Global Market Highlights
The DJIA slipped by -0.06% on Wednesday (28/02), followed by the S&P 500 (-0.17%) and the Nasdaq (-0.55%). Wall Street weakened as investors are waiting for the key inflation data reading tomorrow that could heavily affect the expectations of Fed’s decision in rate cut policy. The 2nd estimation of 4Q23 GDP growth rate, which declined from 4.9% to 3.2%, also contributed to pressuring the index. Furthermore, the MBA Purchase Index also weakened to 127.60 bps on February 23rd from 133.60 bps in the previous week, showing an economic slowdown. Today the market will be looking forward to several data releases such as: 1) US Core PCE Price Index MoM Jan-2024; 2) US Chicago PMI Feb-2024; 3) SG PPI YoY Jan-2024.
Domestic Update
The government plans to increase grant funds for the Palm Oil Rejuvenation (PSR) program for independent farmers by 50% to IDR60 million/ha, considering that the realization of PSR in 2023 have only reached 53,012 ha or 30% of the target of 180,000 ha. MNCS Comment: If the bill is passed, the funding requirement is estimated to reach IDR10.8 trillion. We see that efforts to make replanting easier are important to maintain the average tree age of smallholder oil palm plantations and stabilize the yield level of fresh fruit bunches (FFB) for the next few years. This will certainly help maintain CPO output and help maintain prices from increasing demand, considering that ~42% of palm oil land is owned by the people.
Company News
1. BNII IJ posted a net profit of IDR1.74 trillion in FY23 or an increase of +18.5% YoY from IDR1.47 trillion in FY22 (Emiten News). MNCS Comment: We note that the growth in net profit was supported by an increase in credit disbursement by 7.6% YoY reaching IDR116.0 trillion (vs IDR107.8 trillion in FY22). We also see that the CASA ratio is relatively stable at 51.1% (vs 51.4% in FY22), supported by current accounts which grew 10.2% YoY and savings which rose 6.1% YoY, in line with BNII's strategy of optimizing cheap funds. BNII is currently trading at 0.66x PBV.
2. AVIA IJ recorded a net profit increase of +17.3% YoY, reaching IDR1.6 trillion in FY23 (vs IDR1.4 trillion in FY22) (Market Bisnis). MNCS Comment: The rise in net profit is concurrent with an increase in revenue and margin expansion. In FY23, the company's revenue witnessed a growth of +5.8% YoY, supported by the expansion of the architectural solutions segment by +4.3% YoY. Meanwhile, the company's GPM/OPM experienced increments, reaching 45.4%/24.5% (vs 40.6%/22.0% in FY22). AVIA is currently trading at 23.43x/3.53x PER/PBV.
3. AKRA IJ added ship ownership to strengthened logistics business activities (Kontan). MNCS Comment: The company has injected IDR210 bn to purchase additional fleet in Feb-2024. We anticipate that the newly acquired vessel will play a crucial role in bolstering the company's strategy to enhance its supply chain logistics network for basic chemicals and fuel, particularly in the untapped and growing eastern region of Indonesia. The company experienced a fall of -13.31% YoY of revenue, but managed to earn +9.36% YoY bottom line in 9M23. AKRA is currently trading at 19.27x/2.52x PER/PBV.
IHSG Updates
The JCI strengthened by +0.59% to 7,328.64 on Wednesday (28/02), followed by a net foreign buy reaching IDR23.66 billion. Several sectors experienced gains, propelling the index, led by the consumer non-cyclical sector (+1.09%) followed by the industrial sector (+0.72%). On the other hand, sectors that decline were led by the technology sector (-1.99%) followed by the healthcare sector (-0.77%). The index managed to strengthen amidst a weakening Asian market, as investors optimism ahead of the release of various global and domestic macroeconomic data in early Mar-2024. The Rupiah closed lower at IDR15,685/USD. We estimate the IHSG will move within the price range of 7,270-7,330. Today's Recommendations: DOID, GGRM, MDKA, RAAM.
Corporate Actions
EGMS: GOLD, HEAL, WEGE
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