FROM EQUITY RESEARCH DESK
IDEA OF THE DAY
Property: FY25 Outlook: Picking the Winners Amid Industry Challenges (OVERWEIGHT)
- We expect the VAT & BPHTB incentives, which have evidently aided buyers’ affordability and developers’ pre-sales, to continue until 2H25.
- We identify winning developers amid the affordability challenges and found the key competitive factors are pricing, product, and location.
- We maintain our OW rating on the sector as it trades at a sharp discount with improving pre-sales. Top picks: CTRA> PWON> SMRA> BSDE.
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MARKET NEWS
MACROECONOMY
Bank Indonesia to Announce BI Rate at 2 PM Today, Expected to Maintain at 6.00%
Bank Indonesia will announce the BI Rate today at 2pm. We expect BI to maintain the BI Rate at 6.00% following the weakening IDR. BI should maintain their stability stance to provide assurance for IDR stabilization. (BRIDS)
Indonesia: Future Budget Expansion for Free Nutritious Meals Program
The Head of the National Nutrition Agency (BGN) has suggested that the budget for the free nutritious meals program (MBG) could increase in the future, though the current allocation remains at Rp71tr. This increase would depend on the program's full implementation for a year, as proposed by President. The Minister of Food, Zulkifli, had earlier stated that the current budget would only cover the program until June 2025, with plans to request an additional Rp140tr in mid-2025. If approved, the total budget for the program could reach Rp420tr annually, ensuring that all children in Indonesia receive meals from July to Dec25. (CNN)
US Producer Price Index for Final Demand Rose 0.2% mom
US Producer Price Index for final demand rose 0.2% mom, lower than the consensus of 0.4%. A measure excluding food and energy was unchanged from November. (Bloomberg)
SECTOR
Commodity Price Daily Update Jan 14, 2025
Automotive: Gaikindo Projects 2025 Car Sales at 850,000 Units
Gaikindo targets 850,000 car sales in 2025 with maximum of 900,000 unit, lower than the previous goal of 1mn units. This is due to factors like a 12% VAT, tax options, and economic instability, which could reduce sales to 750,000 units. However, Gaikindo remains optimistic, citing a drop in U.S. interest rates and the influx of new car brands into Indonesia, along with tax relaxation in 25 provinces to support the industry. (Bisnis)
Coal Downstreaming Funded by National Banks
The coal downstreaming projects are set to expand significantly, driven by the opportunity to secure financing from national banks and non-bank financial institutions. This funding is provided based on recommendations from the Task Force for Accelerating Downstreaming and Energy Resilience. The task force was established under Presidential Decree No. 1 of 2025. (Investor Daily)
Indonesia Plans Minimum Age for Social Media Use
Indonesia plans to issue a regulation to set a minimum age for users of social media, a move aimed at protecting children. Minister Meutya Hafid did not say what the minimum age would be in Indonesia. (Reuters)
Comment: We don't see an effective way of monitoring this usage between age groups, but we expect authorities may manage to determine usage in schools and public places mainly. In Australia, smartphones are banned during classrooms, while social media is banned for children under 16 years old. It does not prohibit the use of smartphones. (Niko Margaronis - BRIDS)
Ministry of Agriculture Accelerates National Corn Production Increase
The Ministry of Agriculture (MoA), in collaboration with the Indonesian National Police, is accelerating the increase of national corn production with a planting target of 1.7mn ha this year. The government has decided to close the corn import channel, particularly for consumption, in 2025. During a coordination meeting discussing strategies for consolidation and strengthening cooperation, it was targeted that the 1.7mn ha of planting would yield an additional 4mn tons of corn, an increase of 25% from the current level. According to the MoA, the production for 2023-2024 is approximately 15mn tons, and the target for 2025 is set to rise to 16mn tons. (Investor Daily)
CORPORATE
BUKA Parks Remaining IPO Funds
BUKA still has remaining IPO funds from 2021 amounting to Rp9.3tn, which are parked in deposits and bonds. The company has utilized approximately Rp11.9tn of the IPO proceeds. Of the total, Rp6.9tn was allocated for the company’s working capital, Rp1.1tn for its subsidiary PT Buka Mitra Indonesia, and Rp16.9bn for PT Buka Usaha Indonesia. (Bisnis)
MIKA Introduces SOMATOM Force CT System
MIKA, through its branch in Kelapa Gading, introduces the latest innovation in medical technology, the SOMATOM Force CT System, which is the first CT system in a private hospital in Indonesia. The SOMATOM Force offers exceptionally fast and highly precise heart scanning, even for critically ill patients, while minimizing radiation exposure. This technology is expected to revolutionize cardiovascular imaging, particularly in the detection of heart disease and stroke. (Kontan)
Tiktok: China Considers Offering TikTok to Elon Musk
If TikTok fails to divest its U.S. business unit by January 19, the ByteDance-owned app will face a ban in the country. However, Chinese officials are reportedly considering the possibility of transferring TikTok to Elon Musk. This scenario would come into play if the U.S. Supreme Court refuses to lift the ban on TikTok. One potential plan under consideration is for X, formerly known as Twitter, to take over TikTok's operations in the U.S. (Kontan)
Comment: We don't think ByteDance will be willing to share their knowledge and technology with 3rd parties or let alone merge with X. But we believe Elon Musk can ask as a trustee to the Tiktok operations in US and that it operates within applicable rules and norms of the country (Niko Margaronis - BRIDS)
UNVR Announces Ice Cream Business Divestment and Board Reshuffle
UNVR has approved the divestment of its ice cream business to PT The Magnum Ice Cream for Rp7tr, with proceeds allocated for cash dividends and strengthening its cash position. Post-divestment, UNVR will focus on its core Home and Personal Care and Nutrition businesses. The company also announced a board reshuffle, appointing Alejandro Meinardo Jr Santos Concha, Vandana Suri, and Neeraj Lal as new directors, while outgoing directors Ainul Yaqin and Vivek Agarwal transition to global roles, and Hernie Raharja pursues external opportunities. (Investor Daily)
Comment: Based on an earlier disclosure, UNVR will record a one-off gain of Rp4.8tn from this transaction. Historically, UNVR has distributed interim dividend between November to December. Including 1H25 estimated Net profit of Rp1.8tn and assuming a 100% payout, this would translate to 9.9% yield for the interim dividend in 2025. (Natalia Sutanto & Sabela Nur Amalina – BRIDS)
