Global Market Highlights
The DJIA relatively flat at +0.04% on Thursday (11/01), followed by S&P 500 (-0.07%) and Nasdaq (+0.00%). Wall Street exhibited a flat trend as investors responded to the release of inflation data in Dec-2023 at +3.4% YoY. This figure saw an increase compared to the realization in Nov-2023 at +3.1% YoY and the consensus expectation at +3.2% YoY. With the rising inflation and a robust labor market where initial unemployment claims on 6-Jan 2024 were 202k (vs consensus at 210k), this impacts the consensus expectation for The Fed's rate cut in Mar-2024. Today the market will be looking forward to several data releases such as: 1) China Inflation Rate YoY Dec-2023; 2) China Balance of Trade YoY Dec-2023; 3) US PPI MoM Dec-2023.
Domestic Update
OJK reports that banks' ownership of Government Securities (SBN) in Nov-2023 experienced a decrease of -1.51% YoY to IDR1,436 trillion. MNCS Comment: We assess the reduction in the banking portfolio position in SBN as aimed at stimulating credit growth, in line with increased liquidity amid a dovish stance in FY24E. Bank Indonesia targets a credit growth of 10%-12% YoY in FY24E. Meanwhile, the realized credit growth of banks in Nov-2023 was +9.74% YoY. However, we see downside risks in the form of a market that tends to wait-and-see ahead of the elections.
Company News
1. KEEN IJ is set to operate the Ordi Hulu Microhydro Power Plant (PLTM) in North Sumatra (10 MW capacity) starting in 1Q24 and continue with construction of the Salu Noling PLTM in South Sulawesi (10 MW) in 2Q24 (Kontan). MNCS Comment: We assess that the operational commencement of Ordi Hulu PLTM will support KEEN's performance in FY24E with the potential for additional energy production of 63 GWh/year at a capacity factor of ~72.5%. The company has allocated capex of USD30 million for the work on these two projects. Currently KEEN is trading at 10.66x/1.10x PER/PBV.
2. ASSA IJ targets a capex allocation of IDR1.2-1.5 trillion in FY24E (Emiten News). MNCS Comment: We see that the targeted capex allocation is relatively the same as FY23, with an upper band of IDR1.5 trillion. Meanwhile, we note that the realized capex until 9M23 is approximately 67%. With the utilization of capex in FY24E for the procurement of 4k-5k vehicle units, we expect it to drive the company's performance to achieve double-digit growth. Currently, ASSA is traded at a level of 20.13X/1.70x PER/PBV.
3. INDY IJ targets 31 MT of coal production in FY24 through its subsidiary, Kideco, after exploring 2 mining blocks with total area of 33,887 Ha (Emiten News). MNCS Comment: We see the blocks exploration as a potential cushion for Kideco to rebound after a decreasing production in 9M23 at 22.3 MT (-14.6% YoY) of coal with a total revenue of USD2.3 billion (-26,6% YoY). INDY is currently trading at level 5.53x/0.38x PER/PBV.
IHSG Updates
The JCI weakened by -0.10% to 7,219.96 on Thursday (11/01), amidst net foreign buy of IDR849.75 billion. Some sectors declined, led by the consumer non-cyclicals sector (-0.75%) and followed by the basic materials sector (-0.56%). Meanwhile, most of the sectors strengthened, led by the transportation & logistic sector (+1.29%) and followed by the financials sector (+0.91%). The index underperformed the other Asian markets as investors anticipated an increase in US inflation in Dec-2023, aligning with the consensus expectation of +3.2% YoY. The Rupiah closed higher at IDR15,549/USD. We estimate the IHSG will move within the price range of 7,212-7,261. Today's Recommendations: ERAA, HRUM, TLKM, UNTR.
Corporate Actions
EGMS: AKSI, WIKA, TIFA
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