Global Market Highlights
The DJIA strengthened by +0.43% on Tuesday (26/12), followed by S&P500 (+0.42%) and Nasdaq (+0.54%). Positive catalysts came from the release of the Core PCE price index data in Nov-2023, up by +0.1% MoM, lower than the consensus of 0.2% MoM. This signals a continued decline in prices, supporting a slower inflation rate ahead. Notably, the Michigan Inflation Expectations Final in Dec-2023 stood at +3.1%, reaching the lowest point since Mar-2021. Today, the market will be looking toward several data releases such as: 1) US Richmond Fed Manufacturing Index Dec-23; 2) China Industrial Profits (YTD) YoY Nov-23; 3) Japan Housing Starts YoY Nov-23.
Domestic Update
Bank Indonesia (BI) reported that based on transactions from December 18-21, 2023, non-residents in the domestic financial market recorded a net purchase of IDR6.37 trillion, consisting of a net sale of IDR0.12 trillion in the SBN market, a net purchase of IDR1.52 trillion in the stock market, and a net purchase of IDR4.97 trillion in the SRBI market. MNCS Comment: We note that from December 1-22, the accumulated foreign flow reached IDR4.8 trillion. This figure continues to improve compared to Nov-2023 with an outflow of IDR500 billion and Oct-2023 with an outflow of IDR8.1 trillion. We assess that this inflow is supported by expectations of a rate cut by The Fed in FY24F. We see the potential for continued inflow until the end of FY23E, supported by solid domestic macroeconomics and stable global market sentiment.
Company News
1. TPIA IJ will collaborate with EGCO Group to build a power generation facility oriented towards EBT (Emiten News). MNCS Comment: We see this strategic collaboration positively, which can enhance the company's value in the future, in line with the development of EBT facilities. This momentum coincides with the government's revision of regulations related to achieving the optimum EBT mix in the future. In addition, the company is also increasing the capacity of the CA-EDC plant, with a capacity of 500k MT of ethylene dichloride and 400k MT of chlor-alkali. We anticipate that this will increase the company's footprint and drive better performance in the future. Currently, TPIA is traded at a level of 11.92x PBV.
2. UNTR IJ through its entity Pamapersada Nusantara (PAMA) targets coal production volume growth for FY24F of 4-5% YoY (Kontan). MNCS Comment: We note that the target growth in coal production volume for FY24F is lower than FY23E at +15% YoY. In 10M23, UNTR successfully recorded coal production volume growth of +16.8% YoY to 109.8 million tons (vs. 94 million tons in 10M23). We see normalization ahead, with a decrease in sales target for Komatsu heavy equipment and coal production volume growth. Currently, UNTR is traded at a level of 4.01x/1.10x PER/PBV.
3. ITMG IJ plans to allocate capex up to USD88 million for FY24F (Market Bisnis). MNCS Comment: We notice the capex allocation as relatively aggressive compared to this year, where we note that the realization of capex until 9M23 reached USD30.9 million. We expect increased capex allocation ahead, to drive the completion of mining facilities, thus pushing the company's production performance further. Currently, ITMG is traded at a level of 3.41x/1.09x PER/PBV.
IHSG Updates
The JCI closed in trading on Dec 25-26, commemorating Christmas Day. Meanwhile, several Asian stock markets on Tuesday (26/12) closed mixed, where investors tended to wait and see ahead of the release of macroeconomic data this week, including China's Industrial Profits in Nov-2023, estimated to remain at negative growth due to weakening demand. Investors also await on Japan's Retail Sales in Nov-2023, expected to grow expansively compared to the achievement in Oct-2023 at +4.2% YoY. The Rupiah closed higher at IDR15,483/USD. We estimate the IHSG will move within the price range of 7.196-7.250. Today's Recommendations: AMMN, BSDE, KLBF, MAPI.
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