Global Market Highlights
The DJIA ended the week +0.16% higher on Friday (26/01), whereas S&P 500 (-0.07%) and the Nasdaq (-0.36%) weakened. Wall Street closed mixed, propped up on prospects of achievable soft-landing, while at the same time weighed down by UST 10-yr yield rebound by 3 bps and unappealing 1Q24 earnings forecast for tech stocks. US PCE core deflator Dec-2023 reading was +2.9% YoY, better than expectations of +3.0% YoY. Simultaneously, US Personal Spending Dec-2023 was still solid at +0.7% MoM (vs. expectations of +0.5% MoM). Today the market will be looking forward to several data releases such as: 1) US Dallas Fed Manufacturing Index Jan-2024; 2) Japan Unemployment Rate Dec-2023; 3) AU Retail Sales MoM Dec-2023.
Domestic Update
Bank Indonesia reports that based on transactions from January 22 to 25, 2024, non-residents in the domestic financial market recorded a net sell of IDR3.20 trillion, consisting of a net sell of IDR3.31 trillion in the SBN, a net buy of IDR520 billion in the stock market, and a net sell of IDR410 billion in the SRBI. MNCS Comment: We assess that the recurrence of outflows can be attributed to several factors, including investors reassessing the expectation of a rate cut by The Fed. It is noted that the probability of a rate cut in Mar-2023 has decreased from around 70% to ~46%. This signals that a new rate cut may only begin in 2H24. Additionally, investors are wait-and-see ahead of the election in Feb-2024.
Company News
1. AVIA IJ plans to add 7 - 8 self-owned distribution centers in FY24E on top of 118 self-owned distribution centers, and 14 mini distribution centers and 40 third party distribution centers to achieve sales growth (Kontan). MNCS Comment: We positively assess the company's efforts to expand the distribution chain coverage which can lead to performance growth in FY24E. It was recorded that the company's revenue performance grew 4.42% YoY in 9M23 accompanied by increasing COGS efficiency (GPM 9M23/9M22 at 44.18%/38.36%). The company allocates ~7% of revenue for expansion and maintenance capex in FY24E. AVIA is currently trading at 23.23x/3.50x PER/PBV.
2. BBNI IJ recorded a net profit of IDR20.9 trillion in FY23, an increase of +14.2% YoY (CNBC Indonesia). MNCS Comment: BBNI's net profit in FY23 aligns with our estimate, reflecting 101.3% of the FY23 target. The increase in net profit is supported by credit growth of 7.6% YoY, in line with the management's target of 7.0%-9.0%. The net interest margin for the bank only is recorded at 4.6%. Additionally, the credit cost for the bank only stood at 1.4%. Meanwhile, BBNI targets credit growth of 9.0%-11.0% YoY in FY24E. Currently, BBNI is traded at a level of 1.42x PBV.
3. TLKM IJ won the tender to become a provider of shared infrastructure of telecommunication in IKN with business to business (B2B) scheme and operational target approximately in July-August 2024 (Kontan). MNCS Comment: We foresee this win as a positive catalyst for the group’s business expansion in telecommunication infrastructures, including fiber optic, tower, and pole. While it is still too early to assess how significant this impact will be to the group’s revenue, this opportunity holds a positive potential, after successfully recording +17.60% YoY net income growth in 9M23. Additionally, the upcoming general election will also benefit the company’s performance. TLKM is currently trading at level 20.22x/2.64x PER/PBV.
IHSG Updates
The JCI slumped by -0.57% to 7,137.09 on Friday (26/01), followed by a significant net foreign sell of IDR1.05 tn. Most sectors weakened and weighed the index down, led by the transportation & logistic sector (-2.42%) and followed by the technology sector (-1.31%). In contrast, some strengthened sectors were led by the properties & real estate sector (+0.44%) and followed by the financials sector (+0.20%). The index's decline is in line with other Asian markets, whereas investors are wait-and-see ahead of the release of US consumer spending data in Dec-2023. This data could influence inflation trends and serve as a key metric for The Fed. The Rupiah closed higher at IDR15,820/USD. We estimate the IHSG will move within the price range of 7,121-7,157. Today's Recommendations: ELSA, ITMG, MLIA, PTBA.
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