MNCS Morning Navigator

22 April 2024

MNCS Morning Navigator April 22, 2024

Global Market Highlights
The DJIA continued its gain by +0.56% on Friday (19/04), while the S&P 500 (-0.88%) and Nasdaq (-2.05%) remained under pressure. Wall Street closed mixed, with a sell-off on Nasdaq still triggered by the escalation of conflict in the Middle East. Additionally, the hawkish tone from The Fed also weighed on the indices. Today the market will be waiting for several data releases, including: 1) China Loan Prime Rate 1Y & 5Y Apr-2024; 2) US Chicago Fed National Activity Index Mar-2024; 3) EU Consumer Confidence Flash Apr-2024.

Domestic Update
The Ministry of Industry has completed supporting regulations for Minister of Trade Regulation No. 3 of 2024 regarding import policies and regulations. MNCS Comment: We expect that through the completion of these regulations, the mechanism for imported products can be clarified, thereby preventing supply chain issues. It also accelerates the issuance of import permits. We believe that through these regulations, the resilience of the domestic industry can be strengthened, especially in terms of competitiveness against imported products.

Company News
1. ISSP IJ targets to increase production volume to 10%-20% in FY24 (Kontan). MNCS Comment: Amidst a slowdown in 1Q24, management remains optimistic to achieve this production target until the end of the year with an aim of ~5,000 tons of export monthly. The company successfully earned +3.19% YoY revenue growth and +62.85% YoY net income growth in FY23. However, we anticipate a more challenging situation this year considering the rising price of raw materials (coal and steel) and also the continuous increase of IDR/USD exchange rate due to the Middle East conflict, as ISSP obtains its raw materials by import (60%) and local (40%). ISSP is currently trading at 4.26x/0.46x PER/PBV.
2. CMRY IJ targets double-digit performance growth in FY22 (Kontan). MNCS Comment: In FY23, CMRY successfully recorded revenue/net profit growth of +22.0% YoY/+17.0% YoY respectively. We are optimistic that going forward, the company can achieve double-digit targets, supported by: 1) capex allocation of IDR400-450 billion; 2) innovation and addition of product portfolios; 3) solid market share, with a top brand index value of 92.8% in FY24. We believe CMRY still has ample room for growth ahead, with increasing demand for dairy products projected to remain stable at +6.0% annually. CMRY is currently trading at 31.69x/6.62x PER/PBV.
3. TLKM IJ reported +3.7% YoY revenue increase in 1Q24 (Kompas). MNCS Comment: This revenue growth was primarily supported by the increase in the data, internet & IT service (+11.3% YoY), the interconnection (+16.0% YoY) and the network and other telco services (+20.9% YoY) segments. Meanwhile income from the IndiHome and the SMS, Fixed and Cellular Voice dropped at -4.6%/-37.7% YoY respectively. With total operating expenses rising by +5.3% YoY, the company experienced -5.8% YoY drop in net income, with NPM of 16.1% (vs 17.8% in 1Q23). We anticipate the company to manage a modest growth this year, considering a more constructive competitive landscape in the MNO market and additionally the issue of Starlink to serve in Indonesia. TLKM is currently trading at 1.90x PBV.

IHSG Updates
The JCI corrected by -1.11% to 7,087.32 on Friday (19/04), followed by a net foreign sell of IDR838.17 billion. Most sectors declined and slowed the index down, led by the technology sector (-2.78%) and followed by the transportation & logistic sector (-2.46%). While the healthcare sector was the only sector that moved contrarily (+1.10%). The index fell along with other Asian markets, where investors showed concerns for the escalating geopolitics tension in the Middle East after Israel struck on Iran, which also caused the Rupiah to close higher at IDR16,255/USD. We estimate that the JCI will move in the price range of 7,050-7,130. Today's recommendations: ARTO, GOTO, PGAS, TKIM.

Corporate Actions
Cum Dividend: AVIA (IDR11/share)

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