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Macro Strategy: Currency Conundrum
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Equity Strategy: Re-emerging risk factors may warrant a more conservative positioning in Feb24 · We cut our FY23/FY24F earnings estimates for the sector by 34.5/23.2% due to lower-than-expected LB and higher-than-expected corn prices. · We see downside risks to valuations from potentially soft 4Q23 results, high corn prices, and relatively higher local fund positions. · We downgrade the sector’s rating to Neutral, with CPIN (Buy, TP of Rp5,200) as our top pick. To see the full version of this report, please click here
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MARKET NEWS |
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MACROECONOMY
Indian Government Anticipates a 7% Growth Rate
The Indian government predicts a growth rate of 7% for the upcoming fiscal year (Apr24 to March 2025), citing the robust performance of the financial sector and ongoing structural reforms. This projection surpasses the current consensus of 6.3%, positioning India as one of the fastest-growing economies globally. The expected growth for the ongoing fiscal year is 7.3%. The finance minister expresses optimism in India's potential to double its economy by 2030. (Bloomberg)
Indonesian Government is Set to Distribute Direct Cash Assistance of Rp600,000 to 18.8mn Families
The government is set to distribute a Direct Cash Assistance (BLT) of Rp600,000 to 18.8mn families, marking the ongoing provision of aid previously known as BLT El Nino, now renamed BLT for Food Risk Mitigation. The Rp600,000 cash assistance encompasses a three-month support program, equivalent to Rp200,000/ month, spanning from January to March. The distribution is scheduled to commence in February. (CNBC Indonesia)
Indonesia Government Targets Inflation in the range of 2.5% ±1% until 2027
The government is targeting inflation in the range of 2.5 ± 1% in 2024-2027. Efforts to achieve the inflation target in this range will be carried out through coordination between fiscal and monetary policies. In pursuit of this objective, the government endeavors to maintain volatile food inflation below 5%. (Investor Daily)
SECTOR
Consumer: Government Discusses Sugar Levels Subject to MBDK Tax
The government, through the Directorate General of Customs and Excise, has proposed categorizing excise duty on packaged sweetened beverages in Indonesia based on the amount of sugar or sweeteners they contain. This is consistent with research conducted by the American Heart Association (AHA), which advocated the same idea. There are at least three categories of MBDK that will be imposed: 1) MBDK containing more than 6g of sugar per 100ml; 2) MBDK containing natural sweeteners at any level; and 3) MBDK containing artificial sweeteners at any level. However, the limit value for sugar content can still be determined through an agreement between the Ministry of Finance and the relevant K/L. (Kontan)
Consumer: HET Rice and Sugar Reference Prices to be Re-Evaluated
The Presidential Staff Office (KSP) opened the option to adjust the Highest Retail Price (HET) of rice due to rice prices that are still perched at a high level. Based on data from the Food Price Panel of the National Food Agency (Bapanas), as of January 29, 2024, the national average price of medium rice is Rp13,500/kg, an increase of 14.44% yoy. The price is above the highest national average price of medium rice last year which occurred in October, which was Rp13,210/kg. In addition to rice, KSP also proposed the need to review the reference sales price (HAP) of granulated sugar at the consumer level. The national average price of granulated sugar has also been high for a long time and tends to rise, so it may also need to be adjusted for HAP. (Kompas)
Tech: Kominfo Intends for a Minimum Internet Speed Of 100 Mbps
The Minister of Communication and Information plans to set a minimum fixed broadband internet speed in Indonesia of at least 100Mbps. The APJII (Indonesian Internet Service Providers Association) survey found that internet connections were just accessible for Indonesian people in a range of Rp100,000—300,000 per month, or 30Mbps or less. According to APJII, expanding it to 100Mbps will result in higher costs, so an assessment is required before implementing this policy. (Kontan)
CORPORATE
ACES Opened its First Store in Banyuwangi
Currently the total number of ACES stores in East Java reaches 23 stores and overall in Indonesia there are 234 stores in 68 cities. The company said ACE Banyuwangi offers a unique shopping experience with an innovative store concept through Inspirational Corner, an area to provide an inspirational shopping experience with various home decoration ideas through a variety of ACE products. In addition, there is a Personal Shopper concept that will help customers find products that suit their needs, as well as a Seamless Omni-channel Experience concept that combines the ease of online shopping and the convenience of offline shopping. (Investor Daily)
BBCA Partners with Jamkrindo and Targets 11% KUR Growth
BBCA cooperates with Jamkrindo in KUR distribution and guarantee. In 2023 BBCA managed to record an increase in KUR distribution of up to 24% yoy, with KUR NPLs relatively stable at 0.7%. This will continue to be improved in line with BCA's KUR realization target in 2024 of 11%. With this cooperation, Jamkrindo guarantees the risk of bad debts for the distribution of small KUR or micro-KUR. BBCA offers a ceiling of up to Rp500mn with competitive interest rates, starting from 6% effective per year. This program also offers other benefits such as free administration and provision fees. (Investor Daily)
In other news, motor vehicle loans have supported the growth of banking consumer credit throughout 2023. The condition of vehicle credit is projected to continue accelerating in 2024. BBCA also experienced rapid growth in vehicle loans in 2023. BCA noted that outstanding vehicle loans rose 20.8% yoy to reach Rp56.tr as of Dec23. According to BBCA, the rapid demand for credit was due to the fact that vehicle supply was hampered in previous years. Meanwhile, in 2023, vehicle supply will recover. (Kontan)
BMRI Disbursed Social Loans to ADMF Worth Rp250bn
BMRI distributed financing through a Social Loan facility to PT Adira Dinamika Multifinance Tbk (ADMF) worth Rp250bn. Social Loan is a sustainable financing instrument focused on financing social-based projects. Through this Social Loan facility, BMRI and ADMF collaborate to expand access to financing for entrepreneurs with limited financing services from banks or who still depend on financing alternatives other than banks. (Bisnis)
BTPS Completed the Transfer of 373,100 Treasury Share
BTPS transferred shares resulting from the buyback of 373,100 copies. The sale of treasury shares was carried at an exercise price of Rp3,266 per share. Following this pricing scheme, the company collected Rp1.21bn. The company has transferred 2.25mn treasury shares to date. Treasury shares allocated and distributed to recipients are a deferred variable remuneration component, a.k.a. deferred bonus. Thus, these shares are not subject to a lock-up period. (Emiten News)
HRUM Increases Shareholding in Westrong Metal Industry
HRUM through its subsidiary, PT Harum Nickel Industry (HNI) has purchased shares owned by Prime Investment Capital Limited and Walsin Singapore Pte. Ltd. in PT Westrong Metal Industry (WMI). HNI has purchased 1,214,000 shares. The value of this share sale and purchase transaction reached US$215.2mn. Now HNI's ownership in WMI is 80.7% of the issued and paid-up capital. Currently, the Westrong Metal Industry project is in the final stages of construction and is targeted to commence commercial operations in the 1H24. (Kontan)
INCO Produces 70,728 tons of Nickel in 2023, 2-year high
INCO reported nickel in matte production of 70,728 tons in 2023, up 18% from the realization in 2022 of 60,090 tons. INCO's nickel production in the fourth quarter of 2023 reached 19,084 tons of nickel in matte, or around 6% and 18% higher than the production volume recorded in the third quarter of 2023 of 17,953 tons and the fourth quarter of 2022 of 16,183 tons, respectively. (Bisnis)
