FROM EQUITY RESEARCH
PT Trimegah Bangun Persada: Another fundraising to support solid expansion (NCKL.IJ IDR 790 BUY.TP IDR 1.400) ·         NCKL plans to conduct an EGMS in Mar24 to seek approval for fundraising through a private placement or rights issue. ·         The proceeds will be used to strengthen NCKL’s integrated nickel business on Obi Island.  ·         We maintain our FY24-25F forecasts and TP of Rp1,400 until further disclosure, but see 11.5-15.3% pot. upside from the expansion plan. To see the full version of this report, please click here   To see the full version of this snapshot, please click here   MARKET NEWS

MACROECONOMY

Indonesia Government Spending Reached Rp184.2tr in Jan24

Government spending reached Rp184.2tr in Jan24, a strong growth of 30.2% yoy. The growth indicates a front-loading pattern that had been stated by the Ministry of Finance at the start of the year. However, gov't revenue declined by 7.2% yoy to Rp215.5tr, weighed by Tax (excl. Customs) decline of 8.1% annually. Primary balance surplus was recorded at Rp61.4tr with the overall budget surplus stood at Rp31.3tr (0.14% of GDP). (Ministry of Finance)

 

Comment: ⁠In February, we believe the spending could grow even more as gov't has only started to disburse the Direct Cash Assistance (BLT) in February and they must pay the salary of the election field officers that will finish their term of service on 25th February. (Economic Research – BRIDS)

 

Indonesia Current Account Deficit of US$1.3bn in 4Q23

Indonesia current account deficit widened to US$1.3bn in 4Q23 (0.4% of GDP) from 3Q's deficit of US$0.9bn due to narrowing goods trade surplus. Deficit in service trade balance and primary income narrowed to US$4.8bn and US$9.1bn from US$5.4bn and US$9.6bn, respectively. For FY23, the current account turned deficit at US$1.6bn (0.1% of GDP) from 2022's surplus at US$13.2bn (1% of GDP). (Bank Indonesia)

 

US Manufacturing PMI Rose to 51.5 in Feb24

US Manufacturing expanded at the fastest pace since Sep22 with its manufacturing PMI reached 51.5 in Feb24. Output growth at the highest pace since Apr23 as new order also rose the most since May22. Employment growth touched a four-month high. (Trading Economics)

 

SECTOR

Banking: Digital Banking Transactions Reached Rp5,335tr in Jan24

Bank Indonesia (BI) reported that digital banking transactions reached Rp5,335tr (+17.19% yoy) in Jan24. The value of electronic transactions reached Rp83.37tr (+149.46% yoy). Meanwhile, payment transactions through QRIS reached Rp31.65tr (+149.46% yoy), with 46.37mn users and 30.88mn merchants, most of whom were MSMEs. The value of payment transactions through cards, such as ATM cards, debit cards, and credit cards, reached Rp 692.32tr (+2.58% yoy). (Kontan)

 

CORPORATE

ASII Recorded Car Sales drop to 37,984 Units in Jan24

ASII continues to lead the national car market by 55% in Jan24. However, ASII's car sales figures in Jan24 decreased by 25.16% yoy and 20.3% qoq, with car sales reaching 37,984 units. For the LCGC segment, ASII recorded sales of 12,244 units. In Jan24, sales of Toyota and Lexus brands contributed 21,111 units, followed by Daihatsu with 14,363 units, and sales of non-Astra cars also fell, recorded at 31,635 units in Jan24 (-27.3% yoy). (Bisnis)

 

AUTO Recorded 38% Increase in Net Profit to Rp1.84tr throughout 2023

AUTO recorded an increase in net profit and revenue throughout 2023. Net profit attributable to owners of the parent entity reached Rp1.84tr (+38.88% yoy). Revenue increased to Rp18.6tr (+0.37% yoy). Despite the overall revenue increase, AUTO's cost of revenue decreased to Rp15.57tr (-2.01%), and the company's cash and cash equivalents were recorded at Rp274tr (+32.37% yoy). (Bisnis)

 

FREN Targets First Wave ROSA Users of Up to 200k

FREN targets users of the newest Home Router product, Router Sahabat (Rosa), to reach 200k users. The company said the target was set based on milestone targets. To achieve this target, the company has determined 70 locations that are considered potential. ROSA is set at a price of Rp499k, with the feature of being able to connect to many devices at the same time with a maximum of 32 handheld devices, and the signal emitted is also stronger due to the presence of two antennas with a beam range of approximately 40m. (Kontan)

 

GOTO – Tiktok Migration Achieved Substantial Progress, Reaches 75%

The Ministry of Trade announced that the Goto and Tiktok integration process has reached 75% and the entire migration process is scheduled to be completed in April. The Ministry of Trade said that currently all transaction payment processes have been carried out smoothly through the Tokopedia system. However, migration of back-end functions, especially those designed for merchants, is still ongoing. Once the transition process is complete, Tokopedia will seamlessly integrate into the transaction payment system on TikTok Shop. (The Jakarta Post)

 

GRAB 4Q23 earnings similar trends with GOTO

Positive financial momentum only dented by fintech, announces buyback. GRAB however has much higher net liquidity US$5.2bn, and pulled out from Food Panda acquisition.

 

Deliveries:

• GRAB Unlimited is the biggest royalty program in SE Asia, 1/3 of deliveries GMV. To expand on family loyalty programs, share payments. Gojek pursuing their Hemat series.
• GRAB Priority and Saver deliveries gaining over Standard deliveries. Continuous focus on batching delivery orders. GOTO as well.. GRAB going beyond by optimizing the weight of packages.

 

Ridehailing:

• Enters into GRAB car premium, GRAB for business. Gojek moved first in this category.
• GRAB has luxury to focus on international travellers, Interface with Alipay and we chat to attract Chinese users. Gojek no such plan.
• Stable ridehailing GMV in 1Q24 and next quarters. 1Q24 expected seasonally weak too for GOTO.

 

GRAB Overall EBITDA to add 200bps in 2024 adj. margin. GOTO adj. EBITDA positive for entire group covering the fintech loss in 4Q23 similar to GRAB, but no yet guidance for 2024. However makes effort to record the Tokopedia impairment in 4Q23 instead of 1Q24, to build foundation for good 2024 momentum.

 

Growth levers:

• Digital lending focused so far in Malaysia and Singapore no mention about Indonesia plans. The EBITDA hit from Malaysia launch was big enough. GRAB was only US$35mn adj. EBITDA positive in 4Q23.
• Advertising now is 5% of the GMV. 115k advertisers. More growth ahead.  Gojek has alluded for such runway.
• GRAB mentioned several times there is renewed growth beyond 2025 incubating new initiatives. GOTO growth implied so far mainly from Hemat and fintech tapping TIktok COD.

 

M&A:

• Delivery Hero and GRAB ends talks to sell/buy  Foodpanda business in 7 countries. GRAB to remain 3x larger than next competitor in SE Asia.
• The hurdle rate for inorganic growth is very high for GRAB. Prioritize on building their competitive moat, no hint for M&A with GOTO.

 

Liquidity: Very strong cash position announced share repurchase program of US$500mn. This potentially matches GOTO proposed buyback program, to determine size in AGMS, but GRAB has much more firing power US$5.2bn vs. US$1.7bn of GOTO in 9M23 (incl. 150mn IFC). (Niko Margaronis – BRIDS)

 

ITMG IJ: 4Q23 earnings miss – FY23 below our and consensus

ITMG posted a lower 4Q23 of US$94 (-5% qoq), driving FY23 net profit of US$500 (-58% yoy), below ours and consensus estimates (at 70%/ 89% of consensus forecasts)

It recorded higher 4Q23 (+4% qoq), with FY23 revenue of US$2.374mn (-35% yoy); higher 4Q23 (+1% qoq), and FY23 EBIT of US$605mn (-64% yoy).

FY23 earnings was dragged down by drop in ASP to US$113/t (-41% yoy), as 4Q23 ASP fell to US$97/t (-2% qoq). While production and sales volumes still grew at healthy rate +1% and +10% yoy to 17Mt and 21Mt, increase in stripping ratio to 12.5x drove cash cost to AS$76/t (-13% yoy)

 

UNTR Builds Off-Grid PLTS in South Sumatra

UNTR's subsidiary, PT Energia Prima Nusantara (EPN), is promoting a clean energy mix in coal mining operational areas by building Off-Grid PLTS through the PAMA project at the PAMA MTBU operational site. EPN and PAMA implemented PLTS with a total capacity of 615.6 kWp using a 200 kWh battery. The PAMA MTBU PLTS concept is the first Smart Micro Grid concept in Indonesia that is combined with batteries, and this feature can overcome off-grid interference, avoid losses due to power outages of US$0.5mn/10MW, as well as Smart String-level disconnections