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FROM EQUITY RESEARCH DESK |
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IDEA OF THE DAY |
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Jasa Marga: Debunking JTT divestment payment delay risks and earnings impact from minority interest (JSMR.IJ Rp 5,350; BUY TP Rp 6,500)
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MARKET NEWS |
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RESEARCH COMMENTARY
BBTN Concall KTA
P&L Insight
- Jul24's NIM was under pressure due to accrued interest correction (from commercial and consumer segments) and higher CoF as competition for funding from big banks remained tight.
- Potential additional consumer segment correction is expected in Nov24 but should be smaller, with a soft landing ahead. No more commercial loan corrections are anticipated.
- Every 25bps rate cut could positively impact NIM by 5bps. To reduce CoF, the bank will focus on boosting CASA via mobile app development.
- Opex increased due to compensation adjustments, natura tax, and marketing expenses but should normalize in 2H24. The bank targets 10% yoy opex growth for FY24F.
Corporate Action
- The due diligence for the Sharia banking license acquisition is completed, and negotiations are underway, with a CSPA expected within a month.
- While awaiting the license, the bank is exploring strategic partnerships in the Sharia business. Discussions with Muhammadiyah are still early, with potential share ownership schemes.
- Bulk asset sale progress has been delayed from Sep to late Oct/early Nov. The sale may reduce NPL by 50bps.
Government Regulation
- The quota for subsidized housing is set to increase by 34k to 200k units in FY24, pending government approval.
- Early talks with the government are focused on a 3 million housing target, emphasizing rural renovation and 300-400k additional units in urban areas.
- Ongoing discussions aim to support housing loans, including changes in SSB schemes to make them more attractive for securitization and regulations to support funding. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)
Possible stake sale of Link Net: Potential Positives for Tower Operators and XL Axiata
DealStreetAsia reported that Link Net has reportedly engaged UBS as its sell-side advisor for a stake sale worth ~US$400mn (Rp6.2tr), expected to close by year-end 2024.
Potential suitors are: a) I Squared Capital: Targeting US$5bn in investments across Asia-Pacific between 2025-2027, focusing on digital infrastructure b) Sinar Mas Group: Actively acquiring fiber assets to expand its portfolio. c) Protelindo (Sarana Menara Nusantara TOWR IJ: BUY, TP: Rp1,300): Actively looking into fiber investments, leveraging its strong position in the tower market.
Our view:
- Impact on Tower Operators: The potential investment in Link Net's FTTH infra may benefit tower companies such as TOWR and MTEL by strengthening their ability to monetize fiber deployments with new income streams.
Key Implications:
- TOWR is reportedly also in the race for IOH’s fiber sale, aligning with expectations of more infrastructure investments. This positions the company for growth in both fixed broadband (FTTH) and mobile markets, particularly in ex-Java regions.
- Leverage Considerations: While TOWR may face higher ND/EBITDA (4.7-4.8x) in the short term due to acquisitions, its strong organic free cash flow, along with a potential rights issue, could support further expansion.
- Mitratel (MTEL IJ, BUY, TP: Rp960), with its superior coverage in ex-Java and low ND/EBITDA (2.2x), is also eyeing IOH’s fiber backbone and FTTT cables. Mitratel and Telkom group are exploring entry into the fixed broadband (FTTH) market to leverage current investment in FTTT.
XL Axiata’s Possible improvement in Investor Sentiment: If Link Net secures a new investor, XL Axiata would gain a stronger financial partner, boosting its supply of home passes to meet increasing demand and promoting a strong FMC product. (Niko Margaronis - BRIDS)
MACROECONOMY
US Jobless Claims Fell to Lowest Four-Week Average Since Jun24
US 4-week average of jobless claims continued to fall for the fourth consecutive week to 230K, also marking the lowest 4-week average since early Jun24. (Trading Economics)
US Service Sector Shows Expanding Growth in Aug24
US Service sectors expanded in Aug24 with PMI figures from ISM and S&P at 51.5 and 55.7, respectively. Demand was still expanding in Aug24, although employment was quite mixed. (Trading Economics)
CORPORATE
ANTM to Optimize Core Commodity Production and Sales for the Rest of the Year
ANTM is targeting ferronickel production and sales volumes in 2024 to reach 22,464 TNi (+5/12% from 2023). The production and sales targets for each commodity are as follows:
- Gold: ANTM targets gold production to reach 958 kg in 2024. Gold sales for 2024 are projected to reach 37,354 kg (+43% yoy).
- Nickel Ore: ANTM aims to produce a total of 20.58 mn wmt (+53% yoy) of consolidated nickel ore for use in its ferronickel plants and domestic sales. Nickel ore sales are targeted to reach 18.75 mn wmt in 2024 (+60% yoy). (Kontan)
INCO Reclaims 67% of Mining Land and Plans HPAL Nickel Smelter Project by 2026
INCO has stated that it has reclaimed 67% of the land previously used for mining activities. The company mentioned that this effort is part of INCO's commitment to achieve sustainable mining operations. The reclamation of former mining areas is being carried out to restore the land for future use. (Bisnis)
In other news, INCO aims to complete the high-pressure acid leach (HPAL) nickel smelter project in Sorowako, Luwu Timur, Sulawesi, by 2026. The HPAL smelter designed by INCO has a capacity of 60k tons of nickel per year in the form of mixed hydroxide precipitate (MHP). This Rp30tr investment project, which includes a plant and a mine, began construction at the end of 2023 for further downstream processing up to precursor stages. (Bisnis)
ISAT and Telin Partner to Develop Indonesia Cable Express System 2 for Enhanced Connectivity
ISAT and Telin have announced a strategic partnership to develop Indonesia's telecommunications infrastructure with the Indonesia Cable Express System 2 (ICE System 2). Formalized through an MOU on August 28, 2024, this collaboration aims to meet the growing demand for high-quality connectivity across key Indonesian regions and in Singapore. The ICE System 2 will enhance connectivity at major locations such as Jakarta, Surabaya, and Makassar, and will include an infrastructure expansion to link the Points of Presence (PoP) of both ISAT and Telin, improving network robustness and cost-efficiency. (Telin)
TLKM Partners with ISAT to Build NeuTrafiX Platform
TLKM has entered into a collaboration with ISAT to strengthen the digital connectivity landscape through the NeuTrafiX platform. This partnership is established through TLKM's subsidiary, Telin, and ISAT's subsidiary, Indosat Business. NeuTrafiX is a platform designed to facilitate interconnection between global operators, providing innovative solutions to the challenges faced by the telecommunications industry today. (Kontan)
UNTR Targets an Additional 15 Koz Gold Production from Sumbawa Mine in 2024
UNTR is set to achieve an additional 15 Koz of gold production with the commencement of operations at the Sumbawa Jutara (SJR) mine starting in the second semester of this year. With the SJR mine now in production, UNTR's gold sales could reach up to 235 Koz by the end of the year. As of June 2024, total gold sales from the Martabe mine reached 110 Koz. The company stated that increased gold production could occur once the capacity of the tailing storage facility has been expanded. (Kontan)
