MNCS Morning Navigator

10 Juli 2024

MNCS Morning Navigator July 10, 2024

Global Market Highlights
The DJIA contracted by -0.13% on Tuesday (09/07). Meanwhile, the S&P 500 strengthened (+0.07%) and was followed by the Nasdaq (+0.14%). Wall Street closed mixed following the dovish tone in the testimony by Fed Chair, Powell, which signaled that inflation rate remains above the soft-landing target at 2% and stronger evidence will be required for the timing of rate cuts decision. Today the market will be looking forward to several data releases such as: 1) China Inflation Rate Jun-2024; 2) Japan PPI Jun-2024; 3) US Fed Chair Powell Speech.

Domestic Update
Bank Indonesia reported the retail sales increased by 2.1% YoY in May-2024 (vs -2.7% YoY in Apr-2024). MNCS Comment: The upgrade was driven by the Clothing, Food and Beverage, Tobacco, and Parts and Accessories groups. However, on a monthly basis, the performance experienced a contraction (-3.5% MoM), in line with the normalization after Ramadhan. Following this, the retail sales performance in Jun-2024 is expected to grow by 4.4% YoY or 2.1% MoM, supported by increasing activities during the Eid al-Adha and school holiday.

Company News
1. WIKA IJ proposes state capital participation of IDR2 trillion for FY25 (Kontan). MNCS Comment: These PMN funds will be used to support eight national strategic projects (PSN) and reduce the debt to EBITDA ratio below the target, at 5x in 2038. The company has obtained new contracts worth IDR8.9 trillion (-15.5% YoY) and total order book reaching IDR52.3 trillion (-6.9% YoY) as of May-2024. The new contract acquisitions only reached 24.0% of the company's new contract target in FY24. WIKA is currently trading at 1.81x PBV.
2. BRPT IJ issued bonds amounting to IDR1 trillion (CNBC). MNCS Comment: The proceeds from these bonds will be used to pay the company's debt, including bonds that will mature soon and bank loans. Additionally, the company posted a fall in net profit of -60.9% YoY in line with a decline in revenue of -4.9% YoY. Meanwhile, the company's total debt rose by +4.4% YoY in 1Q24. BRPT is currently trading at 3.85x PBV.
3. SGER IJ got a contract of coal delivery to Vietnam amounting to USD22.51 million (Kontan). MNCS Comment: This contract may support the company in achieving the revenue growth target of IDR13.5 trillion (+10% YoY) in FY24E, despite lower ASP in this contract (USD112,55/mt) than the global coal price (USD135.05/mt as of July 8th, 2024). Furthermore, this contract contributes approximately ~2.7% of the total revenue target in FY24E. In 1Q24, the company's coal trading increased by +21.1% YoY. SGER is currently trading at 8.67x/4.13x PER/PBV.

IHSG Updates
The JCI inched up +0.26% to 7,269.80 on Tuesday (09/07), followed by net foreign buy of IDR23.46 billion. Most sectors experienced gains, driving the index upward, led by the financial sector (+1.44%), followed by the industrial sector (+1.10%). On the other hand, the sectors that weakened were led by the healthcare sector (-1.28%) and the energy sector (-0.76%). The index closed higher in line with the movement of Asian markets, where investors responded positively to the rebound in retail sales performance in May-2024, which grew by +2.1% YoY (vs -2.7% YoY in Apr-2024). Additionally, investor optimism regarding the testimony of Fed Chairman Powell further accelerated the index's movement. The Rupiah closed higher at IDR16,250/USD. We estimate that the JCI will move in the price range of 7,257-7,292. Today's recommendations: INDF, MAPI, TLKM, WIIM.

Corporate Actions
IPO: LABS (IDR102/share)

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