Global Market Highlights
The DJIA gained +0.30% on Wednesday (27/12), followed by S&P500 (+0.14%) and Nasdaq (+0.16%). Wall Street continued its upward momentum as the UST yield declined to 3.79%. This decrease is attributed to the increased expectation of a 25 bps rate cut by The Fed in the FOMC Mar-2024. The probability of rate cut has risen from 21.5% in Nov-2023 to the current 74.5%, acting as a positive catalyst for the market. Today, the market will be looking toward several data releases such as: 1) 1) US Initial Jobless Claims 23-Dec; 2) US Pending Home Sales MoM Nov-23; 3) US Crude Oil Stocks Change 22-Dec.
Domestic Update
Bank Indonesia (BI) reported that credit growth in Nov-2023 reached +9.7% YoY. MNCS Comment: Credit growth in Nov-2023 recorded an expansion compared to the realization in Oct-2023 at +8.7% YoY. This was supported by an increase in the corporate sector (+9.9% YoY), while individual growth slowed to +9.3% YoY. In terms of utilization, working capital credit increased to +10.2% YoY (vs. +8.0% YoY previously), driven by the agriculture, livestock, forestry, and fisheries sectors. We estimate that credit disbursement growth in FY23E will be at the lower band target of 9% YoY, as debtors tend to wait and see ahead of the political momentum in FY24F.
Company News
1. KEEN IJ booked a power sales contract to PLN worth IDR1.2 trillion for 25 years (Emiten News). MNCS Comment: We assess this contract acquisition positively as it can enhance the company's future revenue stream. It also adds to the company's capacity portfolio, with the Salu Noling PLTM in operation having a capacity of 10 MW. The company has a pipeline project of approximately ~165 MW in Sulawesi. Currently, KEEN is traded at a level of 10.73x/1.11x PER/PBV.
2. CLEO IJ realized a new plant in Kutai Kartanegara, near the IKN region (Emiten News). MNCS Comment: We see positively the company's expansion by increasing the number of plants to ~32. This addition has the potential to boost the company's production rate and open up a network of suppliers for efficiency. With the potential addition of 3 new plants in FY24F focusing on Kalimantan, we expect this to drive the company's performance forward. Currently, CLEO is traded at a level of 30.76x/6.13x PER/PBV.
3. HEAL IJ targets a capex allocation of IDR1.2-1.5 trillion in FY24F (Emiten News). MNCS Comment: We note that the capex allocation in FY24F has increased compared to the target in FY23E of IDR1.2-1.3 trillion. Meanwhile, the company's cash on hand position in 9M23 is recorded at IDR914.8 billion. We see the increase in the capex target to continue the company's expansion momentum in Jakarta, Madiun, Pasuruan, and IKN, which we anticipate will boost bed capacity and occupancy rates in the future. Currently, HEAL is traded at a level of 5.98x PBV.
IHSG Updates
The JCI increased by +0.12% to 7,245.92 on Wednesday (27/12), followed by net foreign buy of IDR934.75 billion. All sectors soared and boosted the index up, led by the transportation & logistic sector (+2.39%) and followed by the infrastructure sector (+0.84%). The index movement aligned with the increase of Asian markets as investors’ enthusiasm regains approaching the prospect of rate cut in FY24F by the Fed and majority of central banks globally. The Rupiah closed higher at IDR15,430/USD. We estimate the IHSG will move within the price range of 7,209-7,267. Today's Recommendations: BUKA, HRUM, PGEO, PWON.
Corporate Actions
Cum Dividend : BBRI (IDR84/share)
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