FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Retail: Potential boost from Ied festives and promotions (OVERWEIGHT)

• We noted more foot traffic to retail/shopping areas toward the end of Mar24, likely supported by the disbursement of the holiday allowance.
• Additionally, promotions of several major brands should also translate into higher sales yoy in 1Q24.
• Maintain Overweight with our pecking order being: ACES, MAPA and MAPI. Rupiah weakening is key risk for 2Q24 onward sales outlook.

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Bank Central Asia: The place to shelter from the storm (BBCA.IJ Rp 9,350 BUY; TP Rp 11,300)

• Supported by 17% yoy loans growth and a relatively steady NIM, BBCA booked net profit of Rp12.9tr in 1Q24 (+12% yoy, +5% qoq), inline.
• Credit quality was in check with NPL at 1.9% in 1Q24 (+9bps yoy, +13bps qoq) but with a lower LaR ratio of 6.3% (-29bps yoy, -314bps qoq).
• We maintain our forecasts, TP and Buy rating; BBCA remains as our top pick in the banking sector.

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Macro Strategy: Shift in Rate Trajectory

• Signs of volatility easing on de-escalation of geopolitical tensions, but the recent rising energy prices underpin the higher-for-longer narrative.
• While BI intervened in forex markets, we see no sign of further BI monetary contraction to support the IDR, with OMO falling further.
• We alter our yield projection on the higher-for-longer narrative. The recent yield and IDR levels provide room for foreign inflows.

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RESEARCH COMMENTARY

ACES  ACES (BUY – TP Rp1,200): Continued strong March-24 SSSG of 19.9%

• ACES reported 3M24 sales of Rp1.98tn (+17.8% YoY vs our FY24F: +11.1% yoy), representing 23.4% of our FY24F, i.e inline.
• ACES reported SSSG in March-24 of 19.9% (Feb-24: 15.3%), higher vs March-23 of 1.2%.  Ex-Java was the growth driver with SSSG of 23.3%, followed by Rest of Java 20.3% and Jakarta 13.5%.
• Strong March-24 led to 3M24 SSSG of 13.3% (vs 2M23: 10%). ACES estimates Ramadhan festive to boost April’ sales . ACES opened 2 new stores in Mar-24: 1,400sqm in Garut (West Java) and 6,000sqm in Kota Wisata. The company also completes the renovation of 4 existing stores in West Kalimantan, West Java, Bali and South Sulawesi. (Natalia Sutanto – BRIDS)

BBCA 1Q24 Results – In-line

• BBCA booked net profits of 12.9tr (+12% yoy, +5% qoq) with strong PPOP of 16.9tr (+8% yoy, + 12% qoq) and decent provisions of Rp1.0tr (-30% yoy, from reversal in 4Q24). 
• BBCA`s 1Q24 NP forms 24% of both ours and consensus` FY24F, in-line.
• Notably, BBCA maintained a relatively stable NIM of 6.3% in 1Q24, demonstrating the company's effective management of its interest income and expenses. This was achieved through a relatively stable EA yield and CoF qoq. In Comparison to 1Q23, NIM remained surprisingly flat, with the higher EA yield (from higher portion of loan) offsetting the higher CoF.
• The bank`s CoC remained manageable at 0.5%, slightly higher than the 30-40bps guidance.
• Asset quality remained robust with a flat qoq NPL ratio of 1.9% in 1Q24 and an improving LAR ratio to 6.6% (from 6.9% in 4Q23). However, we note that the <7days SML portion is getting smaller while the >60days SML portion is getting larger.
• Supported by its ample liquidity, BBCA recorded loan growth of 17% yoy in 1Q24. The growth was mainly driven by corporate loans, which grew by 22% with the least growth seen in the commercial segment at 9% yoy. The management keeps the loan growth guidance unchanged at 8-10%.
• TPF recorded 8% yoy growth, resulting in a higher LDR of 74%. TD grew flat qoq while CASA rose 2% as the bank gradually cut its TD (100bps) rate since Aug23.
• Supported by 1) strong loan growth, 2) resilient NIM, and 3) robust asset quality, we still comfortably pick BBCA as our top pick in the banking sector. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

Poultry – 3rd week of April 2024 Price Update

• Livebird price continued its post-Lebaran declining trend, reaching c. Rp20k/kg currently, from Rp22-24k during the Eid holiday, a decrease of 8% wow.
• DOC remained stable at Rp6.5k/chick in late April from end of March.
• Local corn price continues to decrease to Rp5k/kg from Rp6k/kg in mid of March, better than expected.
• Amid the rising global tension, soybean meal (SBM) prices remained stable at c. US$330-340/t during the entire month of April, and the average stood at US$336 (-0.3% mom, -26% yoy). (Victor Stefano & Wilastita Sofi – BRIDS)

MACROECONOMY

Eurozone Fiscal Debt to GDP Fell to 3.6% in 2023

Eurozone fiscal debt to GDP fell to 3.6% in 2023 (vs 2022’s 3.7%), the lowest number since 2020. The bloc members managed to improve their fiscal health after enormous debt issuance during covid. (Eurostat)

Indonesia Trade Balance Reached US4.47bn in Mar24

Trade Balance in Mar24 reached US$4.47bn on the back of higher mom growth in export and a decline in import. The figure was significantly higher than our/cons estimates of US$1.04/1.09bn where we expect slow performance in export. Export in Mar24 was amounted to US$22.4bn, an increase of 16.4% mom but still declined annually at -4.2%. The three main commodities of Indo Export rose on a monthly basis, with Iron & Steel (HS 72) led with 27% mom growth. Animal or Vegetable Fats and Oil (HS 15), which consist of Palm Oil, followed with 19.3% mom growth. Mineral Fuels (HS 27), which contain coal, rose 2.1% mom. All three categories still decline annually.

Import in Mar24 was amounted to US$17.96bn (-12.8% yoy | -2.6% mom). On a monthly basis, import fell across usage categories. Import of consumption goods and Raw Material decline by 0.7% mom, while import of capital goods decline materially at an 11.3% rate. (BPS)

SECTOR

Automotive: Electric Car Sales Increased by 228.05% yoy in 1Q24

Electric car sales reached 5,882 units (+228.05%) in Jan-Mar24. Wuling Motors was the main contributor to national electric car sales in the 1Q24, with 3,807 units coming from the Air EV (686 units) and BinguoEV (3,121 units). According to Gaikindo, the number of sales could not be separated from the increase in new brands and models circulating on the market. (Kontan)

Automotive: Some Regions Abolish Progressive Tax and Transfer of Name Fees

The government plans to abolish the progressive Motor Vehicle Tax (PKB) and Motor Vehicle Title Transfer Fee (BBNKB) II in Indonesia. This policy will come into effect on 1 January 2025, and is in line with Law Number 1 Year 2022 on Financial Relations Between the Central Government and Regional Governments. Despite removing two sources of local tax revenue, the government is optimistic that overall PKB revenue will increase. Currently, several regions have implemented the policy, including: North Sumatra, West Sumatra, Central Kalimantan, Bali, Central Java, Etc. (Viva)

CORPORATE

ADHI to Release Bonds Worth Rp5tr in Three Stages

ADHI has received approval to Release Bonds Worth Rp5tr in Three Stages. In the first stage, ADHI will issue three series of bonds with tenors of 3 years, 5 years and 7 years. For the second phase, the company will publish two series with tenors of 3 and 5 years. The first and second bond interest rates refer to ADHI's credit rating. Finally, in the third phase, the company will only issue one series with a 5-year tenor with a maximum interest rate referring to ADHI's credit rating. (Kontan)

GPF Distributed 253.28mn GOTO Shares

GPF distributed 253.28mn GOTO shares to the company's employees and consultants. The transaction was implemented in three stages. First, on 2 April 2024, GPF transferred 147,857,698 shares. Then, on 3 April 2024, GPF distributed 93,811,203 shares. Then, on 18 April 2024, GPF distributed 11,612,406 sheets. (Emiten News)

MDKA Speeds Up Pani Gold Project in Gorontalo

MDKA is accelerating work on the Pani Gold Mine in Gorontalo, which is targeted to be operational by the end of 2025. The project with an estimated production of 450,000 troy ounces/year is managed by MDKA's subsidiaries, PT Puncak Emas Tani Sejahtera (PETS) and PT Gorontalo Sejahtera Mining (GSM). The Gold Mine Project has mineral resources of 6.7mn ounces of gold and is projected to have a production capacity of 19Mt of ore/year and at its highest production can produce up to 450,000 troy ounces of gold/year. (Kontan)

TLKM Absorbed Rp5.1tr Capex in 1Q24

TLKM spent Rp5.1tr in capex in 1Q24, equivalent to 13.6% of total revenue in Q124. The capex was used for important projects, such as the deployment of 4G and 5G base transceiver stations (BTS), as well as the construction of high-throughput satellites (HTS) at the eastern orbital point 113. Other projects include the construction of international submarine cables and the development of hyperscale data centres in Cikarang and Batam. (Emiten News)