MNCS Morning Navigator

03 April 2024

MNCS Morning Navigator April 3, 2024

Global Market Highlights
The DJIA continued its downturn by -1.00% on Tuesday (02/04), followed by the S&P 500 (-0.72%) and Nasdaq (-0.94%). The UST 10-yr yield advanced further by +5.4 bps, further pressuring stocks, with volatility seen on the rise as indicated by the +7.0% surge in the VIX Index. Yesterday’s stronger-than-expected US factory orders Feb-2024 (rose +1.4% MoM vs. expectations of +1.0% MoM) and JOLTs Job Openings Feb-2024 (rose +8k to 8.76 million vs. expectations of 8.73 million) data were perceived as hawkish signals, paring rate cut bets that was to take place in Jun-2024. Today, the market will await several data releases, including: 1) US ISM Services PMI Mar-2024; 2) Fed Chair Powell Speech; 3) EA Inflation Rate YoY Mar-2024.

Domestic Update
Indonesia's PMI Manufacturing in Mar-2024 stood at 54.2, increasing by 1.5 points from the Feb-2024 realization of 52.7. MNCS Comment: This expansive level of the manufacturing PMI reflects manufacturers' optimism about future business activities, as well as the relatively resilient outlook on consumer purchasing power, driven by the festive momentum of Eid. Looking ahead, we expect the manufacturing PMI to remain at an expansive level (>50), reflecting a favorable consumer outlook amid potential declines in several staple commodity prices.

Company News
1. NCKL IJ recorded net profit growth of +20.4% YoY and reached IDR5.62 trillion in FY23 (Emiten News). MNCS Comment: This achievement is in line with revenue growth of +149.4% YoY. This performance was driven by an increase in sales volume from the mining business line (grew +97.9%) and production from the nickel processing and refining business line (ferronickel production grew +300.2% YoY; MHP grew +50.5% YoY). MHP production performance in FY24E is expected to continue its improvement with the commencement of the second HPAL facility from Obi Nickel Cobalt this year. NCKL is currently trading at 9.22x/2.48x PER/PBV.
2. ACES IJ recorded a net profit of IDR763.5 billion in FY23, or grew by +14.9% YoY (vs IDR664.3 billion in FY22) (Emiten News). MNCS Comment: ACES' net profit growth in FY23 exceeded our expectations, reflecting 109.2% of the FY23 target. The increase in net profit was supported by a revenue growth of +12.6% YoY to IDR7.6 trillion, which reflects 107.4% of our FY23 estimate. Revenue growth was driven by an increase in SSSG by +8.1% in FY23. Meanwhile, margins appeared expansive, with NPM hovered at 10.0% (vs to 9.8% in FY22). ACES is currently trading at 21.45x/2.67x PER/PBV.
3. TPMA IJ aims for a +20% YoY revenue growth and allocates USD20 million for capex in FY24 (Kontan). MNCS Comment: Following this, TPMA sets a target of ~10%-20% increase in net income. Management is optimistic about reaching this goal as the company experiences overflowing demand from existing customers, driven by the increasing coal production. To expand its services, TPMA plans to acquire 2 tug boats, 4 barges, and 1 floating crane this year. The company successfully achieved a +6.02% YoY growth in revenue and +37.77% YoY growth in net income, resulting in an improved NPM at 29.58% in FY23 (vs 22.76% in FY22). TPMA is currently trading at 5.85x/1.25x PER/PBV.

IHSG Updates
The JCI rebounded by +0.44% to 7,236.98 on Tuesday (02/04), despite a net foreign sell of IDR1.77 trillion. Most sectors strengthened, contributing to the index's ascent, with the basic materials sector leading the gains (+1.60%), followed closely by the energy sector (+1.59%). Meanwhile, the financials sector was the only sector that moved against the index (-0.18%). The index's rise occurred amidst mixed performances in Asian markets, as investors await the minutes from the Federal Reserve regarding potential rate cut policies. The Rupiah closed lower at IDR15,897/USD. We estimate that the JCI will move in the price range of 7,174-7,244. Today's recommendations: ASII, BRIS, INCO, TKIM.

Corporate Actions

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