and maintain price stability in light of the potential El-Nino. Moreover, with the upcoming election year in FY24F, rice consumption is expected to increase. Given India's prohibition on rice export activities, we see alternative import options being Thailand, Vietnam, and China.
Company News
1. AUTO IJ will distribute an interim cash dividend for FY23E amounting to IDR192.8 billion, or equivalent to IDR40 per share (Emiten News). MNCS Comment: We estimate AUTO will offer an interim dividend yield of 1.4%. With a net profit in 1H23 reaching IDR801.6 billion, this implies a payout ratio of 24.1%. Currently, AUTO is traded at a level of 8.60x/1.12x PER/PBV.
2. BUMI IJ targets a total coal production for FY23E of 75 - 80 million tons (Market Business). MNCS Comment: In 1H23, the total coal production was 35.4 MT, an increase of +2.6% YoY (vs 34.5 MT in 1H22). With this production target, the realization until 1H23 is between 47.2% - 44.3%. We are optimistic that BUMI can achieve this target, supported by more favorable weather. Currently, BUMI is traded at a level of 19.80x/2.01x PER/PBV.
3. AKRA IJ realized a sale of JIIPE land measuring 10 Ha in 3Q23, translating to a total sale of 29.6 Ha (Market Bisnis). MNCS Comment: We view positively the land sale realization of JIIPE, which is expected to boost the company's performance and increase its profitability. We note that AKRA targets JIIPE land sales of 70 - 75 Ha in FY23E. Furthermore, monetizing JIIPE land is expected to enhance dividend value. Currently, AKRA is traded at a level of 13.73x/2.58x PER/PBV.
IHSG Updates
The JCI declined by -0.78% to 6,888.58 on Wednesday (04/10), accompanied by a net foreign buy of IDR203.0 billion. The majority of sectors experienced a decline, weighing on the index's movement, led by the raw materials sector (-2.98%) followed by the energy sector (-2.61%). On the other hand, the sectors experiencing growth were led by the financial sector (+0.83%), followed by the health sector (+0.26%). The index's decline was in line with Asian markets, where negative sentiment stems from the UST yield's rise to its highest level in 16 years. Moreover, the fall in commodity prices and the increasing likelihood of The Fed raising interest rates also weighed on index performance. The Rupiah closed lower at IDR15,580/USD. We estimate the IHSG will move within the price range of 6,853-6,898. Today's Recommendations: MARK, MEDC, PGAS, UNTR.
Corporate Actions
Cum Stock Split: BBNI (1:2)
Cum Dividend: HEXA (USD0.04916/share)
EGMS: LPCK
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