Global Market Highlights
The DJIA fell by -0.16% on Monday (26/02), followed by the S&P 500 (-0.38%) and the Nasdaq (-0.13%). Wall Street was corrected where investors are waiting for a bunch of crucial macroeconomic data release this week that could affect The Fed’s decision in interest rate trim. Market’s expectation on the rate cut has been lowered after the minutes by The Fed’s policy makers last Thursday. Following this, investors then pushed back their expectations from May-2024 to Jun-2024. Today the market will be looking forward to several data releases such as: 1) US House Price Index Dec-2023; 2) US Consumer Board Consumer Confidence Feb-2024; 3) JP Inflation Rate Jan-2024.
Domestic Update
Bank Indonesia reported that new credit distribution and corporate financing needs indicated limited growth in Jan-2024, with each Weighted Net Balance (WNB) reported at 24.5% and 6.5% (vs. 73.3% and 18.4% in Dec-2024), respectively . MNCS Comment: We noted that the corporate financing demand was mainly driven by increasing needs in the mining sector, particularly for operational purposes. From the household side, demand for financing is reported to remain stable. The lower credit distribution by banks might partly be explained by the seasonality factor, and partly by higher interest rate biting into the demand. For 1Q24 it is estimated that it will continue to grow, although limited according to historical trends.
Company News
1. INCO IJ has completed a divestment agreement to MIND ID with a 14% stake at a price of IDR3,050/share, and will be carried out through a combination of direct acquisition and rights issue (Bloomberg Technoz). MNCS Comment: We note that the number of shares that MIND ID will acquire amounts to 1.39 billion shares or the equivalent of IDR 4.42 trillion, and will make MIND ID the largest holder (34%), exceeding VCL (33.9%) and SMM (11 .5%). This agreement also abolished the block voting agreement scheme, so that future company decision making can be expected to be fair. Currently INCO is trading at the level of 9.00x/0.96x PER/PBV.
2. LPPF IJ reported a net profit decline of -51.2% YoY, amounting to IDR675.4 billion in FY23 (vs IDR1.4 trillion in FY22) (Market Bisnis). MNCS Comment: We attribute this decline to limited revenue growth of +1.3% YoY amid a +8.4% YoY increase in COGS and followed by a +10.7% YoY rise in OPEX. Additionally, financial expenses also experienced a +60.6% YoY increase. This led to a decline in profitability, with the company's NPM in FY23 stood at 10.3% (vs 21.4% in FY22). LPPF is currently trading at 6.14x PER.
3. SUNI IJ won two tenders worth USD6.05 million from PT Pertamina EP (Emiten News). MNCS Comment: Both of these tenders involve procurement of casing with USD3.08 million and USD2.97 million respectively. We anticipate these tenders can impact positively to the company’s performance in FY24E, considering the company successfully earned +45.80% YoY sales growth from Oil Country Tubular Goods (OCTG) segment in 3Q23. As per the same period, this segment constitutes 91.08% of overall sales. Additionally, the company recorded +51.60% YoY bottom line growth in 3Q23. SUNI is currently trading at 12.14x/1.59x PER/PBV.
IHSG Updates
The JCI weakened by -0.15% to 7,283.82 on Monday (26/02), followed by a net foreign sell reaching IDR846.23 billion. Several sectors experienced declines and weighing on the index, led by the healthcare sector (-1.62%) followed by the basic materials sector (-1.39%). Meanwhile, sectors showing gains were led by the industrial sector (+0.31%) followed by the energy sector (+0.19%). The index weakened amid a mixed closing of Asian markets, with investors wait and see towards the earnings releases of several company. Meanwhile, consistent outflows also contributed to the downward pressure on the index. The Rupiah closed lower at IDR15,630/USD. We estimate the IHSG will move within the price range of 7,247-7,311. Today's Recommendations: BRMS, HRUM, ITMG, MEDC.
Corporate Actions
IPO: VISI (IDR120/share)
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