Global Market Highlights
The DJIA weakened -0.22% on Wednesday (20/09), followed by the S&P500 (-0.94%) and Nasdaq (-1.53%). Wall Street saw a decline, with investors closely watching the hawkish tone from The Fed concerning potential future interest rate hikes or the ‘higher for longer’ stance. Today, the market will be looking toward several data releases such as: 1) US Initial Jobless Claims 16-Sep-2023; 2) US CB Leading Index MoM Aug-2023; 3) UK BoE Interest Rate Decision.
Domestic Update
• Bank Indonesia (BI) is expected to maintain the benchmark interest rate at 5.75% in its Sep-2023 meeting. MNCS Comment: We believe this expectation aligns with The Fed's decision to maintain the FFR level. However, the spread is estimated to narrow due to potential FFR hikes in the future. Besides pro-stability efforts through increased liquidity, we foresee BI possibly raising the benchmark interest rate by +25 bps in the future.
Company News
1. ARNA IJ reported that its sales volume in Aug-2023 was better than its previous achievement in Jul-2023 (Kontan). MNCS Comment: Our expectation is in line, where the ceramic market might rebound in 2H23 as inflation for construction materials becomes more manageable. This can act as a buffer for FY23E performance. Currently, ARNA is traded at the level of 11.68x/3.45x PER/PBV.
2. ASSA IJ through its entity Anteraja, plans to develop pharma delivery by partnering with Mostrans (Investor ID). MNCS Comment: We view the company's business expansion positively as it aims to reach a broader market, thus potentially boosting the company's performance. Currently, ASSA is traded at the level of 26.66x/2.20x PER/PBV.
3. PGEO IJ has reported earnings from carbon credit from PLTP Ulubelu units 3 and 4 and Karaha, achieving a 1.7 million ton reduction in carbon emissions (Kontan). MNCS Comment: With other potential geothermal power plants like Lahendong and Lumut Balai, there is certainly an opportunity to increase the company's carbon emission reduction in the future. Currently, PGEO is traded at the level of 22.40x/2.19x PER/PBV.
IHSG Updates
JCI strengthened +0.45% to 7,011.68 on Wednesday (20/09), followed by net foreign buy reaching IDR795.96 billion. A number of sectors strengthened and pushed up the index rate, led by the cyclical sector (+1.22%) followed by the financial sector (+1.05%). On the other hand, the sectors experiencing weakness were led by the raw materials sector (-0.32%), followed by the health sector (-0.29%). The index moved positively amid weakening Asian markets, where investors are optimistic about The Fed's decision to maintain the benchmark interest rate in the FOMC Sep-2023 meeting. The Rupiah closed lower at IDR15,384/USD. We estimate the IHSG will move within the price range of 6,987-7,055 pending the release of BI Interest Rate Decision, Deposit Facility Rate, Lending Facility Rate, and Loan Growth YoY Aug-2023 data. Today's Recommendations: ESSA, ITMG, MPMX, WIRG.
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