FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Poultry: Encouraging chicken and raw material prices to support the sector’s growth and re-rating potential (OVERWEIGHT)

• Following sector underperformance due to the weakness in LB prices, we think the recent rebound may act as a potent catalyst.
• With the strong earnings growth outlook intact and the relatively light position of funds, we believe the sector could re-rate in FY24-25F. 
• We maintain our Overweight rating on the sector, foreseeing higher margins from lower feed costs. CPIN remains our top pick in the sector.

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Macro Strategy: The Conflation of Currency Risk and Fiscal Frailty

• The weaker IDR suggests greater possibility of a BI rate hike; however, we note three factors that rate hike is not the ultimate panacea.
• The fiscal deficit would surpass 4% if the Debt-to-GDP ratio approaches 48%. More comprehensive fiscal design should result in more clarity. 
• The DXY is stronger on a weaker Yen as the BoJ delayed providing details of its QT plan. Expect cross currency event risk to prevail in the ST.

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MACROECONOMY

UK Inflation Eased to 2% in May24

UK Inflation eased to 2% in May24 after three years of above-target inflation. Despite this progress, the Bank of England is still expected to maintain the interest rate tomorrow due to the elevated services inflation print. Services inflation peaked around mid-2023, while the inflation for goods peaked earlier in Oct22 turning to annual deflation in the last two months. Inflation is expected to pick up to 2.4% by the end of 2024. (Bloomberg)

Indonesia’s Trade Balance reached US$2.9bn in May24

Indonesia’s Trade Balance reached US$2.9bn in May24, increasing by US$210mn from the downwardly revised Apr24 figure of US$2.7bn (Apr's imports were revised upwards by US$900mn). The monthly improvement reflects a lower Oil & Gas deficit (-US$1.3bn vs. Apr's -US$1.6bn). The ex-Oil & Gas surplus fell slightly to US$4.26bn from Apr's US$4.35bn. Exports in May24 reached US$22.3bn, or up by 2.86% yoy, the first annual growth in 12 months. Imports in May24 totaled US$19.4bn (-8.8% yoy or -14.8% mom). All import categories increased on a monthly basis but were still lower annually. (BPS)

CORPORATE

CTRA: to Distribute Rp389bn of Dividends and Build 10 Flat Towers in IKN Worth Rp3.5tr

CTRA plans to distribute cash dividends of Rp389bn or Rp21/share for FY23, with a 21% allocation of net profit. The company's marketing sales in 1Q24 amounted to Rp3.3tr or 30% of the 2024 target. (CNBC)

In other news, the company plans to build 10 flat towers in IKN, worth Rp3.5tr, which will house civil servants and 20 landed houses for echelon I officials, with the construction project being managed through the Government and Business Entity Cooperation (KPBU) scheme. The project is currently in the feasibility study process, but completion remains uncertain as the results are still pending. (Kontan)

MCAS Expects Volta Electric Motorcycle Sales to Reach 34,000 Units in 2024

MCAS aims to strengthen its clean energy business by developing the Volta brand electric motorbike. The business has experienced significant sales growth due to a developing ecosystem and government subsidy programs. MCAS aims to sell 34,000 Volta motorcycles by the end of 2024, with the potential for additional sales of 16,000 units. The company also introduced the Electric Motorbike Rental (Semolis) program, targeting online motorcycle taxi drivers or couriers. (Kontan)

SMRA Strengthens its Property Land Reserves

SMRA has prepared a budget of Rp1tr for land purchases this year to strengthen its land bank, which currently totals more than 2,000ha. As of 1Q24, the company has realized 40% of this year's capex allocation and has also undertaken the development of the Summarecon Mall Bekasi Phase 2 project. (Kontan)