FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Poultry: Lower production and an extreme climate are favorable for higher DOC and livebird prices (OVERWEIGHT)

• Pinsar views that the commercial and breeding farm business will continue to be profitable in FY24 due to lower supply.
• Corn prices are now favorable with harvesting still ongoing in some areas while the forecast of a wet dry season supports corn production.
• We maintain our Overweight rating on the sector, foreseeing higher feed margins and higher livebird prices as upside; CPIN is our top pick.

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MAP Aktif Adiperkasa: Solid growth outlook is intact despite FY24-25F est. cuts; reaffirm Buy rating with lower TP (MAPA.IJ Rp 880; BUY; TP Rp 1,100)

• 1Q24 store expansions are on track to achieve mgmt’s and our FY24F target; expect stronger SSSG in the coming quarters
• We trimmed FY24-25F net profit forecast by 13%/9% from higher opex assumption
• We maintain our Buy rating on intact growth outlook (16.7% NP CAGR in FY23-26F), but with lower TP of Rp1,100.

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Mitra Adiperkasa: Specialty stores and store expansion to support FY24 earnings growth; reaffirm Buy with lower TP (MAPI.IJ Rp 1,510; BUY; TP Rp 2,200)

• We expect improved performance in the coming quarters with improved SSSG (490 net add stores in FY23) and more store opening.
• Nonetheless, we lower our FY24-25F NP by 9.4%/7.8% given more conservative store expansion assumptions and lower gross margin est
• We maintain our Buy rating on still attractive growth prospect, but with a lower TP of Rp2,200 implying FY24F PE of 16.9x

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Medikaloka Hermina: Expect volume growth and efficiency effort to sustain earnings momentum in 2Q24 onwards (HEAL.IJ Rp 1,345; BUY; TP Rp 2,000)

• 1Q24 performance has showcased HEAL’s cost-control optimization, volume expansion through operating additional beds and ASP increase.
• We raise our FY24/25F net profit est. by +10/+14%, as we adjust our blended volume growth, amid continued strong traffic YTD.
• We reiterate BUY rating on its solid earnings growth prospect, with a higher TP of Rp2,000.

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RESEARCH COMMENTARY

BBTN Bank Only Apr24 Results

• BBTN's net profit reached Rp984bn (+5% yoy) in 4M24, supported by a 27% yoy decline in provisions offsetting the 9% decline in PPOP caused by a 614bps increase in CIR to 61.2%.
• The 4M24 net profit forms 26% of the consensus FY24F, i.e., inline (4M23 at 27%).
• Despite the 15% yoy loans growth, NII was relatively flat (+1%) due to the lower NIM. NIM fell 29bps to 3.2%, caused by a 65bps rise in the CoF to 5.1% offsetting the 29bps higher EA yield of 7.7%.
• CIR was higher at 61% in 4M24 (vs. 55% in 4M23) caused by 17% higher opex, mainly from higher salary expenses.
• In Apr24, net profit declined to Rp124bn (-59% mom, -8% yoy) as NIM dropped to 2.8% (-29bps mom, -52bps yoy) and CIR surged to 74.3% (+1,225bps mom, +1,711bps yoy).
• The CoC was flat mom in Apr24 and improved yoy to 0.7% (-73bps yoy).
• Annual Loans and customer deposits growth were recorded at 14% and 11%, respectively. This resulted in a higher LDR of 96.44% (+269bps yoy).
• Compared to FY24F, CoC was still 52bps better than expected, while CIR was ahead of estimates due to the higher opex. (Victor & Naura – BRIDS)

BTPS Bank Only Apr24 Results

• BTPS reported net profit of Rp100bn in Apr24 (-11% mom, -25% yoy) driven by lower net interest income from negative loans growth and declining NIM.
• Post the continuous decline in monthly CoC since Dec23, BTPS` CoC in Apr24 rose slightly to 11.7% (from 11.2% in Mar24) but was still below the FY23 CoC of 16.1%.
•    The 4M24 net profit came in at Rp360bn (-35% yoy) caused by a lower loans balance, lower NIM, higher opex, and higher provisions. 
• The loans balance declined 12% yoy to Rp10.7tr while opex rose 17% as the bank continued adding more field staff to increase collection while slowing down its loan disbursement to improve its overall credit quality.
• With loans growth slowing, deposits also declined by 5% yoy to Rp12.2tr with the CoF remaining at 4.2-4.3% in FY24, but still higher than FY23`s CoF of 3.9%.
• Aside from a higher CoF, the bank’s NIM was also pressured by a lower EA yield and lower LDR. (Victor & Naura – BRIDS)

MARKET NEWS

MACROECONOMY

China Issued its 1^st Batch of Ultra Long Bonds in an Auction of CNY40bn (US$5.5bn) 30-year Bonds

China issued its first batch of ultra long bonds in an auction of CNY40bn (US$5.5bn) 30-year bonds. The average awarded yield was 2.57%, slightly higher than the median forecast of 2.55%. Demand was 3.9 times the amount offered, inline with the 30-year tenor auction demand of about four times the CNY28bn offered on average. (Bloomberg)

 

SECTOR

Retail: The Government Issued a Minister of Trade Regulation Regarding Import Policies and Regulations

The government has issued MOT No. 8/2024 on Import Policies and Regulations, effective since 17 May 2024. The government agreed to relax import licenses for seven groups of goods: electronics, footwear, apparel and apparel accessories, bags, and valves. The government will also exclude non-commercial or personal-use goods from the regulation. In line with the revision of the new MOT, the Ministry of Finance issued a Minister of Finance Decree (KMK) as a technical implementation guideline for Customs in the field. (Emiten News)

 

Industry: Government Disburses Oil and Gas Exploration and Production Incentives

The government will provide a number of incentives to boost national oil and gas exploration and production activities. The Ministry of Energy and Mineral Resources said that currently the government no longer requires contractors to use gross split, then related to exploration privileges. As such, exploration data facility procedures become easier whereby exploration commitments can be transferred to open areas and data membership fees can be recovered. The government also provides incentives for the exploration period which can be extended from a maximum of 10 years for contractors who still want to work to find reserves. This year's exploration investment is targeted to reach US$1.8bn.

 

CORPORATE

BRIS to Distribute Dividends of Rp855.56bn

BRIS will distribute 15% of its 2023 net profit as dividends, or around Rp855.56bn, equivalent to Rp18.54/share (yield: 0.74%). The dividend amount increased by 100% compared to the 2022 financial year dividend of Rp9.24/share. (Bisnis)

 

MBMA Announced Rights Issue Plans

MBMA plans to conduct a rights issue of up to 10% of its total shares. According to the disclosure of information, the rights issue will be carried out within a 12-month period. The funds will be used for general liquidity needs, capital expenditures, working capital, and the growth and/or development of the Company's business. (CNBC)

 

NCKL Targets 55,000 tonnes Production of Nickel Content in MHP

NCKL aims to produce 55,000 tonnes of nickel content in mixed hydroxide precipitate (MHP) from the PT Halmahera Persada Lygend (PT HPL) business unit in 2024. According to the company, MHP production from Harita Nickel will increase after the operation of PT Obi Nickel Cobalt (ONC), which has an installed capacity of 65,000 tons of nickel content in MHP. (Kontan)

 

TLKM Strengthens Cooperation with Starlink

TLKM, through its subsidiary Telkomsat, signed a cooperation agreement with Starlink for enterprise segment services in various regions in Indonesia. Telkomsat has been collaborating with Starlink since 2021. In 2022, Telkom Group started to develop Starlink backhaul services by utilising the anchoring rights that the government had granted. The company added that this cooperation is an effort by Telkom Group to accelerate equitable connectivity throughout Indonesia, especially in the 3T (Disadvantaged, Frontier, and Outermost) areas. (Kontan)