MNCS Morning Navigator

08 September 2023

MNCS Morning Navigator September 8, 2023

Global Market Highlights
DJIA strengthened +0.17% on Thursday (07/09), while the S&P500 (-0.32%) and Nasdaq (-0.89%). Wall Street closed mixed, with investors paying attention to the release of data on initial jobless claims as of September 12 which fell to 216k (vs. 234k in consensus). It is feared that this could trigger a hawkish outlook for The Fed going forward. Today, the market will be looking toward several data releases such as: 1) US Wholesale Inventories MoM Jul-2023; 2) US Consumer Credit Change Jul-2023; 3) Germany Inflation Rate YoY Final Aug-2023.

Domestic Update
• Bank Indonesia (BI) reported foreign exchange reserves of USD137.1 billion in Aug-2023 (vs USD137.7 billion in Jul-2023). MNCS Comment: The foreign exchange reserves in Aug-2023 decreased by USD600 million, influenced by the government's foreign debt payments and the need to stabilize the rupiah exchange rate. Despite the decrease, the reserves remain above the global adequacy standard, equivalent to 6.2 months of import financing and 6.0 months for both import financing and government foreign debt payments.

Company News
1. SMIL IJ reported a realized acquisition of proceeds amounting to IDR50 billion for fleet expansion (Emiten News). MNCS Comment: We view the forklift expansion positively as it can boost the company's future performance. We also anticipate an increase in forklift demand, especially with the upcoming elections acting as tailwinds for the paper industry, and the expansion of the INKP factory. Currently, SMIL is traded at the level of 16.50x/2.05x PER/PBV.
2. RAJA IJ is currently engaged in B2B negotiations to acquire a portion of the participating interest (PI) in an oil and gas block in Sumatra (Kontan). MNCS Comment: We see the company's efforts to expand its business portfolio as value-adding and having the potential to drive profitability in the future. Furthermore, this will be supported by the government's target to increase oil lifting in the 2024 state budget. Currently, RAJA is traded at the level of 14.92x/2.42x PER/PBV.
3. SILO IJ has allocated IDR396.8 billion for land acquisition as part of the construction process for new hospitals in Surabaya and Jakarta (Market Bisnis). MNCS Comment: We view the company's efforts to increase market penetration in that area positively. It is expected that this expansion can boost the company's future revenue. With the existing bed capacity up to 1H23 reaching 3,956 units, the expansion is estimated to increase the total bed capacity to 4,356 units. Currently, SILO is traded at the level of 24.48x/3.41x PBV.

IHSG Updates
JCI weakened -0.59% to 6,954.81 on Thursday (07/09), followed by net foreign sell reaching IDR1.10 trillion. A number of sectors experienced weakening and weighed on the index, led by the transportation sector (-1.72%) followed by the property sector (-1.30%). On the other hand, sectors that experienced strengthening were led by the technology sector (+1.58%) followed by the health sector (+0.31%). The index movement is in line with weakening Asian markets, where investors are observing the disappointing performance of China's trade balance in August 2023, thus increasingly pointing to a global economic slowdown. The Rupiah closed lower at IDR15,325/USD. We estimate that the JCI will move in the price range of 6,912-6,973 pending the release of Consumer Confidence Aug-2023 data. Today's recommendation: ACES, ESSA, INKP, UNVR.

Corporate Actions

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