Global Market Highlights
The DJIA rebounded +0.54% on Thursday (18/01), followed by S&P 500 (+0.88%) and Nasdaq (+1.35%). Wall Street equities were bolstered, led by the tech sector’s strengthening, after economic data releases reinforced the soft-landing narrative, followed by US shutdown risks that subsided after the Senate passed a funding resolution that will last until Mar-2024. The US weekly initial jobless claims that fell to 187k (vs consensus of 205k), and US housing starts Dec-2023 that stood stronger at 1.46 million (vs consensus of 1.43 million) was positively received by the market. Today the market will be looking forward to several data releases such as: 1) Japan Inflation Rate YoY Dec-2023; 2) UK Retail Sales MoM Dec-2023; 3) US Michigan Consumer Sentiment Prel Jan-2024.
Domestic Update
The government has extended the food assistance program until 1H24, which will be distributed to 22 million recipients, with each receiving a monthly allocation of 10kg of rice. MNCS Comment: We assess positively the government's efforts to help maintain consumer purchasing power amid the impact of El-Nino, especially at the mid-low income level. The food assistance distributed until Dec-2023 is considered effective in curbing inflation. It is noted that the inflation rate in Dec-2023 was +0.41% MoM, compared to +0.38% MoM in Nov-2023; however, it is lower than the realized rate of +0.66% MoM in Dec-2022. Furthermore, the food aid has successfully boosted consumption levels within the proportions consumer expenditure of IDR2.1-3 million.
Company News
1. DMAS IJ is optimistic in achieving their FY23 marketing sales target of ~IDR1.8 trillion (Kontan). MNCS Comment: We note that DMAS' marketing sales performance during 9M23 has reached a run rate of 76.16%. At the same time, the company's revenue in the same period fell by -27.72% YoY, which we see was especially caused by a high interest rate condition. We see that the company still has a growth catalyst in the form of a land bank of 800 Ha, with potential investors coming from the EV sector such as BYD and VinFast. DMAS is currently trading at 1.34x PBV.
2. MEJA IJ is currently conducting a book building with a price range of IDR100-103/share. The company will release 480 million shares, equivalent to 25.03%, with total proceeds of IDR48-49.4 billion (Market Bisnis). MNCS Comment: MEJA is an integrated interior design construction company that provides a one-stop solution. With this IPO, the company can leverage working capital to secure more contracts in the future, given the construction industry's scenario of full pre-financed contractors (CPF). There is a spread between office demand and supply that motivates landlords to create attractive interior designs, we anticipate an improvement in the company's performance going forward.
3. DRMA IJ is optimist to dominate the electric vehicle component market after the relaxation of regulation regarding the level of domestic components (TKDN) (Emiten News). MNCS Comment: We view the easing of regulations to potentially attract foreign investors to establish an electric vehicle ecosystem in Indonesia. Thus, it can benefit the company in accelerating their sales where they have recorded +59.68% YoY revenue and +107.81% YoY net income growth in 9M23. DRMA is currently trading at level 10.17x/3.20x PER/PBV.
IHSG Updates
The JCI strengthened by +0.73% to 7,252.97 on Thursday (18/01), amidst net foreign sell of IDR97.23 bn. Most sectors inclined and drove the index up, led by the basic materials sector (+2.78%) and followed by the healthcare sector (+1.56%). Meanwhile, some weakened sectors were led by the transportation & logistic sector (-0.79%) and followed by the consumer non-cyclicals sector (-0.32%). The index increased after Bank Indonesia decided to keep interest rate stable at 6% in Jan-2024. The Rupiah closed higher at IDR15,620/USD. We estimate the IHSG will move within the price range of 7,202-7,251. Today's Recommendations: AMMN, ANTM, ARTO, BBRI.
Corporate Actions
EGMS: BESS
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