Global Market Highlights
The DJIA slumped by -0.71% on Monday (05/02), followed by the S&P 500 (-0.32%) and the Nasdaq (-0.20%). Wall Street closed weak, amidst the release of macroeconomy dataset that met the market expectations. The index was pressured after Federal Reserve Chair, Jerome Powell, signaled a backoff from lowering interest rates in the imminent period as he stated in the “60 Minutes” interview. Today the market will be looking forward to several data releases such as: 1) US household debt balance 4Q23; 2) UK S&P Global Construction PMI Jan-2024; 3) JP Household Spending MoM Dec-2023.
Domestic Update
Indonesia's GDP grew +5.05% YoY annually in FY23 (vs. +5.31% in FY22) and grew +5.04% YoY/+0.45% QoQ quarterly in 4Q23 (vs. consensus estimate of + 5.00% YoY/+0.41% QoQ). MNCS Comment: We see that economic growth in FY23 slowed as a result of the high-base growth in FY22 which was supported by the commodity boom. Sectorally, the transportation & warehousing sector strengthened +13.96% YoY, followed by the F&B sector by +10,01% YoY, driven by increased mobility and election preparations. According to our projections, growth in FY24E has the potential to reach +5.10% YoY, driven by election-related consumption, as well as government spending on the infrastructure and social services sectors.
Company News
1. BIRD IJ has budgeted capex of IDR 2.5 trillion for FY24E for rejuvenation and purchasing a new fleet (Kontan). MNCS Comment: We note that the company has plans to purchase and rejuvenate a taxi, non-taxi and EV fleet of 7,000 units, and this will be done for all business segments. We see that increasing community mobility, election activities and growing tourist arrivals (+20.17%/98.30% YoY in Dec-23/FY23) will be performance catalysts for FY24E. BIRD is currently trading at 8.68x/0.78x PER/PBV.
2. RALS IJ targets a revenue growth of +10% YoY in FY24E, with a capex allocation of IDR200 billion (Kontan). MNCS Comment: Considering the company's decision not to expand its outlets, we project a flat growth in FY24E at +0.2% YoY. We assess that the purchasing power of consumers in the lower-income bracket may potentially erode amid the resurgence of the El-Nino impact after Feb-2024. Additionally, the consumer trend of downgrading to more affordable products on e-commerce platforms poses a challenge for the company going forward. RALS is currently trading at 10.28x/0.99x PER/PBV.
3. LTLS IJ estimates revenue growth of +12% and prepares up to IDR300 bn capex for warehouse construction in FY24E (Kontan). MNCS Comment: Despite its pressured performance in 9M23 by -10.33% YoY of revenue growth, management is confident to reach double digit growth of sales by focusing on industrial needs such as food, drink, water, and personal home care. We view management’s belief on increasing demand is supported with the government’s effort to increase people’s purchasing power. LTLS is currently trading at level of 0.62x PBV.
IHSG Updates
The JCI weakened by -0.55% to 7,198.62 on Monday (05/02), followed by a net foreign sell of IDR493.39 billion. Almost all sectors experienced declines and weighed on the index, led by the basic materials sector (-1.85%), followed by the industrial sector (-1.07%). Meanwhile, the transportation and logistics sector recorded a slight gain (+0.17%). The index weakened amidst Asian markets where closed mixed, as investors scrutinizing the FY23 GDP growth data, which slowed to +5.05% YoY (vs +5.31% YoY in FY22). The Rupiah closed lower at IDR15,705/USD. We estimate the IHSG will move within the price range of 7,180-7,226. Today's Recommendations: BMRI, PTBA, TOWR, WINS.
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