Global Market Highlights
The DJIA climbed +0.59% to a higher high on Monday (29/01), followed by gains from the S&P 500 (+0.76%) and the Nasdaq (+1.12%). Wall Street stocks posted solid gains, supported by the tumble in UST 10-yr yields by -8 bps after the US Treasury down-revised their borrowings target for 1Q24 from USD816 billion to USD760 billion. The lower borrowing estimate was prodded by a higher-than-expected tax receipt, generally viewed as an indication of strength in the economy, and thus also contributed to positive sentiments for investors about soft landing possibilities. Today the market will be looking forward to several data releases such as: 1) US JOLTs Job Openings Dec-2023; 2) US CB Consumer Confidence Jan-2024; 3) IMF World Economic Outlook Jan-2024.
Domestic Update
GAPKI reports that the estimated export volume of palm oil and CPO are expected to decrease by -4% YoY to 29-30 million tons in FY24E. MNCS Comment: We assess that this decline can be attributed to reduced productivity due to El-Nino. Additionally, increased domestic consumption, especially in an election year, and the implementation of B35 are priority factors for domestic fulfillment. On the external front, we observe that demand remains relatively solid amid the potential economic slowdown in China, which will be offset by increased consumption in India.
Company News
1. TRIN IJ recorded a 10% YoY increase in marketing revenue worth IDR1.05 trillion in FY23, exceeding the company's target of IDR1.00 trillion (Emiten News). MNCS Comment: We note that this achievement is supported by the company's strategy of targeting niche segments in the form of landed houses and modern business parks, with the largest revenue contribution from Sequoia Hills (44.3%) and high rise Collins Boulevard (21.9%). We assess the marketing strategy of KPR Patungan with developers in the era of high interest rates and upcoming projects such as The Leroy and Earthville as growth drivers in the future. TRIN is currently trading at 0.99x PBV.
2. FREN IJ plans to conduct a rights issue (RI) by issuing 171.5 billion new shares offered at a price of IDR50 per share, bringing the total value of the RI to IDR8.57 trillion (Market Bisnis). MNCS Comment: Along with the utilization of the IDR5.5 trillion RI funds for debt and interest payments, we believe this could reduce the company's debt exposure, potentially enhancing profitability. Notably, the company's finance cost in 9M23 was IDR926.6 billion (vs operating profit of IDR319.2 billion). Additionally, the remaining funds from the RI will be used to boost working capital, which we anticipate could drive better company performance ahead. Currently, FREN is trading at a level of 1.13x PBV.
3. PWON IJ estimates mall visits rate to grow by +10% by FY24E through crowd pulling and customer loyalty marketing strategies (Kontan). MNCS Comment: Considering the quality of the company’s mall portfolio in 9M23 where the occupancy level is above 92% for malls in Jakarta and ranges from 81%-96% in Surabaya and Central Java, we view the crowd pulling can contribute to the growth of total revenue from the shopping centre operation segment. Additionally, the leasable areas in the malls will also increase by 70k square meters in FY24E. The company successfully booked +37.2% YoY of net income growth in 9M23. PWON is currently trading at level 13.39x/0.92x PER/PBV.
IHSG Updates
The JCI increased by +0.28% to 7,157.18 on Monday (29/01), followed by a net foreign buy of IDR540.18 bn. Some growing sectors were led by the transportation & logistic sector (+1.40%) and followed by the basic materials sector (+0.42%). Meanwhile, the weakened sectors were led by the technology sector (-2.17%) and followed by the infrastructures sector (-0.68%). The index rebounded slightly amidst investors still wait for the release of Fed’s decision of interest rate and signal of rate cut this week. The Rupiah closed higher at IDR15,810/USD. We estimate the IHSG will move within the price range of 7,100-7,155. Today's Recommendations: BMRI, CMRY, SMGR, UNTR.
Corporate Actions
IPO: SMGA (IDR105/share)
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