Global Market Highlights
The DJIA strengthened by +0.53% on Wednesday (22/11), followed by S&P500 (+0.41%) and Nasdaq (+0.46%). Wall Street successfully rebounded as investors noted a decrease in initial jobless claims as of 18-Nov, which fell to 209k (vs 225k consensus). Additionally, investors positively responded to efforts towards a ceasefire agreement between Israel-Hamas conflicts, easing market concerns about ongoing war escalation. Today, the market will be looking toward several data releases such as: 1) France Business Confidence Nov-23; 2) Germany HCOB Manufacturing PMI Flash Nov-23; 3) UK S&P Global Manufacturing PMI FLash Nov-23.
Domestic Update
The government has set an average increase of +3.5% YoY for the Provincial Minimum Wage (UMP) in 2024. MNCS Comment: We note that the average increase in UMP in 2024 is lower than the 2023 figure of +7.5% YoY. Meanwhile, BI's estimated inflation projection in the annual budget plan for 2024 is recorded at +3.2%. We view that the purchasing power in the low-mid class will face several challenges, especially from the exposure of El-Nino, which is starting to realize an increase in staple prices due to lagging factors over 6-12 months. Meanwhile, we expect political year momentum, the realization of social assistance and state spending, as well as the potential for an increase in civil servant salaries to act as a buffer going forward.
Company News
1. JSMR IJ plans to conduct asset recycling for toll roads with low frequencies such as the Manado-Bitung Toll Road (Investor ID). MNCS Comment: We see that asset recycling efforts will face several challenges, especially in an era of high-interest rates like the present. Additionally, the prospects for regional growth plans will also be a success factor in these asset recycling efforts. Currently, JSMR is traded at a level of 14.22x/1.46x PER/PBV.
2. EXCL IJ recorded a net profit growth of +3.0% YoY to IDR1.0 trillion in 9M23 (vs IDR981.2 billion in 9M22) (Emiten News). MNCS Comment: The increase in net profit was driven by a +10.5% YoY increase in revenue to IDR23.9 trillion in 9M23 (vs IDR21.6 trillion in 9M22). However, finance expenses increased by +15.1% YoY and hindered profitability. We note that the company's NPM decreased to 4.2% in 9M23 (vs 4.54% in 9M22). Currently, EXCL is traded at a level of 20.17x/1.04x PER/PBV.
3. ARKO IJ projects production assumptions in FY24F to be 139,819 MWh and 177,510 MWh in FY25F (Market Bisnis). MNCS Comment: We assess that these assumptions will be supported by the operation of the Yaentu and Kukusan projects. With the addition of these pipeline projects, there is potential to drive the company's performance forward. Currently, ARKO is traded at a level of 34.30x/4.68x PER/PBV.
IHSG Updates
The JCI weakened by -0.79% to 6,906.95 on Wednesday (22/11), followed by a net foreign sell of IDR34.73 billion. Most sectors experienced declines and weighed on the index, led by the infrastructure sector (-5.44%), followed by the basic materials sector (-2.52%). On the other hand, sectors experiencing gains were led by the technology sector (+2.66%), followed by the healthcare sector (+0.44%). The index weakened amid a mixed close in the Asian markets, with investors scrutinizing the FOMC minutes by The Fed in Nov-2023 discussing whether The Fed needs to raise the benchmark interest rate in the future. Meanwhile, investors will wait and see ahead of the BI7DRR decision to be announced by Bank Indonesia. The Rupiah closed lower at IDR15,575/USD. We estimate the IHSG will move within the price range of 6,885-6,950. Today's Recommendations: ARTO, BBRI, BEST, TLKM.
Corporate Actions
Cum Dividend : SKRN (IDR6/share), SPTO (IDR25/share), JTPE (IDR15/share)
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