MNCS Morning Navigator

10 Juni 2024

MNCS Morning Navigator June 10, 2024

Global Market Highlights
The DJIA weakened by -0.22% on Friday (07/06), followed by the S&P500 (-0.11%) and Nasdaq (-0.23%). Wall Street reversed its gains and weakened as investors responded to the release of non-farm payrolls data for May-2024, which recorded 272k, higher than the consensus of 185k. As the figure exceeded both the consensus and the Apr-2024 realization of 165k, it dampened expectations of a future rate cut. Today the market will be looking forward to several data releases such as: 1) Japan GDP Growth 1Q24; 2) EA Consumer Inflation Expectations Apr-2024; 3) China Vehicle Sales YoY May-2024.

Domestic Update
Bank Indonesia reported that Indonesia's foreign exchange reserves in May-2024 stood at USD139.0 billion. MNCS Comment: The foreign exchange reserves in May-2024 increased compared to the Apr-2024 realization of USD136.2 billion. This increase was mainly influenced by tax and service revenues as well as the issuance of government global bonds. Additionally, we view higher global commodity prices, such as coal in May-2024, as a catalyst. With the increase in foreign exchange reserves, we expect this to serve as a buffer for the rupiah.

Company News
1. ACES IJ will distribute dividends for the 2023 fiscal year amounting to IDR574 billion, or equivalent to IDR33.5 per share with a payout ratio of 75% (Kontan). MNCS Comment: Consequently, we estimate that ACES will offer a dividend yield of approximately ~4%. The total DPS distributed is the highest since 2011 and exceeds our expectations with a payout ratio of ~52%. Meanwhile, the average dividend yield over the past 5 years has reached ~2.5%. ACES is currently trading at 17.48x/2.26x PER/PBV.
2. HRUM IJ focuses on the expansions in nickel business while the coal segment eases (Kontan). MNCS Comment: The management targets the coal production and sales volume between 5.5-6.1 MT (vs target of 7 MT in FY23), with sales realization of 1.7 million tons in 1Q24. Meanwhile, the production and sales of nickel ore are aimed at 500,000-1 MT, 23,800-28,000 tons of NPI, and 38,000-42,000 tons of nickel matte. The target is supported by the downstream capacity expansion, the new matte nickel smelter since Mar-2024 (WMI) which is targeted to have 85% capacity by the end of FY24, and the development of another new smelter (BSE). In 1Q24, HRUM recorded a -9.7% shrink in revenue due to the challenging coal price. Hence, we view this aggressive expansion in nickel as a good effort from management to diversify its business. HRUM is currently trading at 0.69x PBV.
3. PSAB IJ recorded USD62.8 million of sales (+188% YoY) in 1Q24 (Kontan). MNCS Comment: This performance was primarily favored by higher ASP (+13% YoY) following the rise in gold commodity price and an increase in the production volume at 33,272 troy ounces (+251% YoY). As a result, the bottom-line experienced +114.9% YoY spike to USD2.2 billion (vs net loss of USD15.0 billion in 1Q23). PSAB is currently trading at 0.68x PBV.

IHSG Updates
The JCI fell by -1.10% to 6,897.95 on Friday (07/06), accompanied by a net foreign sell of IDR894.24 billion. Most sectors weakened and pressured the index, led by the financials sector (-1.35%) and followed by the technology sector (-1.31%). On the other hand, the healthcare sector led the gain (+1.20%) and followed by the transportation & logistic sector (+0.60%). The index weakened amidst better-than-expected Indonesian Foreign Exchange reserves in May-2024 at USD139 billion (vs USD136.2 billion/USD135 billion Apr-2024/Est). The other Asian markets also closed in the red zone as investors tend to wait and see for the upcoming economic data reading from Japan. The Rupiah closed higher at IDR16,195/USD. We estimate that the JCI will move in the price range of 6,884-6,950. Today's recommendations: ACES, ARTO, AVIA, PNLF.

Corporate Actions
Cum Dividend: GHON (IDR165/Share), MTEL (IDR18.27/Share)

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