MNCS Morning Navigator

19 Maret 2024

MNCS Morning Navigator March 19, 2024

Global Market Highlights
The DJIA strengthened by +0.20% on Monday (18/03), followed by S&P 500 (+0.63%) and Nasdaq (+0.82%). Wall Street successfully rebounded, supported by a rally in technology stocks following positive catalysts from Apple and Tesla. Investors tended to overlook the rise in UST yield as well as the release of the NAHB Housing Market Index data in Mar-2024, which rose to level 51 (vs consensus 48). Investors will wait and see ahead of the FOMC meeting by The Fed this week, with expectations of unchanged interest rates. Today, the market will await several data releases, including: 1) Japan BoJ Interest Rate Decision; 2) US Building Permits Prel Feb-2024; 3) US Housing Starts Feb-2024.

Domestic Update
Bank Indonesia reported an increased net liability of Indonesia’s International Investment Position (PII) in 4Q23 to USD260.3 bn (vs USD251.9 bn/USD250.1 bn in 3Q23/4Q22). MNCS Comment: The increase in net liabilities is a result of the offsetting positions of Foreign Financial Obligations (KFLN) at USD744.9 billion (+3.8% QoQ) and Foreign Financial Assets (AFLN) at USD484.6 billion (+4.1% QoQ). The rise in KFLN is in line with the weakening of the USD exchange rate against the majority of global currencies, including the Rupiah, and the increasing optimism among investors regarding the domestic economic outlook, coupled with a reduction in uncertainty in the global financial market. This position reflects a PII to GDP ratio of 19.0% in 2023, which remains unchanged from the previous year.

Company News
1. SRTG IJ recorded a -20% YoY decline in net asset value (NAV) of IDR48.9 trillion in FY23 (Kontan). MNCS Comment: The Company attributed the decline in net asset value to fluctuations in ADRO and MDKA share prices amidst pressure on prices of related commodities, namely coal and nickel. At the same time, the company continues to maintain prudent balance sheet management, as can be seen from the decrease in net debt by 62% YoY to IDR263 billion and LTV which was successfully cut to 0.4% from 1.1%. SRTG is currently trading at 0.43x PBV.
2. TPMA IJ recorded a net profit of USD19.7 million in FY23, or an increase of +37.8% YoY (vs USD14.3 million in FY22) (Kontan). MNCS Comment: We noted that the increase in net profit was supported by a revenue increase of +6.0% YoY to USD66.6 million (vs USD62.8 million in FY22). Furthermore, COGS remained relatively flat, supporting the increase in gross profit performance by +17.9% YoY. In addition, profits from associate entities, gains from FX, and a lower tax rate contributed to margin expansion. NPM recorded an increase to 29.6% (vs 22.8% in FY22). TPMA is currently trading at 6.24x/1.33x PER/PBV.
3. DRMA IJ targets a 10% revenue growth in FY24 with a focus in developing its EV component business (Kontan). MNCS Comment: DRMA is becoming increasingly prominent in the electric automotive component industry through several strategic initiatives. These include the development of EV support infrastructures such as charging stations and the establishment of two new factories dedicated to developing new components, particularly for EV. These factories are expected to operate in mid-2024. In FY23, the company achieved remarkable growth, with a +41.88% YoY increase in revenue, followed by a +55.20% YoY rise in net income. DRMA is currently trading at 8.08x/2.43x PER/PBV.

IHSG Updates
The JCI continued its downturn by -0.35% to 7,302.45 on Monday (18/03), followed by foreign net buy of IDR96.7 billion. Sectoral indices closed mixed, where weakness was led by the transportation (-0.44%) and energy (-0.30%) sectors. On the other hand, the sectors that experienced strengthening were led by the technology sector (+1.14%) and basic materials (+0.68%). Regionally, Asian exchanges on average closed higher with the Nikkei leading the gain by +2.67% ahead of the decision of the BOJ board of governors meeting which is expected to end the era of negative interest rates and raise them to 0%. The Rupiah closed lower at IDR 15,690/USD. We estimate that the JCI will move in the price range of 7,284-7,371. Today's recommendations: ASSA, BBCA, ELSA, SIDO.

Corporate Actions
Cum Dividend: BMRI (IDR353.96/share), SDRA (IDR7.5/share)

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