FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Coal Sector: Improved Price Outlook Amid Tighter 1H24 Market S-D and Rising Costs; Upgrade Sector to OW (OVERWEIGHT)

• Stable coal prices in 1H24 have been supported by improved S-D, amid firm China, India demand and surprisingly weak Indonesia’s production.
• Rising production cost for Indonesian producers shall add support for LT prices amid firm demand; we raise our FY24-25 coal price and EPS f’casts
• We upgraded the sector’s rating to OW on the improved price outlook. Our preferred picks are ADRO and ITMG.

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Astra International: GIIAS 2024 Visit KTA: Intensifying competition amid Chinese Producers Product Launches (ASII.IJ Rp 4,520; BUY; TP Rp 5,100)

• Our visit to GIIAS 2024 revealed aggressive Chinese 4W product launches with many choices in multiple price range.
• We observed decent traffic at the Toyota booth, with Innova Zenix and Hilux Rangga attracting the most interest.
• BYD’s new M6 MPV garnered attention, though we think it is still not comparable to Innova. Retain Buy rating and TP of Rp 5,100 on ASII.

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RESEARCH COMMENTARY

BSDE Recorded Marketing Sales of Rp4.84tr in 1H24 (51% of the company's FY24F target)

• BSDE booked marketing sales of Rp2.61tr in 2Q24 (+18%qoq; -1%yoy), bringing its 1H24 achievement to Rp4.84tr (+1%yoy), in line with the company's FY24F target of Rp9.5tr.
• The overall 1H24 achievement has been aided primarily by new launches of landed residential products in BSD City, shophouses in Kota Wisata Cibubur and Grand City Balikpapan, and JV land sales to PT Sinar Mitbana Mas at Rp565bn. Overall segment contributions are as follows: Residential 54%, Shophouses 20%, JV Land sales 12%, Commercial lots 7% and Apartment 7%. VAT-exempted marketing sales are yet to be disclosed.
• We currently have a Buy rating for BSDE with a last TP of Rp1,300 based on our 61% disc.to.RNAV as we believe future growth should be pillared by its strong Greater Jakarta township franchise, making it a proxy of upper-middle class residential demand. (Ismail Fakhri Suweleh - BRIDS)

Poultry – 3rd week of July 2024 Price Update

• The average live bird price in the second week of the Suro month slightly decreased to Rp19.4k/kg from the previous week (Rp20.1k/kg) and before Suro month (Rp19.6k/kg), although still far better than historical (based on the table).
• DOC price declined to Rp7.95k/chick in the third week of July 2024 from the previous week at Rp8.3k/chick (-4.2%).
• Local corn prices have remained stable at Rp4.4k/kg since the end of June 2024.
• After reaching its peak at US$380/t in the previous week, soybean meal (SBM) prices have seen a significant decrease, now hovering around c. US$333-340/t in the third week of July. This decline is due to the USDA releasing a report on the world market and trade, which includes estimates indicating easier global SBM availability in 2023/24 due to several factors, including a rebound in Argentina soybean production, increased Brazil soybean meal exports, and rising U.S. crush, leading to higher global exportable supplies.
• We maintain a positive outlook for the sector with 2Q24 earnings and better-than-expected LB prices as the ST catalysts. (Victor Stefano & Wilastita Muthia Sofi – BRIDS)

RESEARCH COMMENTARY BSDE Recorded Marketing Sales of Rp4.84tr in 1H24 (51% of the company's FY24F target) BSDE booked marketing sales of Rp2.61tr in 2Q24 (+18%qoq; -1%yoy), bringing its 1H24 achievement to Rp4.84tr (+1%yoy), in line with the company's FY24F target of Rp9.5tr. The overall 1H24 achievement has been aided primarily by new launches of landed residential products in BSD City, shophouses in Kota Wisata Cibubur and Grand City Balikpapan, and JV land sales to PT Sinar Mitbana Mas at Rp565bn. Overall segment contributions are as follows: Residential 54%, Shophouses 20%, JV Land sales 12%, Commercial lots 7% and Apartment 7%. VAT-exempted marketing sales are yet to be disclosed. We currently have a Buy rating for BSDE with a last TP of Rp1,300 based on our 61% disc.to.RNAV as we believe future growth should be pillared by its strong Greater Jakarta township franchise, making it a proxy of upper-middle class residential demand. (Ismail Fakhri Suweleh - BRIDS)                             Poultry – 3rd week of July 2024 Price Update The average live bird price in the second week of the Suro month slightly decreased to Rp19.4k/kg from the previous week (Rp20.1k/kg) and before Suro month (Rp19.6k/kg), although still far better than historical (based on the table). DOC price declined to Rp7.95k/chick in the third week of July 2024 from the previous week at Rp8.3k/chick (-4.2%). Local corn prices have remained stable at Rp4.4k/kg since the end of June 2024. After reaching its peak at US$380/t in the previous week, soybean meal (SBM) prices have seen a significant decrease, now hovering around c. US$333-340/t in the third week of July. This decline is due to the USDA releasing a report on the world market and trade, which includes estimates indicating easier global SBM availability in 2023/24 due to several factors, including a rebound in Argentina soybean production, increased Brazil soybean meal exports, and rising U.S. crush, leading to higher global exportable supplies. We maintain a positive outlook for the sector with 2Q24 earnings and better-than-expected LB prices as the ST catalysts. (Victor Stefano & Wilastita Muthia Sofi – BRIDS)                                                         MARKET NEWS

MACROECONOMY

China’s 1Y and 5Y LPR Increased by 10bps

China’s 1Y and 5Y LPR increased by 10bps each to 3.35% and 3.85%, respectively. Typically, decisions on the LPR are preceded by similar movements in the PBoC's Medium-term Lending Facility (MLF), but this time is different. Last week, the PBoC maintained the MLF at 2.5%, making the 1Y and 5Y LPR cuts unexpected. (Bloomberg)

 

Indonesia Money Supply Growth Reach 7.8% yoy in Jun24

Indonesia Money supply growth reached 7.8% yoy in Jun24, the highest in over a year. The growth came from robust loan growth at 11.5%, slightly higher than May’s 11.4%. An increase was seen in consumer loan with a growth of 10.4%, after stagnating at 10% in the previous three months. (Bank Indonesia)

 

CORPORATE

HMSP Launched a New Hand-Rolled Kretek Cigarette Factory in Blitar

HMSP has launched a new hand-rolled kretek cigarette factory in Blitar, East Java, increasing the number of its production facilities to 8. The move, which required an investment of Rp638bn, will also create employment opportunities in East Java, Central Java, DI Yogyakarta, and West Java, and add five new MPS in East Java and Central Java. (Bisnis)

 

TBIG has Made Principal and Interest Payment of Bonds

TBIG has paid the principal and interest of the Continuous Bond VI Tower Bersama Infrastructure Phase I Year 2023 series A, which was due on July 22, 2024. (IDX)