MNCS Morning Navigator

05 April 2024

MNCS Morning Navigator April 5, 2024

Global Market Highlights
The DJIA corrected -1.36% on Thursday (04/04), followed by the S&P 500 (-1.23%) and Nasdaq (-1.40%). Wall Street’s downturn continued following the Fed's hawkish statement in which the rate of disinflation has yet reached the right level for pivoting. Apart from that, the market also responded to the release of US data Initial Unemployment Claims which reached 221k (vs. consensus expectations of 214k) and US trade deficit data for Feb-2024 which widened to -USD68.9 billion (vs. expectations of -USD67.6 billion), indicating a weaker 1Q24 GDP. Today the market will be waiting for several data releases, including: 1) US Non Farm Payrolls Mar-2024; 2) US Unemployment Rate Mar-2024; 3) Germany Factory Orders MoM Feb-2024.

Domestic Update
National Food Agency (Bapanas) has set the government purchasing price (HPP) for harvested dry paddy (GKP) from April 3, 2024, until June 30, 2024, at IDR6,000, up from the previous IDR5,000. This policy is aimed at preventing a significant decline in prices for farmers when the harvest season arrives. MNCS Comment: We see this providing a buffer for producers to maintain selling prices and potentially enhance the sustainability of future planting seasons. On the other hand, we perceive that the future decline in rice prices is likely to be slower than we anticipated. However, producer-level rice prices have already moderated by -15% from the peak in Feb-2024. We believe that the normalization of rice prices could potentially benefit related company, such as HOKI.

Company News
1. ARCI IJ posted a net profit growth of +0.13% worth USD14.6 million in FY23 (Kontan). MNCS Comment: This achievement was supported by revenue growth of +15.3% YoY reaching USD249.6 million. The increase was driven by growth in export sales which jumped +79.9% YoY with the main markets being India (25.7% of revenue) and Singapore (22.0%). The company's GPM and OPM margin performance ticked upwards, but NPM slid -12.0% to 5.9% due to financial expenses growing +52.4% YoY. Currently ARCI is trading at 39.14x/2.18x PER/PBV.
2. LPPF IJ will distribute dividends worth IDR200 per share, with the cum-dividend date for the regular and negotiation markets on 19-Apr'24 (Emiten News). MNCS Comment: With this, we estimate LPPF will offer a dividend yield of 11.0%. The total DPS decreased from the previous at IDR525 per share, following a -51.2% YoY decrease in net profit in FY23. We note that retained earnings after deducting dividend payments will amount to IDR2.98 trillion. Meanwhile, the average dividend yield over the last 5Y stands at 7.6%. LPPF is currently trading at 6.11x PER.
3. IMAS IJ recorded a net income of IDR632 billion (+42.62% YoY) in FY23 (Emiten News). MNCS Comment: This net profit growth is supported by the rise in revenue +12.94 YoY at IDR28.89 trillion (vs IDR25.58 trillion in FY22), supported by the automobiles, trucks & heavy-duty equipment business line (+22.94% YoY), services (+17.90% YoY), and the spare parts & accessories segment (+7.13% YoY). With a manageable increase in COGS (+12.90% YoY) and opex (+10.99% YoY), the company improved its NPM from 1.73% in FY22 to 2.19% in FY23. IMAS is currently trading at 8.87x/0.36x PER/PBV.

IHSG Updates
The JCI rebounded by +1.22% to 7,254.40 on Thursday (04/04), despite experiencing a net foreign outflow of IDR469.60 billion. Most sectors strengthened, bolstering the index, with the basic materials sector leading the gains (+2.93%) and followed by the infrastructures sector (+1.15%). Meanwhile, two sectors moved against the index, led by the energy sector (-0.15%) and followed by the industrial sectors (-0.12%). The index saw strength amidst a mixed closing in other Asian markets, where investors showed a tendency to reinvest in stocks after reaching the current bottom level. Additionally, the weakening of the USD also contributed to the rebound. The Rupiah closed higher at IDR15,893/USD. We estimate that the JCI will move in the price range of 7,205-7,269. Today's recommendations: ADRO, ASSA, BRMS, DOID.

Corporate Actions
Cum Dividend: ADMF (IDR972/share), TMAS (IDR8/share)

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