Global Market Highlights
The DJIA settled -0.62% lower on Tuesday (16/01), followed by S&P 500 (-0.37%) and Nasdaq (-0.19%). Wall Street equities were pressured by the surge in UST 10-yr yields by 12.5 bps, driven by new corporate debt supply pressures and the Fed’s remark that hinted at current rate levels to linger higher indefinitely. Investors were also taken aback by the unexpected plunge in US NY Empire State Manufacturing Index Jan-2024 by -29.2 to -43.7, vs. the consensus projection of an improvement to -5.0, indicating waning economic activity. Today the market will be looking forward to several data releases such as: 1) China GDP Growth Rate YoY Q4-2023; 2) US Retail Sales MoM Dec-2023; 3) UK Inflation Rate YoY Dec-2023.
Domestic Update
The Indonesian Shopping Mall Management Association (APPBI) foresees that mall expansion will tend to be relatively slow in the future, as the majority of businesses reduce and postpone the opening of new outlets in FY24. MNCS Comment: Based on Colliers' projections, the growth in supply space is expected to slow down, averaging 173.4k sqm in FY23-25F (vs 189.9k sqm in FY23). With disruptions in supply, we anticipate an increase in rental rates for retail emitters, estimated to match pre-pandemic levels. However, we believe this can be offset by slower UMR growth, creating efficiency space in OPEX.
Company News
1. ULTJ IJ has prepared USD30 million to complete the construction of a distribution center (DC) and factory in MM2100, aiming for a double digit growth target for FY24E revenue (Kontan). MNCS Comment: We see that ULTJ's growth momentum could continue into FY24E after achieving net sales growth of +7.75% to IDR6.12 trillion, in line with the general elections momentum which has the potential to bolster consumption amid a stable posture of Consumer Confidence Index (IKK) at 123.8 in Dec-2023. Currently ULTJ is trading at 15.60x/3.07x PER/PBV.
2. CTRA IJ recorded marketing sales achievements in FY23 reaching IDR10.2 trillion (Market Bisnis). MNCS Comment: We note that marketing sales achieved a growth of +24.2% YoY, with realization from the FY23 target (IDR9.8 trillion) reaching 104.8%. The CitraGarden Seprong and Bintaro portfolios, as well as CitraLand Surabaya, supported marketing sales achievements in FY23. Although the marketing sales target in FY24E is below the FY23 realization, at IDR 9.8 trillion, in the face of challenges from the election year. However, we expect FY24E realization to exceed the predetermined target, supported by ongoing VAT incentives, thereby sustaining the company's top-line further. Currently, CTRA is traded at a level of 14.65x/1.19x PER/PBV.
3. TOTL IJ recorded IDR4.2tn contract in FY23 which surpassed +43% of the IDR2.9tn target in the same period and +60.62% from new contract value in FY22. The company is aiming for IDR3.5tn of contract value and IDR3.1tn of acquisition this year (Kontan). MNCS Comment: We expect the new business agreement to deliver more growth potential for the company after successfully hitting +19.23% YoY revenue growth with +66.29% YoY net profit growth in 9M23. TOTL is currently trading at 12.20x/1.33x PER/PBV.
IHSG Updates
The JCI increased by +0.26% to 7,242.79 on Tuesday (16/01), followed by significant net foreign buy of IDR1.63 tn. Some sectors strengthened, led by the consumer cyclicals sector (+1.05%) and followed by the basic materials sector (+0.78%). Meanwhile, some weakened sectors were led by the healthcare sector (-1.93%) and followed by the technology sector (-0.61%). The index outperformed the majority of the Asian markets where investors still wait and see for the release of global macroeconomy dataset this week. The Rupiah closed lower at IDR15,591/USD. We estimate the IHSG will move within the price range of 7,227-7,267. Today's Recommendations: ENRG, ESSA, INCO, MBMA.
Corporate Actions
EGMS: ELSA, AMMS
Disclaimer On
