MNCS Morning Navigator

07 September 2023

MNCS Morning Navigator September 7, 2023

Global Market Highlights
The DJIA weakened -0.57% on Wednesday (06/09), followed by the S&P500 (-0.70%) and Nasdaq (-1.06%). Wall Street weakened again, in line with increasing investor concern over The Fed's hawkish policies, after the release of PMI services data in Aug-2023 which rose significantly to 54.5 (vs 52.7 in Jul-2023). Today, the market will be looking toward several data releases such as: 1) US Initial Jobless Claims 2-Sep-2023; 2) France Balance of Trade Jul-2023; 3) Japan Leading Economic Index Prel Jul-2023.

Domestic Update
• Fitch estimates that the 2024 elections will not impact investments. However, the election spending by parties is expected to have a positive effect on economic growth over the next 6 months. Fitch projects a 5% economic growth for Indonesia in 2023. MNCS Comment: Assuming that there are more than two pairs of presidential and vice-presidential candidates, leading to a two-round election, this can certainly provide stronger tailwinds for the real sector. We anticipate domestic consumption leading up to the 2024 elections to reach IDR149.3 trillion (0.7% of the nominal GDP in FY23E). This figure represents an increase of +16.9% compared to the FY19 elections.

Company News
1. MTEL IJ reported the realization of a capex allocation reaching 50%, or IDR3.5 trillion, in 1H23 (Kontan). MNCS Comment: With a capex allocation of IDR7 trillion for FY23E, we anticipate MTEL will strengthen its position as a leader in the tower sector. With a tower portfolio comprising 58% outside of Java, we view the robust fiber optic expansion positively in terms of enhancing the company's future performance. Currently, MTEL is traded at the level of 31.05x/1.92x PER/PBV.
2. BSSR IJ will distribute an interim dividend for the fiscal year FY23E amounting to USD60 million, equivalent to IDR349.93 per share. The cum dividend date for regular and negotiation markets is September 14 (Emiten News). MNCS Comment: Given this, we estimate BSSR will offer a dividend yield of 8.1%. With net earnings of USD106.37 million in 1H23 (-17.2% YoY), the payout ratio stands at 56.4%. Currently, BSSR is traded at the level of 3.55x/2.83x PER/PBV.
3. UNTR IJ has potential to operate a geothermal power plant (PLTP) with a capacity of 2x110 MW through PT Supreme Energy Rantau Dedap (SERD) (Market Bisnis). MNCS Comment: : We view the company's efforts to diversify its business operations positively and create a more sustainable future business model. We also believe this can be an effort to counterbalance the implementation of the carbon trading, particularly related to the company's coal segment. Currently, UNTR is traded at the level of 4.56x/1.42x PER/PBV.

IHSG Updates
JCI flat +0.06% to 6,995.95 on Wednesday (06/09), followed by net foreign sell reaching IDR17.03 billion. The sector that led the strengthening was the energy sector (+2.41%) followed by the transportation sector (+1.46%). On the other hand, the sector that experienced weakness was led by the property sector (-0.93%) followed by the cyclical sector (-0.55%). The index tends to close flat amidst the majority of Asian exchanges contracting, where investors wait and see ahead of the release of domestic foreign exchange reserves data in Aug-2023. The Rupiah closed lower at IDR15,293/USD. We estimate that the JCI will move in the price range of 6,970-7,020. Today's recommendation: AKRA, IMJS, MDKA, SULI.

Corporate Actions
IPO: BABY (IDR266/share)

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