MNCS Morning Navigator

17 April 2024

MNCS Morning Navigator April 17, 2024

Global Market Highlights
The DJIA rebounded +0.17% on Tuesday (16/04), whereas the S&P 500 (-0.21%) and Nasdaq (-0.12%) slipped lower. Wall Street stocks closed in the mix from UST 10-yr yield’s further advance by +6.2 bps following a hawkish-tilted comment released by Fed officials that emphasized on the unwavering labor market, as well as yield spike carryover from European bonds. Geopolitical unrest remains a bearish factor for stocks at large, whilst investors discern the stronger-than-expected US Manufacturing Production Mar-2024 which rose +0.5% MoM vs expectations of +0.2% MoM. Today the market will be waiting for several data releases, including: 1) GB Inflation Rate YoY Mar-2024; 2) EA Inflation Rate YoY Mar-2024; 3) Indonesia Retail Sales YoY Feb-2024.

Domestic Update
OJK reported an increase in net NPL of banking in Feb-2024 to 0.82% (vs 0.79% in Jan-2024). Meanwhile, gross NPL remained relatively stable at 2.35%. MNCS Comment: We believe this slight increase aligns with the impact of high lending rates due to the rise in benchmark interest rates. However, we anticipate that banking NPL within our coverage will meet the guidance in FY24E, driven by the target of moderate loan growth, which creates more manageable and prudent risk. Furthermore, net NPL at 0.82% is still within the threshold of 0.8%. We anticipate a slight increase in provisions as a buffer going forward.

Company News
1. BEEF IJ posted a net profit of IDR57.1 billion in FY23, after experiencing a net loss of IDR93.6 billion in FY22 (Emiten News). MNCS Comment: This achievement was driven by the company's revenue performance which grew +1,464.0% YoY or reached IDR611.8 billion in FY23, mainly supported by the distribution and sales segment which jumped +3,639.7% YoY along with a number of new contracts obtained company. The company's margin also increased, where GPM was able to reach 17.7% from 11.1% in FY22; as well as an increase in the NPM margin after recording write-off expenses and provisions for bad debts in FY22. BEEF is currently trading at 30,31x/12,26x PER/PBV.
2. WIFI IJ posted net profit of IDR58.5 billion in FY23, remaining relatively flat (+0.1% YoY) compared to FY22 (Emiten News). MNCS Comment: We see WIFI's performance in FY23 was attributed to an increase in gross profit of +58.1% YoY, given a decline in cost of revenue (-24.2% YoY) amidst lower revenue (-4.8% YoY). Meanwhile, decreased other income and tax rate increases impacted profitability on the bottom line. On the other hand, WIFI achieved efficiency gains, as reflected by increased GPM/OPM to 39.1%/28.5% in FY23 (vs 23.6%/20.1% in FY22). WIFI is currently trading at 10.00x/0.49x PER/PBV.
3. SPTO IJ prepares IDR100 billion capex for FY24 (Kontan). MNCS Comment: The company plans to utilize the capex budget to build a new production facility for business expansion in sanitation products and household accessories segments. During 1Q24, the company has absorbed 30% of the capex budget for this development. Amidst a flat revenue growth (+2.32% YoY) and a drop in net income (-27.51% YoY) in 9M23, the management is optimistic that the sanitary business will do well this year. SPTO is currently trading at 10.09x/0.69x PER/PBV.

IHSG Updates
The JCI plummeted by -1.68% to 7,164.81 on Tuesday (16/04), followed by a net foreign sell of IDR2.48 trillion. Most sectors weakened and weighed the index down, with the consumer non-cyclicals sector leading the loss (-3.30%), followed closely by the properties & real estate sector (-3.25%). Meanwhile, two sectors moved against the index, led by the basic materials sector (+2.39%) and followed by the energy sector (+2.32%). The index corrected along with other Asia markets, reflecting investors’ agitation regarding the rising Middle East geopolitical tension, which also pressured the Rupiah to close lower at IDR16,175/USD. We estimate that the JCI will move in the price range of 7,136-7,220. Today's recommendations: INCO, INKP, MDKA, TOBA.

Corporate Actions
Cash Dividend: BNII (IDR10.29/share), HAIS (IDR19.98/share)

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