Global Market Highlights
The DJIA closed down -0.82% on Wednesday (31/01), whereas the S&P 500 (-1.61%) and the Nasdaq (-2.23%) continued their losses. Wall Street stocks settled lower again as big tech names’; Alphabet, AMD and Microsoft; earnings fell short of market expectations. Market was also pressured on the Fed’s hinting towards holding the rates up as well in Mar-2024 FOMC. On the brighter side, the market found support as the UST yields tumbled on lower-than-expected US ADP Employment Jan-2024 rose by +107k jobs (vs. the expected +150k jobs). Today the market will be looking forward to several data releases such as: 1) US Fed Interest Rate Decision Jan-2024; 2) China Caixin Manufacturing PMI Jan-2024; 3) EA Inflation Rate YoY Jan-2024.
Domestic Update
The Ministry of Finance is currently preparing a new Minister of Finance Regulation (PMK) to extend the government-borne value added tax (PPN DTP) incentive program for the delivery of landed houses and flats for the tax period Jan-2024 to Dec-2024. MNCS Comment: We assess that the continuation of the DTP VAT program will be a driving factor for Indonesia's economic growth for the FY24E period, which MNCS estimates projects will be in the range of 4.9% - 5.1% YoY, considering that the property sector has a strong spillover effect for real sector growth and will prop up inflation. We see this government maneuver as a form of attempt to offset the weakening of purchasing power in the property sector in line with high interest rates.
Company News
1. PRDA IJ has prepared capital expenditure (capex) of IDR 250 billion - IDR 300 billion, with a detailed allocation of 30-35% for information and digital technology development, then 40-45% for increasing laboratory capacity and the remainder for developing outlets (Kontan). MNCS Comment: We positively assess the company's plans to support performance in FY24E, where we see that the company is more focused on developing their existing infrastructure (especially the digital infrastructure) compared to expanding outlets, considering that management believes that digitalization has the potential to boost the company's growth. PRDA is currently trading at 15.07x/2.02x PER/PBV.
2. BMRI IJ recorded consolidated net profit in FY23 reaching IDR55.9 trillion, an increase of +33.7% YoY (Kontan). MNCS Comment: BMRI's net profit in FY23 exceeded our estimate, reflecting 112.0% of the FY23 target of IDR49.2 trillion. The increase in net profit was supported by credit growth of +16.3% YoY, a decrease in CoC by -59 bps YoY, and a reduction in provision cost by -37.1% YoY. Currently, BMRI is traded at a level of 2.55x PBV.
3. BBTN IJ projects a growth in house sales of 11%-12% YoY in FY24E (Emiten News). MNCS Comment: We are optimistic that house sales in FY24E can grow in double digits, supported by various incentives. The government has implemented the VAT policy until Dec-2024. Additionally, there are incentives such as administrative cost relief of IDR4 million and a relaxation of the LTV/FTV ratio for property financing to 100%. We believe these incentives can contribute to the company's performance in FY24E. Currently, BBTN is traded at a level of 0.63x PBV.
IHSG Updates
The JCI rose by +0.22% to 7,207.94 on Wednesday (31/01), followed by a net foreign buy of IDR 1.52 trillion. Most sectors experienced gains and driving the index, led by the financial sector (+1.11%), followed by the consumer non-cyclical sector (+0.75%). Meanwhile, sectors experiencing declines were led by the consumer cyclical sector (-0.20%), followed by the healthcare sector (-0.12%). The index continued its strengthening amid a corrective trend in Asian markets, where positive earnings reports from banking issuers became a catalyst for the index. Additionally, investors were optimistic ahead of The Fed's decision in the Jan-2024 FOMC and the release of inflation data in Jan-2024, expected to slow according to consensus to +2.55% YoY. The Rupiah closed higher at IDR15,780/USD. We estimate the IHSG will move within the price range of 7,155-7,250. Today's Recommendations: BBTN, EXCL, MIKA, PGAS.
Corporate Actions
Cum Dividend: EURO (IDR4.8/share)
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