FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Astra International:1Q24 preview: possible decent headline figures, as strong expected UNTR earnings to offset weak auto (ASII.IJ Rp 5,025 HOLD; TP Rp 5,600)

• We expect consolidated 1Q24E revenue and NP of ~Rp76-77t/~Rp8.5-8.6t, hence possible inline revenue but earnings ahead vs seasonality.
• Despite this, the 1Q24E performance may see more support from UNTR to possibly offset weak auto segment performance.
• We maintain our FY24-25F forecasts pending the 1Q24 earnings but see a challenging outlook for auto sales as a key risk for FY24F estimates.

To see the full version of this report, please click here

Timah: Expect a major turnaround in FY24F from improving tin mining practices (TINS.IJ Rp 985 BUY; TP Rp 1,400)

• TINS sets an optimistic FY24 production target of 30k tons (+100% yoy) of tin metal; we forecast a more conservative 26k tons (+69.5% yoy).
• We expect TINS to benefit from the current intensifying oversight of tin mining activities in Pangkal Pinang and Bangka Belitung.
• We reiterate our Buy recommendation with a lower TP of Rp1,400 as we apply lower LT tin price at US$25k/t (Prev: US$30k/t).

To see the full version of this report, please click here

To see the full version of this snapshot, please click here

RESEARCH COMMENTARY

ACES Key takeaways from the BRIDS’ event with GAPMMI – 24 April 2024:

• 2Q24 outlook: Expect better top lines yoy. Most companies will opt to maintain ASP in 2Q24 despite the threat of higher costs. This may weigh on margins in 2Q24.
• Headwinds and risks: Regulation (Permendag No.36/2023 – difficulties in obtaining raw materials for F&B products i.e., premix fortification for wheat flour), rupiah weakening and higher logistics costs from geopolitical issues.
• Boycott impact: Sales decline more than 20%. After easing in Jan-Feb-24, the boycott issue arose again in Mar24.
• Purchasing power: Improved compared to last year but still heavily impacted by higher food prices. Solid 1Q24 sales, supported by Ramadan. (Natalia Sutanto – BRIDS)

UNVR 1Q24 result: Broadly inline but still challenging outlook in 2Q24 onwards

1Q24 top line down 5% yoy with lower prices

• UNVR reported a 1Q24 revenue of Rp10tr (+24.4% qoq but -5% yoy). Food & Refreshment (FNR) revenues fell -3.8% yoy with Unilever Food Solutions reporting +2.1% yoy growth. Meanwhile, Home and Personal care (HPC) revenues fell -5.6% yoy, dragged down by Homecare (-9.1% yoy).
• The management stated that in Mar24, the sales run rate had already recovered to the 3Q23 level and the Feb24 market share had picked up from its low in Dec23, but still below the pre-boycott level of 37% in 9M23. In 1Q24, Underlying Price Growth (UPG) was -4.9% yoy (FY23: -1.1% and 4Q23: -2.4%) with volume growth of +0.2% yoy (FY23: -4.1% and 4Q23: -13%).

1Q24 NP up 3.1%yoy due to the higher gross margin and royalty savings

• UNVR’s 1Q24 gross margin expanded by 60bps to 49.9% thanks to lower commodity prices. A reduction in royalty rates to 5% (1Q23: 7.1%) also offset higher A&P/revenue spending of 9% (1Q23: 8%) and higher promotional expenses (4.2% vs 1Q23’s 3.5%). This paved the way for 1Q24 operating profit growth of +1.3% yoy to Rp1.9tn.
• With lower finance costs, UNVR reported 1Q24 net profit of Rp1.45tn, +3.1% yoy. The 1Q24 net profit is 28% of the consensus and 29% of our FY24F, i.e., broadly inline (In the past years, 1Q ranging from 25-28% of FY).

MACROECONOMY

Bank Indonesia Raises Interest Rates to 6.25%

Bank Indonesia (BI) has decided to increase the BI Rate by 25 basis points to 6.25%, citing pressure on the IDR and rising global uncertainties. Such a move deviates from our base case /the consensus of no rate change, although calls for rate hikes were already increasing, especially with the absence of monetary contraction in recent weeks. The aim is to proactively address potential risks, such as delayed or no rate cuts by the Fed in 2024 and heightened tensions in the Middle East. (Bank Indonesia)

Comment: In our assessment, BI's window to lower the BI Rate in 2024 is narrowing, given their baseline scenario indicating only one rate cut by the Fed in December 2024. Faster rate cuts are unlikely, as they could undermine IDR stabilization due to lower yields and rate spreads. (Economic Research – BRIDS)

SECTOR

Consumer: The Government Adjusts the Government Purchasing Price of Grain/Rice and Corn

The government immediately adjusted the government purchasing price (HPP) of grain/rice as well as the highest retail price (HET) of rice. This increase includes, among other things, HPP for harvested dry grain (GKP) for farmers to Rp6,000/kg (in accordance with the flexibility figures in effect from 3 April-30 June 2024), HET for medium rice to Rp12,500/kg, and HET for premium rice to Rp14. 900/kg (according to the relaxation amount which has been extended until 31 May 2024). Meanwhile, the reference price for corn for dry shelling with a moisture content of 15% is likely to be increased to Rp5,000/kg (Previously: Rp4,200). Currently, legal protection in the form of National Food Agency regulations is being prepared. (Investor Daily)

CORPORATE

PTPP Acquired Rp4.9tr of New Contracts in 1Q24

PTPP secured new contracts worth Rp4.9tr in 1Q24, bringing its total contracts in the National Capital City to Rp11.23tr. The company is working on two contract packages, Central Government Core Area 1 and KIPP 2, with infrastructure completion expected by August 17, 2024. Other construction projects include the VVIP Airport, Toll 3B, West Kebangsaan Axis, and Toll 6C. PTPP is also working on several projects, including the Presidential Palace, the President's Office, ASN-Hankam flats, the Bank Indonesia office complex, and the PUPR Ministry Building. (Kontan)

TBIG Prepares Rp800bn for the Buyback of 396.50mn Shares

TBIG plans to buy back 396.50mn shares with a nominal value of Rp800.80bn, reaching 1.75% of the total shares. The company has prepared a maximum fund of Rp800,800,000,000 sourced from internal cash. After shareholder approval, the buyback process will begin in stages from 31 May 2024 to 30 May 2025. (Bisnis)