FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

RESEARCH COMMENTARY

ACES TLKM: Telkom 1Q24 earnings call takeaways: Telkomsel defends market share in a profitable way, and hence in a constructive and credible manner for themselves and the sector, in line with our thesis.

• Much better subscriber price elasticity vs. 10 yrs ago or so, hence market repairs are sustainable. In line with our thesis, TSEL alluded that price adjustments to its new products TSEL Lite and ByU are meant to stabilize market share and ARPU in a constructive manner that improves their profitability and growth in KPIs thereafter.
• No concerns of subs cannibalization in prepaid from the new offerings, better data traffic trajectories. Telkomsel’s Lite product is aimed to improve exposure to consumer segments (youth primarily) in Java for 260 cities for local use, i.e. not meant to be spread across regions. Still early days for Lite but it helped TSEL to post 14.4%yoy growth in traffic vs. 9% for TSEL reported in FY23. TSEL is part of the broader strategy of FMC to supplement connections into Fixed Broadband accounts and offer comprehensive digital services. There are no concerns on cannibalization by the management (small internal churn observed in prepaid, after Lite is exhausted will buy from existing packages).
• EBITDA margin. TSEL provides guidance for a 46-48% EBITDA margin (as per expectations, achieved 47% in 1Q24). TSEL expects to capture Rp1.8tr upside in 2024 for FMC - Indihome and in broader terms for TLKM from gains in revenue uplift, content cost integration, digital touch point integration and people reorganization efficiencies. TSEL’s revenue guidance remains at low to mid-single digits for FY24. Delivered at 3.7%qoq (our and cons. estimates are closer to the higher end of the guidance).
• Data centers progress: Looking for partnering with a strategic investor with the aim of managing 400MW Data center IT Load capacity in 6yrs (42MW in 1Q24). 

Our comment on share price reaction post earnings call; ISAT/EXCL go up while TLKM falls. We believe that the ISAT/EXCL gains at the expense of TSEL dominates. We see instead a quite adaptive strategy for TSEL as it adjusts its portfolio to resonate better with the subs base with a stable ARPU yoy in 1Q24. This strategy already delivers with a higher data traffic growth trajectory. (Niko Margaronis – BRIDS)

UNTR: Strong Mar24/1Q24 operational achievement

• Pama’s Mar24 production volume grew +8% mom/ 17% yoy to 266mn bcm + 32Mt coal; 1Q24 volumes grew 17% yoy accounting for 24% of FY24F (slightly above vs. the 1Q historical rate of 22-23%).
• Komatsu Mar24 sales volume fell -2% mom/ -46% yoy to 301 units; 1Q24 sales volume of 1,126 units (-37% yoy, above our forecast at 30% of FY24F)
• UNTR delivered gold sales volume of 49k oz in Mar24, following no sales in Jan-Mar24 due to RKAB delay (1Q24: 49koz, -17% yoy, 21% of our FY24F est.)
• 1Q24 total coal sales volume of 4.0Mt +33% yoy (37% of our FY24F est). (Erindra Krisnawan – BRIDS)

 HMSP’s 1Q24 cigarette sales volume +1.6% yoy

• Indonesia’s 1Q24 sales volume (cigarette and Heated Tobacco Units – HTU) reached 73.6bn units (+ 6.4% yoy).
• HMSP’s 1Q24 cigarette sales volume +1.6% yoy to 20bn sticks (24% to our FY24F volume, i.e inline), while the sales volume of HTU +100% yoy to 0.2bn units.
• In 1Q24, HMSP’s total market share (including HTU) down to 27.5% (1Q23: 28.6%). Meanwhile, PMI reported that HMSP’s 1Q24 market share of HTU in Indonesia increased to 0.3% from 0.1% in 1Q23. (Natalia Sutanto – BRIDS)

Industry & INTP Cement Data Mar-24

• Cement industry recorded flattish vol growth for 3M24. The bagged cement segment continued to weaken (on Mar-24 only numbers, Java -8% yoy and outside Java -5% yoy), while bulk segment continued to grow (on Mar-24 only numbers, Java +12.5% yoy and outside Java +18.1% yoy). The bulk cement segment driver continued to be toll roads, industrial estates, and IKN.
• INTP vol grew by 7% yoy in 3M24 (-1% yoy estimated if we exclude Grobogan), with market share of 29.5% in Mar-24 (vs 27.7% in Mar-23), driven by Central Java (+67% yoy, pushed by Grobogan), East Java (+11%), and Nusa Tenggara (+9% yoy). The bagged cement segment weakened by 0.8% yoy in 3M24, while the bulk cement segment expanded by 29% yoy.
• Based on our price tracker, Semen Tiga Roda prices improved in Mar-24 (+5% MoM), while Semen Bosowa pricing was relatively stable, but Semen Grobogan pricing declined by 7% MoM (possibly due to the reintroduction of Grobogan under INTP, in our view).
• We expect April24 vol to remain weak, given long holidays and the long truck ban for transport (5-16 April 2024). (Richard Jerry, CFA - BRIDS)

SMGR Mar24 Volume

• SMGR Mar24 total volume sales were 3.1 Mt (-5% yoy), for which domestic sales volume reached 2.4 Mt (-5% yoy). SMGR's domestic market share recovered to ~50% after falling in Jan-Feb 24, reaching 51% in Mar-24. The bagged cement portion was 70% of total sales as of Mar-24.
• SMGR’s 1Q24 total volume sales reached 9.1 Mt (-2% yoy). Domestic sales volume in 1Q24 reached 7.1 Mt (-4.3% yoy), partially due to the election month in Feb-24, while export sales grew 6% yoy to 2 Mt. From Jan24 to Mar24, bagged cement’s portion was 69.6%. (Richard Jerry, CFA - BRIDS)

MACROECONOMY

Preliminary April PMI Numbers in Advanced Economies (AE)

Preliminary April PMI numbers in Advanced Economies (AE) indicate a notable expansion in the service sectors, while the manufacturing sector continues to contract.

• In the US, Service sectors expanded slightly with a PMI of 50.9 (vs. 51.7). However, manufacturing slipped to a contraction for the first time in 4 months with a PMI of 49.9 (vs 51.9).
• Japan Services PMI rose to 54.6 (vs. 54.1), while the Manufacturing PMI remained in contraction territory at 49.9.
• Eurozone Services PMI saw a significant increase to 52.9 (vs. 51.5), supporting overall economic expansion, while the Manufacturing PMI deteriorated to 45.6 (vs. 46.1).
• In the UK, Services PMI reached a high of 54.9 (vs. 53.1), marking an 11-months high, while the Manufacturing industry declined to 48.7 from a one-time expansion seen in March. (S&P Global)

SECTOR

Telco: Data Traffic during Eid Holidays Increased by 17%

Data/internet service traffic on four telecommunications operators in Indonesia increased by 17% during the Eid holiday in 2024. This realization is lower than estimates of up to 20%. The increase in traffic was mainly triggered by homecoming activities that require data and application services. (Investor Daily)

The following is the data traffic during the Eid holiday in 2023 and 2024:

CORPORATE

BBCA’s QRIS Transaction Volume Increased by 153% in 1Q24

BBCA recorded a 153% yoy increase in QRIS transaction volume in 1Q24. Meanwhile, the transaction value reached Rp41.6tr (+156% yoy). The company's strategies to pursue this growth include expanding the QRIS cross-border feature to meet customer transaction needs abroad. BBCA has also adjusted the daily QRIS transaction limit for combined payments of up to Rp25,000,000, which previously followed the daily debit card limit. (Kontan)

BMRI and Wise Collaboration Saved IDR 35 Billion in Foreign Exchange Transfer Fees

BMRI and Wise have collaborated for over a year to help customers transfer money between countries at affordable costs, which has resulted in Livin' by Madiri customers saving up to Rp35bn on inter-country foreign exchange transaction costs. For information, Wise is a global technology company that operates in the international payments sector and aims to provide money without borders. (Investor Daily)

DOID to Carry Out a Buyback of 819.87mn Shares

DOID will carry out a share buyback of 819.87mn shares or 10% of the company’s issued and fully paid-up capital as it received shareholders' approval during the EGMS. (Kontan)

HMSP to Distribute Dividends of Rp8.06tr

HMSP plans to distribute dividends of Rp8.06tr, equivalent to Rp69.3/share (yield: 8.2%). The dividend amounts to 99.56% of HMSP’s 2023 net profit of Rp8.09tr. (IDX Channel)

MAPA’s Commissioner Reduced Her Share Ownership Portion

MAPA’s Deputy Main Commissioner reduced her share ownership from 27,720,000 to 27,120,000 shares, or 0.097% to 0.095%, between March 20-21, 2024, selling 600,000 shares at a price of Rp1,045-1,060 per share. (Emiten News)

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