FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Macro Strategy: Ominous Carry Trade Unwind Risk

• The Bank of Japan's plan to halve its bond purchasing program will be crucial for the Yen, triggering concern about carry trade unwind risk.
• While not entirely immune, Indonesia's impact should be manageable due to its low foreign position and minimal Yen-denominated debt.
• Despite recent positive economic data, Fed rate cut expectation in Sept remain firmed. BI will also limit the issuance and ownership of SRBI.  

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RESEARCH COMMENTARY

INCO 2Q24 Result: inline

Financial

• 2Q24 net profit was flattish at US$31mn, +402% qoq (vs. our preview of US$31mn), reaching 39%/34% of our/cons estimate.
• 2Q24 revenue grew to US$249mn, +8.2% qoq, (vs. our preview of US$235mn), reaching 49%/49% of our/cons estimate.

 

Operational

• 2Q24 production was at 16.5kt, -8.5% qoq, -2.0% yoy.
• 2Q24 sales was at 17.5kt, -3.7% qoq, +6.3% yoy.

 

Comment: Lower production/sales volume were expected as they undergo maintenances throughout 2Q24. The higher ASP was also inline with a stronger LME price of 11% qoq. More updates after earnings call on Wednesday. (Timothy Wijaya – BRIDS)

KROM Bank Jun24 Results

• In Jun24, KROM reported an NP of Rp12.2bn (+26% mom), driven by a 75bps mom improvement in NIM to 21.0% as EA yield rose 104bps mom to 23.2% and CoF declined 10bps mom to 7.5%.
• In 6M24, KROM’s NP was recorded at Rp65.1bn (+12% yoy) as NIM rose significantly to 21.2% as the bank rebranded itself as a digital bank at the end of Feb24. Thus, we deem it best to focus on monthly comparison in assessing the bank’s overall performance.
• In Jun24, Loans and customer deposits grew to Rp2.7tr (+8% mom, +113% yoy) and Rp1.5tr (+21% mom, +582% yoy), respectively. While CASA ratio was recorded at 12.9% (-33bps mom, +355bps yoy).
• The growth in customer deposits can be attributed to the aggressive time deposit schemes offered, including the 8.75% TD rate, which was reflected by the TD growth (+22.0% mom) outpacing the casa growth (+18.5% mom) in Jun24.
• In our view, KROM has several aspects worth noting as it managed to improve its NIM to 21.1% (+75bps mom) while lowering its LDR to 184.1% (-2,275bps mom) in Jun24. Furthermore, its CIR of 14.5% is one of the lowest among digital banks. However, its CoC remained relatively high at 23.6% in Jun24.
• (Victor Stefano & Naura Reyhan Muchlis - BRIDS)

Mitratel (MTEL, TP:960, BUY) – Inline 1H24, soft 2Q24, more capex to be deployed.

Mitratel delivered 2Q24 Net Profit Rp543bn (+4.2%qoq, +4.2%yoy) mainly due to: 

• Growth in 2Q24 revenue Rp2.2tr (+1.7%qoq, +8.2%yoy), with Telkomsel from B2S towers and Telkom projects as key contributors for the growth.
• Moreover, MTEL EBITDA margin decreased to 82.7% in the quarter (-80bps qoq) but still higher (+180bps yoy) as permits & constructions increased.

 

Mitratel 1H24 NP is inline with our/cons FY24 forecasts 49%/49.9%. 1H24 Revenue is 47.8%/47.9% of estimates, and EBITDA is broadly inline with the FY forecasts.

 

Other key observations:

• 2Q24 / 1H24 EBITDA margin remains elevated at 82.7%/83.1%, but we still expect to normalize to lower level.
• The capex deployment is only Rp1.1tr in 1H24 out of the Rp5.6tr (which includes inorganic capex as well) hence we expect more deployments in coming quarters. (Niko Margaronis – BRIDS)

Poultry – 4th week of July 2024 Price Update

• The average live bird price in the third week of the Suro month declined to Rp17.5k/kg from the previous week (Rp19.4k/kg) and before the Suro month (Rp19.6k/kg), in line with the historical trend and our expectations.
• DOC price declined to Rp7.5k/chick in fourth week of July 2024 from the previous week at Rp8.0k/chick (-6.3%).
• Local corn price slightly increased to Rp4.5k/kg from Rp4.4k/kg in the previous week (+0.9% wow).
• Soybean meal (SBM) price slightly increased to c. US$347/t in the fourth week of July, and the average price in Jul24 stood at US$357 (-1.5% mom, -18% yoy).
• We maintain a positive outlook for the sector with 2Q24 earnings and better-than-expected LB prices as the ST catalysts. (Victor Stefano & Wilastita Sofi – BRIDS)

SAQU Jun24 Results

• SAQU reported a net loss of Rp84.5bn in 6M24 as it recorded a CIR of 118%, which we noted was due to aggressive marketing as shown by the 30x yoy increase in promotion expense, along with the 50% yoy rise in personnel expenses.
• In Jun24, SAQU recorded a net loss of Rp29.0bn (+108% mom) as CIR and provisions rose to 152.1% (+2,850bps mom) and Rp10.1bn (+87% mom), respectively. Despite the significant increase in provisions, its CoC remained relatively low at 2.5%.
• NIM declined 25bps to 4.8% in Jun24, due to a 20bps decline in EA yield to 7.2% and a 4bps increase in CoF to 4.8%. We believe that the bank managed to keep its CoF below 5%, despite the low casa ratio of 12.9% as a large portion of the TD are legacy TD.
• Loans grew 2% mom and customer deposits growth was flat mom, which resulted in a flat LDR of 85.0% in Jun24.
• It is worth noting that SAQU was launched as a digital bank only towards the end of FY23. Thus, in our view, a yearly comparison is not particularly useful in examining the bank’s performance. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

Superbank Jun24 Results

• In Jun24, Superbank reported a net loss of Rp35.1bn (+34% mom) due to a significant mom increase in CIR to 160.9%. This was caused by an 87% decline in other operating income and a 10% increase in operating expenses.
• Superbank’s NIM declined by 54bps mom to 8.5% in Jun24, despite a 62bps decrease in CoF to 7.3%, due to a 46bps contraction in the EA yield to 9.5% and a decline in LDR to 376%, as loans and customer deposits grew 2% and 35% mom, respectively.
• In our view, the mom decline in CoF was due to the normalization after the launch of the ‘celengan’ savings scheme (10% interest rate) at the end of Apr24. This affected May24’s CoF and resulted in a high base last month.
• On the other hand, CoC improved 256bps mom to 2.3% in Jun24 due to a 50% decline in provisions.
• In 6M24, superbank’s net loss rose 67% yoy to Rp188.5bn due to 70% and 108% increases in operating expenses and provisions, respectively.
• NIM was reported at 8.7% (+142bps yoy) in 6M24, despite a 221bps yoy rise in CoF to 5.7%, as EA yield rose 174bps yoy to 9.5%. CoC also declined to 3.8% (-189bps yoy).
• However, we believe that comparing superbank’s results on a yoy basis is not ideal, given that the bank only started launching its mobile app and various programs in 4Q23. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

Telkom Indonesia (TLKM IJ, TP: Rp4,400, BUY)1H24 Inline earnings – softer revenue than expected, but sturdy EBITDA margin

1H24 Telkom group core net profit reached Rp13.0tr, well in line with our/cons expectations, fulfilling 50.9%/50.0% of FY24 est.

• 1H24 Group Topline reached Rp75.3tr, +2.5% yoy, trending slightly lower than Cons est. of 3% yoy for FY24.
• Normalized EBITDA margin held up at 51.9% (-30bps yoy), delivering Rp39.1tr in 1H24. (normalized due to ERP program costs of Rp1.24tr).
• Group Capex absorption in 1H24 was only at the 34% level, hence we see relatively lower D&A in 1H24.

 

Telkom reported 2Q24 net profit of Rp6.67tr (+5.3%qoq, +5.2%yoy). This was despite softer revenue than we expected and owed to a stable margin on qoq basis at 52% (+10bps qoq).  

• TSEL revenue grew in 2Q24 (+2.0%qoq, +29.3%yoy) with steady growth in mobile as well as Indihome, but Legacy further declined in 2Q.
• Telkom 2Q24 Indihome (Consumer + Enterprise) sustained further qoq/yoy decline. However, Telkomsel Indihome (consumer) is growing steadily (+0.3%qoq, 3.2%yoy). 
• Other Group Data revenue and Interconnect revenue were softer in the quarter, lowering the topline growth rate in 2Q24. 

Normalized EBITDA margin improved slightly by 10bps qoq. as OPEX was held steady. (Niko Margaronis - BRIDS)

MARKET NEWS

MACROECONOMY

Direct Investment Realization Reached Rp428tr in 2Q24

Direct Investment Realization reached Rp428tr in 2Q24 or Rp829.9tr in 1H24. Realization in 2Q24 grew by 6.7% qoq and 22.5% yoy. Foreign Direct Investment accounted for 50.7% of investment in the 2Q24, a growth of 16.6% yoy and 6.3% qoq. Meanwhile, Domestic Direct Investment increased by 7.1% qoq and 29.1% yoy. Investment located in Java reached Rp213.2tr, accounting for 49.8% of direct investments in 2Q24. Investment outside Java reached Rp215.2tr, an increase of 7.3% qoq and 18.3% yoy. (BKPM)

 

CORPORATE

BIRD Targets the Purchase of 7,000 Vehicles Throughout 2024

BIRD plans to purchase up to 7,000 new vehicles throughout 2024. This initiative aims to modernize and expand BIRD's fleets, which include taxis, non-taxi vehicles, and electric vehicles (EVs). To implement this plan, BIRD has allocated a capital expenditure budget of Rp2.5tr for 2024.

 

HMSP Invests US$300mn in E-cigarette Production Facilities

HMSP invests US$300mn in e-cigarette production facilities and launches seven new Terea variants and a limited Veev launch in 10 Indonesian cities. The company sees a promising opportunity with IQOS users as it reaches 200,000 adult consumers, with a market share of 4.5% in Jakarta out of 1.5mn smokers. (Kontan)

 

Honda Records 1,861 Car Bookings during GIIAS 2024

PT Honda Prospect Motor (HPM) recorded bookings of 1,861 units at the GIIAS 2024. The combination of Honda Brio Satya and Honda Brio RS recorded Honda's highest sales of 800 units or 43% of Honda's sales at GIIAS 2024.  Honda HR-V as many as 386 units, Honda WR-V as many as 344 units, Honda BR-V as many as 164 units, and Honda CR-V as many as 109 units. All of these sales figures are bookings made at the Honda booth during the GIIAS 2024 event and have fulfilled administrative procedures with booking fees. (Kontan)

 

TPIA Secured a US$800mn Syndicated Loan

TPIA successfully secured a sustainability-linked syndicated loan amounting to US$800mn, equivalent to Rp13.03tr. This loan facility, which includes a greenshoe option, was oversubscribed beyond the initial plan of US$600mn. (Investor Daily)

 

Wuling Motors Receives 2,301 Bookings at GIIAS 2024

Wuling record 2,301 vehicle order letters (SPK) and conducted test drives with 1,610 visitors during the GIIAS 2024 exhibition. BinguoEV contributed 30% of the total SPK, Air ev series achieved 26% of the total SPK and CloudEV contributed 23% of the total SPK. (Kontan)