MNCS Morning Navigator

08 Juli 2024

MNCS Morning Navigator July 8, 2024

Global Market Highlights
The DJIA grew by +0.17% on Friday (05/07), followed by the S&P 500 (+0.54%) and the Nasdaq (+0.90%). Wall Street strengthened as the softening job market seemed to fuel investors’ expectations on the rate cut agenda. The unemployment rate in Jun-2024 rose to 4.1% from 4% previously, marking the highest number since Nov-2021. Meanwhile, the non-farm payrolls in Jun-2024 fell to 206k from 218k previously, but still above the consensus of 190k. Today the market will be looking forward to several data releases such as: 1) Singapore Foreign Exchange Reserves Jun-2024; 2) Japan Bank Lending Jun-2024; 3) US Consumer Inflation Expectations Jun-2024.

Domestic Update
Bank Indonesia reported the position of foreign exchange reserves in Jun-2024 at USD140.2billion (vs USD139.0 in May-2024). MNCS Comment: This increase was mainly influenced by the revenue of taxes and services, as well as the withdrawal of foreign loans by the government, amid the pressure of the Rupiah exchange rate. This current position is equivalent to the financing of 6.3 months of imports, or 6.1 months of imports and payment of foreign government debt, which is above the international standard of 3 months of imports.

Company News
1. ADHI IJ reported new contract values totaling IDR10.2 trillion up to Jun-2024 (Kontan). MNCS Comment: We note a -27.1% YoY decrease in Jun-2024 new contract values (vs IDR14.0 trillion in June 2023). Meanwhile, if the target for new contract values remains at least equal to the achievement in FY23, the realization up to June 2024 stands at 27.3%. We anticipate an increase in new contract values in 2H24 will be supported by SOEs and the government, particularly in the engineering & construction and manufacturing segments. ADHI is currently trading at 0.22x PBV.
2. PTRO IJ signed an amendment and restatement of its mining services agreement with PT Pasir Bara Prima (a SINI entity), extending the contract duration to the life of mine (Emiten News). MNCS Comment: We view positively the company’s efforts to extend the contract duration with PT Pasir Bara Prima, which could provide a potential backlog of up to USD1.08 billion. We anticipate that the additional backlog will strengthen the company's performance in the future. PTRO is currently trading at 2.40x PBV.
3. INTP IJ recorded 1.6million tons cement sales as of 5M24 (Kontan). MNCS Comment: Following this, the market shares of INTP reached 29.3%. The achievement was mainly contributed by the increase in sales for the construction of IKN. Management believed that further expansion of the cement market in Sulawesi and national infrastructure projects such as Patimban Port, MRT and LRT in Jakarta also contributed to the sales volume. In 1Q24, INTP experienced -3.8% YoY decline in revenue and -35.1% YoY in net income, pressured by the slowdown in all business segments while coupled by increasing operating expenses. INTP is currently trading at 1.21x PBV.

IHSG Updates
The JCI increased by +0.45% to 7,253.37 on Friday (07/05), followed by a net foreign buy of IDR 558.00 billion. Most sectors strengthened and boosted the index, led by the healthcare sector (+1.45%), followed by the industrial sector (+1.37%). On the other hand, sectors that weakened were led by the basic materials sector (-0.43%), followed by the infrastructure sector (-0.22%). The index managed to outperform the declining Asian markets, as investors responded positively to the increase in foreign exchange reserves in Jun-2024 to USD140.2 billion (vs USD139.0 billion in May-2024). The Rupiah closed higher at IDR16,278/USD. We estimate that the JCI will move in the price range of 7,183-7,266. Today's recommendations: BMRI, ESSA, ITMG, LSIP

Corporate Actions
Cum Dividend: CITA (IDR117/share), ICBP (IDR200/share), INDF (IDR267/share)

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