FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Unilever Indonesia: Broadly inline 1Q24 earnings, but still challenging outlook in 2Q24 onwards (UNVR.IJ Rp 2,390 SELL; TP Rp 2,300)

• UNVR’s 1Q24 earnings was inline thanks to a higher gross margin and royalty savings; sales volume was +0.2% yoy while prices fell 4.9% yoy.
• FY24 strategy will focus on volume growth to obtain market share at the pre-boycott level with continued price intervention/promotions.
• We revise down our FY24/25F by 9.9% and 13.6% with negative ASP growth and lower margins. Maintain Sell with lower TP of Rp2,300.

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

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

 

RESEARCH COMMENTARY

AKRA IJ; 1Q24 Result Highlights; inline with our forecast and the consensus

• In 1Q24, AKRA reported earnings of Rp595 bn – slightly lower than 1Q23’s figure of Rp607 billion (-1.9% yoy). The result is broadly in line with our forecast (20.8%) and consensus estimates (19%) as we expect the largest chunk of land sales to be recorded in 2H24. In 1Q24, AKRA managed to generate land sales revenue of Rp316bn (-34.3% yoy).
• The decline in revenue by 10.5% yoy to Rp9.8 tn was primarily driven by lower revenue from its T&D segment (-9.8% yoy).
• On a quarterly basis, earnings dropped by 44.4% qoq as AKRA booked significant land sales in the previous quarter. (Hasan Barakwan - BRIDS)

*More details will be available post the earnings call on 26 Apr, 2024 @4PM JKT time.

Banks: BBTN 1Q24 Result – below forecast

• BBTN booked net profits of Rp860bn (+7% yoy, -28% qoq), supported by lower provisions of Rp657bn (-12% yoy, -21% qoq) and high other operating income. PPOP declined 22% compared to its high base in 4Q23 but is still 2.4% higher yoy, supported by NII growth of 3.4% yoy.
• BBTN`s 1Q24 NP came in slightly lower than consensus estimates at 22% due to lower-than-expected NII at 21% of FY24F.  
• NIM came in lower at 3.3% in 1Q24 from 3.8% in FY23 as the CoF increased to 4.2% from 3.7% as liquidity remained tight. To navigate the higher interest rate, the bank will continue to push the growth rate of mid-sized institutions’ TD, which typically have lower costs.
• Loans grew 15% yoy to Rp344tr driven by commercial loans and corporate loans (up by 49% and 56%, respectively), while mortgages grew by 12% yoy. FY24 guidance was maintained at 10-11%.
• Asset quality remained robust with NPLs at 3.0% (flat qoq). The management expects fluctuations in NPL due to some downgrades and potential asset sales, but the max figure is still 3.0% for FY24.
• To navigate the pressure on NIM, the bank expects fee-based income to compensate, with the target at least as high as FY23`s high base. The FY24 NIM target is flat yoy at 3.8%. (Victor & Naura – BRIDS)

 

HMSP 1Q24 Result: broadly inline with our forecast and consensus estimates

• HMSP reported 1Q24 net profit of Rp2.25tr, +4% yoy and 18.8% qoq, supported by a solid top line (+7.9% yoy) with lower gross margins (16.3% vs 1Q23: 18%) and manageable opex. The 1Q24 net profit is 26.6% of our FY24F and 25.2% of the consensus, i.e., broadly inline.
• In 1Q24, HMSP reported sales volume of +1.6% yoy with ASP adjustments of 6.2% yoy. By product category, only SKT reported +25% yoy revenue growth. SKM only grew 1.6% yoy and SPM was down 7.6% yoy.

 

Comments: We believe downtrading will still continue in the cigarette industry. Changes in regulations will create a level playing field for the Tier-1 category (i.e., HMSP and GGRM), paving the way for stronger earnings growth.

(Natalia Sutanto – BRIDS)

MIKA 1Q24 Result: inline with our forecast and consensus estimates

• MIKA reported 1Q24 Net Income of Rp289bn (+25.3%yoy, +25.6%qoq), reaching 27.8% and 26.4% of our forecast and consensus estimates, i.e. inline. The EBITDA margin showed an improvement of 210bps to 37%, supported by a higher drugs and medical supplies margin as the company imposed an average of 8-10% price increases during the quarter.
• Meanwhile, as part of its efficiency efforts, MIKA also managed to obtain discounts from its medicine suppliers, as reflected in the declining medicine costs as a percentage of revenue, quarter on quarter. In terms of the payer mix, BPJS’ portion to revenue fell from 18% in FY23 to 16% in 1Q24, translating into a qoq improvement in both outpatient and inpatient revenue intensity (see: Table 2). (Ismail Fakhri Suweleh -  BRIDS)
• *More details will be available post the earnings call on 26 Apr, 2024 @4PM JKT time.

SIDO 1Q24 Result: above our forecast and consensus estimates

• SIDO reported 1Q24 net profit of Rp390bn, +30% yoy and 7.3% qoq, supported by a solid top line (+16% yoy) with high gross margins (59.3% vs 1Q23’s 53.3% but lower than 4Q23’s 62.3%) and manageable opex. The 1Q24 net profit is 37% of our FY24F and 38% of the consensus, i.e., above.
• 1Q24 Herbal revenue grew 13% yoy, while F&B revenue was up 19.8% yoy. Exports (especially to Malaysia and the Philippines) grew 44% yoy in 1Q24 with a 7% contribution to revenue.
• The gross margins for Herbal and F&B improved to 71.5% (1Q23: 67.6%) and 41.8% (1Q23: 31.2%), respectively, supported by lower raw material prices and overhead cost efficiencies. (Natalia Sutanto – BRIDS)

MARKET NEWS

MACROECONOMY

US GDP Increased by 1.6% qoq in 1Q24

US GDP increased by 1.6% qoq in 1Q24. The figure is an annualized rate. It is lower than the consensus of 2.5% and 4Q23’s 3.4%. However, Core PCE accelerated to 3.7% qoq compared to 2% in 4Q23. US Treasuries surged to 4.7% following the data publication. (Bloomberg)

 

Indonesia Money Supply Growth Accelerated to 7.2% yoy in Mar24

Money Supply (M2) growth accelerated to 7.2% in Mar24, the highest in almost a year. High loans growth and govt spending were behind the acceleration. (Bank Indonesia)

 

SECTOR

Banking: Credit Grew 12.4% in 1Q24

Bank Indonesia (BI) noted that as of 1Q24, banking credit grew by 12.4% yoy, supported by credit growth in all economic sectors. From the supply side, high credit growth was supported by continued demand for loans supported by high capital and adequate liquidity. The availability of banking liquidity is reflected in the high ratio of Liquid Assets to Third-Party Funds (AL/DPK) of 27.18%, which is supported by Bank Indonesia's Macroprudential Liquidity Incentive Policy (KLM).  (Investor Daily)

 

CORPORATE

BBCA Credit Card Transactions Grew 17.3% yoy in 1Q24

BBCA recorded 17.3% yoy growth in the value of its credit card transactions, as the number of credit cards circulating in the community reached 4.5mn. Furthermore, the value of the BBCA debit or outstanding credit card balance was recorded at Rp16.1tr. (Kontan)

 

SMGR Increased Alternative Fuel Usage to 559k Tons

SMGR's use of alternative fuel reached 559,625 tons (+27% yoy) in 2023. SMGR successfully partially replaced the use of coal in cement production, achieving a TSR ratio of 7.27%. The company has also implemented the use of biomass in several plants, which reached 325,804 tons by 2023. SMGR also initiated the utilization of renewable energy with solar panels and the conversion of waste heat recovery power generation (WHRPG) thermal energy into electrical energy. (Emiten News)

 

MAPA Collaborates with Sports Direct Malaysia to Open Stores in Indonesia

MAPA is collaborating with Sports Direct Malaysia, Sdn Bhd (Frasers Group Asia), to open the first Sports Direct store in Indonesia. The opening of this shop was carried out at Sogo Department Store, Kota Kasablanca Mall. Through a partnership with MAPA, Sports Direct plans to open outlets in various shopping centers elsewhere. Shopping centers that have been targeted as outlet locations include Plaza Senayan and Karawaci Mall. (Kontan)

 

UNTR Aims to Sell 15Mn Tons of Coal

UNTR estimates the company's coal sales will grow to 15Mt annually by 2026. To achieve this target, the company has budgeted CAPEX for US$1.3-1.4bn. The company has budgeted US$100mn for expansion, washing plant infrastructure and ports, US$1 bn to finance the mining contractor business, and US$100mn for the coal mining business. This year, the company targets coal production of 12Mt (+5% yoy vs the 2023 target). Meanwhile, UNTR will distribute dividends to its shareholders of Rp1,569/share, totalling Rp5.7tr. (Investor Daily)