FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Cement: Downgrade sector to Neutral on weak ASP and lower demand; cut our FY24F/25F EPS by 20%-21%(NEUTRAL)

• SMGR’s 1Q24 ASP fell 3% yoy/qoq after being relatively stable for the past 8 quarters, while Apr24 vol was also weak (-3.4% yoy).
• We change our FY24F/FY25F ASP assumption to -1.5%/+1.5% (vs. +1%/+1.5% prev.) and vol growth to +1%/+3% (vs +3%/+3.5% prev).
• We cut our FY24F/FY25F EPS by 26%/23%. Reiterate BUY on SMGR with a 22% lower DCF-based TP of Rp 6,700.

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RESEARCH COMMENTARY

AGRO Apr24 Results

• AGRO reported an 88% rise in NP to Rp12.5bn in 4M24, driven by the 86bps increase in NIM to 4.7% and a decline in the CIR to 49.9%, offsetting the higher provisions.
• The rise in the CoC to 7.3% in 4M24 (+626bps yoy) was mostly attributed to 1Q24. In Apr24, CoC was recorded at 2.8% (flat yoy).
• The EA yield increased to 8.8% (+133bps yoy) and offset the 87bps rise in the CoF to 5.6%, which resulted in 86bps growth in the NIM to 4.7%.
• The CIR declined significantly from 80.1% to 49.9% as opex fell 13% and other operating income rose 70%.
• In Apr24, NP amounted to Rp3.4bn (+46% yoy) as AGRO recorded non-operating income (vs. non-operating expenses last year) and lower provisions.
• NIM increased 157bps yoy to 4.7% in Apr24, despite an increase in the CoF to 5.6%, as the EA yield rose 206bps yoy to 8.7%.
• On a monthly basis, NIM improved 20bps mom, supported by a 17bps decline in the CoF and a 23bps rise in the EA yield. CIR also improved to 65.5%.
• As the bank continued to clear its legacy business, loans and customer deposits growth were relatively flat yoy. However, customer deposits rose by 5% mom. The LDR was recorded at 78% (-117bps yoy).
• Compared to FY23, NIM improved 38bps despite the increase of 81bps in CoF as the EA yield increased 95bps. CIR was significantly lower in 4M24 but the CoC much higher at 7.3% (vs FY23’s 2.4%). (Victor & Naura – BRIDS)

BNGA Bank Only Apr24 Results

• In 4M24, BNGA reported a 6% rise in NP to Rp2.2tr as provisions fell 51%, offsetting the 11% decrease in PPOP caused by a decline in NIM and a higher CIR.
• NIM declined to 4.1% (-58bps yoy) as the EA yield was relatively flat and the CoF increased 74bps yoy to 4.0%.
• Despite the 5% fall in opex, CIR increased 162bps to 46.4% as NII and other operating income declined 5% and 15%, respectively.
• In Apr24, NP fell 3% yoy due to a 248bps yoy higher CIR of 44.1% driven by a 40bps and 35% decline in NIM and other operating income, respectively.
• On the other hand, the CoC improved annually to 0.8% in Apr24 as provisions declined 46%.
• On a monthly basis, a 25% mom rise in provisions and a 10% mom fall in PPOP due to the 124bps increase in CIR contributed to a 13% mom decline in NP in Apr24.
• NIM fell 77bps mom as the EA yield declined 77bps.
• Loans and customer deposits grew 4% and 5% yoy, respectively, leading to an LDR of 79.8% (-66bps yoy). On a monthly basis, loans and customer deposits growth was flat.
• Compared to FY23, BNGA recorded a 33bps lower NIM in 4M24, as the EA yield was flat and CoF rose 38bps. However, CIR and CoC improved 46bps and 13bps, respectively. (Victor & Naura – BRIDS)

MARKET NEWS

SECTOR

Banks: Third Party Funds Grew 8% yoy as of Apr24

Bank Indonesia reported that the growth rate of banking third-party funds (TPF) in Apr24 increased significantly amid still high interest rates, reaching 8.1% yoy to Rp8,376.1tr. This figure is higher than last year's growth of 7% yoy as of Apr23 and the previous month's growth of 7.4% yoy as of Mar24. In detail, total low-cost funds (CASA) grew 7.8% yoy with a fund value of Rp5,251tr as of April 2024. (Kontan)

 

Cement: National Cement Absorption is Projected to Reach 67.4mn Tons

This year, national cement absorption is projected to reach 67.4 million tons or an increase of 3% yoy. Last year, national cement consumption reached 65.5 million tons or 3.5% higher than in 2022 which was 63 million tons. According to the Indonesian Cement Association, although domestic consumption is still experiencing growth, excess supply still haunts the national cement industry. Continuing infrastructure work and the Our Mother Country Nusantasa megaproject are the main catalysts that support the growth of cement consumption in the country. (Bisnis)

 

Government to Adjust the Reference Price for Sugar Consumption at the Producer and Consumer Levels

According to the National Food Agency (NFA), in order to stabilize the supply and price of sugar, a sugar coordination meeting has been held between NFA, Ministries/Institutions (K/L), and related stakeholders to agree on price adjustments at the producer and consumer levels. The government has relaxed the reference purchase price for sugar consumption at the producer level to Rp14,500/kg from 31 May - 31 October 2024 and the reference sales price at the consumer level to Rp17,500/kg, especially in eastern Indonesia at Rp18,500/kg from 5 April - 31 May 2024. (Investor Daily)

 

Wheat Contract Prices Set at Their Highest Level in the Last Nine Months

In trading Tuesday, May 28, 2024, the price of wheat contracts on the Chicago Futures Exchange rose by 3.3% in early trading in the Asian zone and touched the highest level in the last nine months. This is due to the threat of drought in the main global wheat producing countries and fears of an escalation in the Russia-Ukraine conflict. However, wet weather in India in 3Q24 provided new hope for wheat price stability. (Bisnis)

 

CORPORATE

BBRI distributed KUR of Rp59.96tr as of Apr24

BBRI distributed KUR of Rp59.96tr to 1.2mn debtors from January to April 2024. This is equivalent to 36% of BRI’s KUR distribution target set by the government in 2024 of Rp165tr. According to BBRI, the majority of its KUR was distributed to the production sector, reaching 55.95%. (Kontan)

 

ISAT Ready to Repay Debt Securities worth Rp471bn

ISAT will repay Debt Securities worth Rp471bn (Continuing Bonds of Rp67bn; Sustainable Sukuk Ijarah of Rp404bn), which will mature on July 23, 2024. ISAT plans to repay the debt securities using internal funds. (Emiten News)

 

MEDC Divested its Assets in Libya's Area 47

MEDC divested assets in the African region by releasing ownership in the Area 47 Libya Contract to the Libyan National Oil Corporation (NOC). MEDC and NOC have agreed to transfer all of the company's 50% participation rights in the Exploration and Production Sharing Agreements (EPSA) in the Area 47 contract, and all of the company's 24.5% share ownership in the Joint Operating Company, Nafusah Oil Operations B.V. (Emiten News)

 

PGEO Distributes Dividends of 78% of the 2023 Profit

PGEO will distribute dividends of US$128.4mn or equivalent to Rp2.07tr for fiscal year 2023. This dividend distribution of 78.5% was approved at the AGMS. US$35.1mn or 21.5% of the net profit is allocated and recorded as mandatory reserves. PGEO recorded a 2023 net profit of US$163.57mn (+28.47% yoy).

 

TBIG: Plans to Issue Debt Securities of US$900; Add New Business Service

TBIG plans to issue debt securities in foreign currency with a maximum principal amount equivalent to US$900mn. This issuance will be carried out in one or several issuances within a 12-month period. The proceeds from the Notes issuance will be used to repay maturing debt obligations and accelerate payments on debts of the company and its group of subsidiaries or finance future business expansion plans and support the company's funding needs in general. (CNBC Indonesia)

 

In other news, TBIG will have new business services which will be carried out through its business entities, PT Tower Bersama and PT Solu Sindo Kreasi Pratama. This business plan consists of renting power supplies and renting office space and home offices. This new service follows the addition of an electricity system rental business using batteries for telecommunications towers and property land rental. (Bisnis)