FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Mayora Indah: Steady indicative 2Q24 sales growth, with intact margin outlook (MYOR.IJ Rp 2,350; BUY; TP Rp 3,200)

• MYOR’s management expects robust sales growth in 2Q24 off a low base in 2Q23 after double-digit growth (mom and yoy) in Apr-May24.
• Higher raw material costs led to lower margins in 2Q24. As such, MYOR will gradually adjust ASP at the consumer level.
• Maintain Buy with an unchanged TP of Rp3,200 (implying FY24F PE of 21x).

 

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RESEARCH COMMENTARY

ACES (BUY – TP Rp1,200): Continued solid May24 SSSG of 10.1%

• ACES reported 5M24 sales of Rp3.43tr (+15.3% yoy vs our FY24F: +11.1% yoy), reaching 40.5% of our FY24F, i.e., inline.
• ACES reported SSSG in May24 of 10.1% (Apr24: 6.8%), higher than May23’s 1.1%, boosted by three long weekends and May promotions (Electrical Lighting Fair), in contrast to the soft post-Lebaran period last year.  Rest of Java was the growth driver with SSSG of 11.1%, followed by Ex-Java at 10.9% and Jakarta at 6.6%.
• The solid May24 led to 5M24 SSSG of 11.1% (vs 5M23: 3.5%), above the company’s FY24 guidance of 7%. At the present time, the company is conducting a “Boom Sale” event from June 12 to July 9, 2024 and supported by the long Eid Al-Adha weekend (June 17 -18), the company is expected to book positive SSSG in June. (Natalia Sutanto & Sabela Nur Amalina – BRIDS)

Permodalan Nasional Madani (PMN) Meeting KTA

• With more than 15 million customers (100% women), PNM targets loans growth of 13% (higher than BBRI`s micro loans growth target of c. 7-9%) and NP growth of c. 10-12% to c. Rp1.8tr in FY24F.
• PNM`s loans have an average tenor of 1 year with current outstanding loans per customer of Rp4.3 million, up from Rp2 million in 2015 as repeat customers can get more loans. 
• NPLs stand at c. 1%, higher than the pre-covid level of below 0.2%. The weakening in the economy of middle to low income earners has impacted loans quality, but the company expects NPLs to remain manageable at below 1.3-1.4% in FY24F.
• Post-covid, the attendance rate in its weekly meeting (PKM) declined to 50-60% while the repayment rate remained above 90%. The company continues to prioritize addressing the lower attendance rate.
• Since its inception in 2015, around 1.3 million customers have graduated to the bankable category, and 75% of the 15 million are recurring customers. 
• With 5 PKM slots per day and four working days per week, an account officer can handle up to c. 360 PKM per month.
• Amid the tight liquidity, PNM is targeting CoF of 7.2% max for FY24F (1Q24 at 6.6%) while looking at cheaper ST funding from banks. Currently, bank borrowing forms 55% of total funding. (Victor Stefano & Naura Reyhan Muchlis - BRIDS)

MARKET NEWS

MACROECONOMY

The Bank of England Maintained its Key Interest Rate At 5.25%

The Bank of England maintained its key interest rate at 5.25%, with two members voting for a rate cut and the remaining seven voting for an unchanged rate. The BoE addressed the fact that some inflation indicators remain elevated even though the overall CPI has eased to the 2% target. Expectations for a rate cut in August are increasing as the market starts to price in two rate cuts in 2024. (Bloomberg)

 

Bank Indonesia Opted to Maintain the BI Rate At 6.25%

Bank Indonesia (BI) opted to maintain the BI Rate at 6.25%, inline with our/consensus expectations. The policy move reflects BI’s confidence in the IDR trend despite its current weakness. BI reiterated that the IDR fundamentally remains robust. However, short-term sentiment can result in heightened daily volatility. To address the pressure on the IDR, BI is focusing on its non-interest rate policy, mainly through SRBI optimization and intervention in the spot IDR, DNDF, and INDOGB secondary market. (Bank Indonesia)

 

SECTOR

Banking: Credit Grew reaches 12.15% yoy in May24

According to BI, credit grew 12.15% yoy in May24, driven by both the corporate and consumption segments. However, credit growth in May24 slowed compared to Apr24 when credit grew 13.09% yoy. On the supply side, third-party funds (TPF) grew 8.63% yoy in May24. (Bisnis)

 

CORPORATE

ERAA to Distribute Dividends of Rp268.32bn

ERAA has approved the distribution of cash dividends of Rp268.32bn (Rp17/share), or 32.48% of the FY23 net profits. (Emiten News)

 

KLBF Partners with South Korean Biotechnology Company, GC Cell

KLBF is officially collaborating with GC Cell, a global biotechnology company in South Korea with a cell therapy business focus, through Regenic which is managed by its subsidiary, PT Bifarma Adiluhung (Bifarma). This collaboration aims to facilitate the entry of Immuncell-LC, an innovation in cell therapy that uses autologous T-cell therapy and has received approval for use for liver cancer surgery in Korea. The collaboration also includes technology transfer and cooperation in developing the Natural Killer (NK) Cells therapy pipeline, which has been proven effective in cancer cell killing. (Kontan)

 

MAIN Exports Frozen Chicken Worth US$65,000 to Singapore

MAIN has increased its frozen whole chicken exports to Singapore, worth around US$65,000. The company's second shipment of frozen chicken to Singapore was made from the Malindo Feedmill Poultry Slaughterhouse in Purwakarta Regency, while the fifth shipment of processed products was made from the PT Malindo Food Delight factory in Cikarang. (Kontan)

 

SMRA to Distribute Dividends of Rp148.57bn

SMRA plans to distribute cash dividends to shareholders, totaling Rp148.57bn, equivalent to 14.3% of the FY23 financial year's net profit of Rp1.036tr. (Emiten News)

 

UNVR to Distribute Dividends of Rp2.93tr and Plans to Spin Off its Ice Cream Business Unit

UNVR plans to distribute dividends of Rp2.93tr or Rp77/share for FY23 (yield: 2.5%). This follows the previous interim dividends of Rp63/share, totaling Rp 5.34tr or Rp140/share, which was the same as the total dividends distributed in FY22. (Bisnis)

 

In other news, UNVR plans to spin off its ice cream business unit but without setting a completion time. (Investor Daily)