Global Market Highlights
The DJIA slid back -0.15% on Tuesday (30/01), followed by the S&P 500 (-0.06%) and the Nasdaq (-0.76%). Wall Street stocks were under pressure by a sell-off in the UST notes, especially the front-end 2-yr notes with its yield surging +7 bps following a strong jobs report. The US JOLTs Job Openings Dec-2023 stood higher-than-expected at 9.03 million as opposed to the consensus of a decline to 8.75 million. Additionally, solid US CB Consumer Confidence Jan-2024 at 114.8 and IMF’s 2024 global GDP forecast up-revision to 3.1% YoY (from 2.9% YoY) showed monetary tightening might still linger for longer. Today the market will be looking forward to several data releases such as: 1) China NBS Manufacturing PMI Jan-2024; 2) Japan Consumer Confidence Jan-2024; 3) US API Crude Oil Stock Change 26 Jan-2024.
Domestic Update
Tuesday’s (30/01) Government Securities auction garnered a total incoming bid of IDR73.24 trillion (vs previous auction’s IDR67.56 trillion), with the total awarded bid settled at IDR24tn, right on the indicative target set by the Ministry of Finance. MNCS Comment: We assess that this surge in demand for government fixed income securities mainly reflects domestic investor’s anticipation for central banks’ rate cuts as well as portfolio diversification strategies. We note that the move towards this asset class has been made largely by domestic institutions (such as pension funds, insurance funds, securities companies and other financial institutions) as well as the retail segment, with an aggregate YTD net ownership inflow of IDR23.89 trillion, as opposed to the non residents’ IDR1.74 trillion.
Company News
1. DSNG IJ recorded CPO production growth of 3.5% YoY and CPO sales volume growth of 4% YoY, accompanied by an increase in average selling price (ASP) of 1.9% YoY in FY23 (Emiten News). MNCS Comment: We note that this achievement was supported by the increase in productivity of the company's plantations and factories, where the production of fresh fruit bunches (FFB) increased 2.6% YoY, accompanied by the efficiency of oil extraction rate (OER) which increased 1.9% YoY to 23.19%. Total sales of the DSNG’s palm oil segment (CPO, PK and PKO) reached 731 thousand tons or reflected 103.4% of MNCS estimates. DSNG is currently trading at 8.07x/0.66x PER/PBV.
2. INTP IJ reports that the sales volume of cement in FY23 reached 17.5 million tons, an increase of 9% YoY (Kontan). MNCS Comment: The higher cement sales volume compared to the industry's +3.6% YoY indicates a robust figure. We assess this solid performance in line with a strong market expansion in the eastern part of Indonesia, supported by increased utilization of the Maros plant. We anticipate continued solid growth in sales volume, supported by additional capacity post the acquisition of Semen Grobogan in FY23, reaching ~28 million tons. Currently, INTP is trading at a level of 19.77x/1.65x PER/PBV.
3. BSDE IJ booked a marketing sales of IDR9.5 trillion in FY23 (Emiten News). MNCS Comment: We note that the marketing sales increased by +8.0% YoY, exceeding the management's estimate of IDR8.8 trillion with a realization of 108.0%. The rise in marketing sales is supported by the BSD City portfolio, contributing around ~57%. Looking ahead, we anticipate a consistently solid performance in marketing sales amid the political year, supported by VAT incentives, which could accelerate the company's revenue going forward. Currently, BSDE is trading at level 9.33x/0.61x PER/PBV.
IHSG Updates
The JCI strengthened by +0.49% to 7,192.22 on Tuesday (30/01), followed by a net foreign buy of IDR488.68 billion. Several sectors experienced gains thus leading the index, led by the technology sector (+2.97%), followed by the cyclical sector (+0.89%). Meanwhile, sectors experiencing declines were led by the transportation and logistics sector (-1.17%), followed by the financial sector (-0.91%). The index outperformed other Asian markets, which tended to correct, as investors remained optimistic about the release of domestic macroeconomic data early in the month. Moreover, the market also wait-and-see ahead of the FOMC decision, with expectations that the Fed would hold the FFR in Jan-2024. The Rupiah closed higher at IDR15,780/USD. We estimate the IHSG will move within the price range of 7,166-7,220. Today's Recommendations: ADRO, AMMN, CTRA, MEDC.
Corporate Actions
EGMS: BBYB
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