Global Market Highlights
The DJIA slipped by -0.04% on Tuesday (17/09), while the S&P 500 (+0.03%) and the Nasdaq (+0.20%) strengthened. Wall Street closed mixed as all eyes are on Fed’s interest rate decision today, expected to be trimmed by 25bps to 5.25%. Additionally, there were mixed signals from yesterday’s data releases. Retail sales performed softer in Aug-2024, growing by 0.1% MoM/2.1% YoY, slowing down from 1.1% MoM/2.9% YoY in Jul-2024. Meanwhile, the industrial and manufacturing productions recovered to 0.8% MoM and 0.9% MoM, respectively (vs -0.9% MoM/-0.7% MoM in Jul-2024). Today the market will be looking forward to several data releases such as: 1) Indonesia Interest Rate Decision; 2) Indonesia Loan Growth Aug-2024; 3) Japan Balance of Trade Aug-2024.
Domestic Update
BPS reported a trade balance surplus of USD2.89 billion for Aug-2024, up from USD0.50 billion in Jul-2024. MNCS Comment: This performance exceeded market expectations of USD1.96 billion, driven mainly by the non-oil and gas sector, which recorded a surplus of USD4.34 billion (vs USD2.60 billion in Jul-2024). This aligns with the increase in exports to USD22.36 billion, accelerated by higher fats and animal/vegetable oil (CPO) exports. Meanwhile, the oil and gas sector posted a narrower deficit of USD1.44 billion (vs USD2.13 billion in Jul-2024). Imports were recorded at USD20.67 billion, slowing by -4.93% MoM. We believe that this solid surplus will bolster foreign exchange reserves and support IDR stability.
Company News
1. ADHI IJ reported new contract values totaling IDR13.6 trillion up to Aug-24. MNCS Comment: We note a -44.5% YoY decrease in Aug-2024 new contract values (vs IDR24.5 trillion in Aug-2023). This was mainly driven by building projects which contributed 43% of total new contract values, followed by water resource projects contributing 31%, and projects related to roads and bridges, property, manufacturing, and EPC contributing 26%. Additionally, if the target for new contract values remains at least equal to the achievement in FY23, the realization up to Aug-24 stands at 36.4%. 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 0.28x PBV.
2. WIKA IJ has obtained two new projects for the construction of a hospital and a glass bridge, amounting to IDR1.0 trillion. MNCS Comment: We note that the contract value for the construction of the hospital is IDR863.0 billion and will be built through the company’s consortium. Additionally, the construction of the 275m glass bridge, amounting to IDR185 billion, will be a tourist attraction near Sukamashi Dam and is expected to be completed by FY25. WIKA is currently trading at 19.76x/1.31x PER/PBV.
3. MTDL IJ has prepared IDR300 billion for capex in FY24E. MNCS Comment: The allocated capex in FY24E will focus on enhancing the company’s infrastructure and equipment upgrades. Management explained that IDR120 billion will be used to expand its main logistic center and warehousing, which is currently running at near full capacity (90% capacity). Additionally, this is expected to increase the warehouse capacity by over 85% and enhance MTDL’s capabilities to handle and distribute goods efficiently. The remaining IDR180billion of the proceeds will be used to rent IT equipment for its oil & gas business segment and renew internal IT equipment. MTDL is currently trading at 13.68x /2.03x PER/PBV.
IHSG Updates
The JCI rose by +0.25% to 7,831.78 on Tuesday (17/09), followed by a net foreign buy of IDR678.82 billion. Most sectors saw gains, supporting the index's rise, led by the consumer cyclical sector (+1.63%), followed by the healthcare sector (+1.15%). On the other hand, the sectors that experienced declines were led by the infrastructure sector (-0.82%), followed by the property and real estate sector (-0.20%). The index once again outperformed other Asian markets, which closed mixed, as investors responded positively to Indonesia's trade balance surplus in Aug-2024, which reached USD2.89 billion, up from USD500 million in Jul-2024. The Rupiah closed higher at IDR15,335/USD. We estimate that the JCI will move in the price range of 7,775-7,855. Today's recommendations: ASII, BMRI, CPIN, LSIP.
Corporate Actions
EGMS: JSMR, RMKE
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