MNCS Morning Navigator

04 Juli 2024

MNCS Morning Navigator July 4, 2024

Global Market Highlights
The DJIA declined slightly by -0.06% on Wednesday (03/07), while the S&P 500 strengthened (+0.51%) and the Nasdaq (+0.88%). Wall Street closed mixed following the weaker-than-expected job market with 238,000 unemployment claims (vs 243,000 previously). Meanwhile the Services PMI Final from S&P500 met market’s estimation and acted as a buffer to the indices. Today the market will be looking forward to several data releases such as: 1) Japan Foreign Bond Investment Jun/29; 2) US Total Vehicle Sales Jun-2024; 3) Australia Balance OF Trade May-2024.

Domestic Update
The Ministry of Finance reported an increase in the government’s debt position to IDR8,353.02 trillion (+0.17% MoM) as of the end of May-2024. MNCS Comment: The figure resulted into 38.71% government debt/GDP ratio, which rose from 38.64% in Apr-2024 but remains below the 60% limit set by the government. As of the end of May-2024, the debt maturity profile is within an average time maturity (ATM) of 8 years. The debt structure was dominated by the SBN instruments (87.96%) or IDR7,347.5 trillion.

Company News
1. SMIL IJ will distribute dividends for FY23 amounting to IDR16.7 billion (Emiten News). MNCS Comment: Therefore, we estimate that SMIL will distribute a DPS of IDR1.9/share, translating to an estimated dividend yield of 0.8%. Meanwhile, the payout ratio is recorded at 20.0%, from the FY23 net profit realization of IDR83.3 billion (+42.5% YoY). The net profit increase in FY23 was supported by revenue growth of +35.7% YoY. SMIL is currently trading at 18.21x/2.75x PER/PBV.
2. FAST IJ has acquired a poultry company, PT Jagonya Ayam Indonesia (JAI), for IDR160.4 billion (Emiten News). MNCS Comment: We assess the acquisition positively, as it involves the issuance of new shares by JAI. This acquisition is expected to support the company's business operations, especially in maintaining the availability of raw materials for carcasses and other processed meats, which can positively impact margins. In 1Q24, FAST recorded a widened net loss of IDR196.2 billion (vs a net loss of IDR 22.1 billion in 1Q23), in line with a -17.2% YoY decline in revenue performance. FAST is currently trading at 3.61x PBV.
3. CITA IJ will distribute IDR463.4 billion final dividends or IDR117/share for FY23 (Kontan). MNCS Comment: This dividend distribution is translated into 64.5% DPR (vs 22.9% for FY22) and a potential yield of ~5.2%. The cum dividends in regular markets is scheduled on July 8th, 2024. IDR1 billion of the FY23’s profit is planned to be kept as a reserve fund and IDR254.3 billion as retained earnings. CITA is currently trading at 1.51x PBV.

IHSG Updates
The JCI rose by +1.01% to 7,196.76 on Wednesday (07/03), followed by a net foreign buy of IDR619.11 billion. Most sectors experienced gains and drove the index upward, led by the industrial sector (+2.07%), followed by the transportation and logistics sector (+1.61%). On the other hand, the sectors that experienced declines were led by the technology sector (-0.07%) and followed by the healthcare sector (-0.06%). The index managed to rebound, aligning with the broader Asian markets which closed higher as investors positively responded to the release of China's Caixin services PMI for Jun-2024, maintaining an expansionary level at 51.2 points (vs 54.0 points in May 2024). Investors were also optimistic ahead of the anticipated weak U.S. labor market data, which could raise expectations of a Fed rate cut. The Rupiah closed higher at IDR16,370/USD. We estimate that the JCI will move in the price range of 7,099-7,229. Today's recommendations: ACES, MYOR, PTBA, UNTR.

Corporate Actions
Cum Dividend: ASSA (IDR20/share), CEKA (IDR100/share), TOWR (IDR18.1/share)

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