Global Market Highlights
The DJIA jumped +0.36% on Monday (22/01), followed by S&P 500 (+0.22%) and Nasdaq (+0.32%). Wall Street continued their rally as the UST 10-yr yield slid back 4 bps to 4.11% on solid economic indicators and corporate earnings result, receding Fed rate cut chances. CME Fedwatch now points to a 58% chance of seeing a cut in Mar-2024’s FOMC meeting (down from 63% last week. US Leading Economic Indicators Dec-2023 only edged down -0.1% MoM as opposed to market’s expectations of -0.3% MoM. Today the market will be looking forward to several data releases such as: 1) Bank of Japan Interest Rate Decision; 2) EA Consumer Confidence Flash Jan-2024; 3) AU NAB Business Confidence Dec-2023.
Domestic Update
Tobacco excise revenue in FY23 recorded at IDR213.5 trillion, a decrease of -2.35% YoY. MNCS Comment: We note that tobacco excise revenue realization is ~92% of the APBN target. We assess that the increase in cigarette excise rates, coupled with aggressive rate adjustments by manufacturers, has led to a decrease in cigarette production volumes. With the ~10% increase in cigarette excise tax in FY24, we anticipate a decline in tobacco excise revenue realization going forward. However, on the other hand, we see an opportunity for the government to offset this decrease through diversification into other products, such as implementing excise taxes on sugar-sweetened beverages (MBDK).
Company News
1. JTPE IJ aims for the completion of digital product production facilities expansion in Sidoarjo in 2H24 to boost FY24E performance (Investor Daily). MNCS Comment: We note that the company's revenue during 9M23 had substantially grown +101.84% YoY with the net profit surging +197.41% YoY. To support further performance growth, the company will also increase its export market contribution from 20% to 30%. The value of cooperation contracts successfully collaborated with foreign clients reached USD11 million for the FY24E period. JTPE is currently trading at 11.09x/2.02x PER/PBV.
2. UNTR IJ along with Sumitomo Corporation (SC) and Hitachi Zosen Corporation (HITZ), established a Joint Venture (JV) named PT Jabar Environmental Solutions (JES), engaged in electricity generation, waste treatment, and disposal of non-hazardous waste (Kontan). MNCS Comment: We see the company's efforts to continue diversifying its business into non-coal sectors positively. We also expect this to drive the company's ESG initiatives forward. Along with exploring business diversification, we anticipate it can provide revenue stream enhancement alongside the footprint in the heavy equipment sales and mining contractor business. Currently, UNTR is traded at a level of 4.24x/1.16x PER/PBV.
3. VICI IJ aims for double-digit revenue growth rate in FY24 with new products launch as one of its strategies to increase demand (Kontan). MNCS Comment: In 9M23 the company successfully recorded aggressive +40.59% YoY sales and +168.21% YoY net profit growth, with some trademarks products that act as main revenue drivers remain the leading products in the market, such as Herboist, NuFace, and CBD Professional. Therefore, we view the company’s optimism to hit double-digit sales growth is approachable. VICI is currently traded at level 4.77x PBV.
IHSG Updates
The JCI strengthened by +0.28% to 7,247.93 on Monday (22/01), amidst net foreign sell of IDR308.95 bn. Some increased sectors were led by the financials sector (+1.50%) and followed by the infrastructures sector (+0.97%). On the other hand, some weakened sectors were led by the transportation & logistic sector (-1.65%) and followed by the energy sector (-1.46%). The index grew after the released data of money supply M2 in Indonesia increased 3.5% YoY for Dec-2023 period. The Rupiah closed lower at IDR15,635/USD. We estimate the IHSG will move within the price range of 7,194-7,267. Today's Recommendations: ACES, BFIN, BREN, HRTA.
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