Global Market Highlights
The DJIA climbed by +0.62% on Thursday (26/09), followed by the S&P 500 (+0.40%) and the Nasdaq (+0.60%). Wall Street strengthened as investors responded to a solid final GDP growth rate at 3% QoQ in 2Q24, which met markets’ expectations. Additionally, initial jobless claims fell to 218k as of Sep/21 (vs 222k/225k previously/consensus). These key performances boosted market expectations for a potential rate cut in Nov-2024, while easing concerns over the possibility of an overly aggressive reduction. Today the market will be looking forward to several data releases such as: 1) China Industrial Profits Aug-2024; 2) US Core PCE Price Index Aug-2024; 3) US Michigan Inflation Expectations Final Sep-2024.
Domestic Update
Ministry of Finance (Kemenkeu) reported that Indonesia’s government debt fell to IDR8,461.93 trillion in Aug-2024, down by IDR40.76 trillion from Jul-2024. MNCS Comment: This reduction was primarily due to debt repayments. The debt-to-GDP ratio declined to 38.49%, staying well under the 60% legal threshold, reflecting disciplined fiscal management post-pandemic. Most of the debt (88.07%) is in government bonds (SBN), with an average maturity of 7.95 years. We view that this prudent debt management can support Indonesia's sovereign credit ratings, providing fiscal stability amidst global challenges.
Company News
1. AALI IJ will distribute an interim dividend of IDR161.7 billion or the equivalent of IDR84/share. MNCS Comment: We estimate a potential yield of approximately ~1.2% with a payout ratio of 25.1% of total net profit as of 8M24. Cum dividend in the regular market and negotiated market on 3 Oct-2024. Additionally, the company posted a net profit of IDR642.9 billion (-4.4% YoY) as of 8M24. AALI is currently trading at 13.01x/0.59x PER/PBV.
2. WEGE IJ reported new contract values totaling IDR1.5 trillion as of Aug-2024. MNCS Comment: We note that new contract values as of Aug-2024 account for 29% of the new contracts target for this year (Target FY24E: IDR5.1 trillion). Additionally, 100% of the new contracts are from external clients, in line with WEGE’s strategy to diversify and expand its market outside the WIKA Group. Management noted that 72.3% of the new contracts are from government projects, 15.0% from SOEs, and 12.7% from private companies. Furthermore, WEGE expects that the majority of its revenue will be obtained through government projects in FY24E. WEGE is currently trading at 0.31x PBV.
3. BRIS IJ recorded a net profit growth of 20.6% YoY, amounting to IDR4.5 trillion as of 8M24. MNCS Comment: This increase in net profit was in line with a +4.3% YoY growth in NII to IDR11.8 trillion (vs IDR11.3 trillion in 8M23). As a result, PPOP increased by +5.5% YoY to IDR7.4 trillion in 8M24 (IDR7.0 trillion in 8M23). Furthermore, Cost of Credit remained flat at 0.7% and the CASA ratio improved to 63.1% in 8M24 (vs 60.1% in 8M23). BRIS is currently trading at 21.06x/3.43 PER/PBV.
IHSG Updates
The JCI closed flat at +0.05% at 7,744.52 on Thursday (26/09), amid a net foreign sell of IDR2.27 trillion. Most sectors posted gains, led by the healthcare sector (+2.29%) followed by the technology sector (+1.58%). On the other hand, sectors that experienced declines were led by the transportation and logistics sector (-0.79%) and the cyclical sector (-0.41%). The index remained flat despite Asian markets closing higher, as outflows from the banking sector continued to weigh on the index. Meanwhile, Singapore’s industrial production in Aug-2024 saw significant growth of +21% YoY, surpassing consensus estimates of +9.6% YoY. The Rupiah closed lower at IDR15,166/USD. We estimate that the JCI will move in the price range of 7,660-7,778. Today's recommendations: CMRY, ISAT, MARK, BMRI.
Corporate Actions
AGMS: BNII, MGLV, BNLI
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