FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Aspirasi Hidup Indonesia: Steady SSSG, but Challenges Loom; reaffirm Buy Rating with a lower TP (ACES.IJ Rp 725; BUY TP Rp 1,100)

• ACES will terminate its agreement with ACES US, with an expected additional cost for rebranding in FY25.
• We lowered FY24-25F net profit by 3.2%/3.5% due to higher opex and lower gross margins.
• Despite steady SSSG, we see uncertainty lingering post-license termination. Maintain Buy rating with a lower TP of Rp1,100.

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Charoen Pokphand Indonesia: Strong 2Q24 earnings on higher sales and margin; 1H24 beat estimates (CPIN.IJ Rp 5,150; BUY TP Rp 6,400)

• CPIN booked strong 2Q24 net profit of Rp1.1tr (-7% yoy, +49% qoq), supported by higher feed and DOC margin; 1H24 results beat estimates.
• The strong performance was slightly offset by the continuous losses in the processed food business and higher effective tax rate.
• We maintain our Buy rating with a higher TP of Rp6,400, reflecting a higher NP FY24-25F est. by 18%-2% due to higher ASP and lower costs.

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Indocement Tunggal Prakarsa: Lowering FY24E/FY25E EPS est by 7%-8%; reiterate Buy on Better ASP Management (INTP.IJ Rp 7,200; BUY TP Rp 8,800)

• INTP's 1H24 NP reached 25%/26% of our/consensus estimate – a miss vs seasonality of 28%, due to rising labor and raw material cost.
• Despite indicating a better Jul24 sales vol trend, mgmt. expects challenges from regional elections and fighting brand competition.
• We cut our FY24E/FY25E NP by 7%/8% due to lower ASP in FY25E and higher costs. Reiterate our Buy rating with an 8% higher TP of Rp 8,800

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Telkom Indonesia: Resilient 1H24 earnings (inline); diversified growth drivers to mitigate downside risks (TLKM.IJ Rp 2,790; BUY TP Rp 4,250)

• TSEL fended off competition, while enterprise biz supported Telkom growth.
• We expect Indihome, through EZNet, to enhance TSEL’s growth in 2H24, with improving performances from Enterprise & WIB segments. 
• We adjusted our forecast with a more conservative approach for TSEL, deriving a lower TP of Rp4,250. Reiterate Buy rating on the stock.

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Semen Indonesia: Lowering FY24E/FY25E est. EPS by 20%-22 on weak ASP; downgrade rating to Hold (SMGR.IJ Rp 3,780; HOLD TP Rp 4,100)

• SMGR’s 1H24 results only reached 24%/22% of our/consensus estimate (miss), due to weak ASP (1H24/2Q24: -5% yoy/-6% yoy).
• Given the poor ASP hike deliveries in 2Q24, we downgrade our FY24E/FY25E ASP assumption to -3%/+1% from -1.5%/+1.5%.
• We cut our FY24E/FY25E NP by 22%/20% and our TP by 39% to Rp 4,100. We downgrade our rating for SMGR to Hold.

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Macro Strategy: Anathema to Growth

• The growing necessity for a rate cut due to evident economic weakness has led to the risk of the Fed falling behind the curve.
• Yen appreciation from the BoJ's rate hike, contrasting with rate cuts by major central banks, heightens the risk of a carry trade unwind.
• Domestic moderation is evident with the PMI dropping below 50 and deflation persisting for three consecutive months.

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RESEARCH COMMENTARY

Poultry: 5th week of July 2024 Price Update

• Livebird prices rebounded to Rp19.0k/kg last week and the average LB price during the Suro month was Rp18.6k, higher than our expectation of Rp17.9k. The lowest point in Suro also came in better than expected at Rp16.0k.
• Due to the bottom price of Rp16.0k, the average live bird price in the fourth week of the Suro month was Rp16.8k/kg, down from Rp17.5k/kg in the previous week and lower than the historical trend.
• There is no new data on DOC, which remained at Rp7.5k/chick.
• The local corn price increased to Rp4.7k/kg from Rp4.5k/kg in the previous week (+4.5% wow).
• Soybean meal (SBM) prices slightly increased to approximately US$356/t in the fifth week of July. The average price in Jul24 and Aug24 stood at US$357 (-1.5% mom, -18% yoy) and US$359 (+1% mom, -16% yoy), respectively.
• We remain bullish on the poultry sector post the 2Q24 strong earnings momentum and rebound in livebird prices. (Victor Stefano & Wilastita Sofi – BRIDS)

KTA with GOTO management.

Gojek 2Q24 GTV is Rp15.5tr grew 11.5%qoq, 14.1%yoy compared to flattish growth in 1Q24, at the expense of lower take rate and EBITDA. The CEO suggested that GOTO has run strong rationalization in 2023 improving unit economics by reducing the non profitable users, and hence every new customer acquisition leads to positive contribution margin. Moreover, GOTO has improved efficiency of delivery and unit economics and lowering the cost of fixed technology by aggregation of demand serving multiple orders with fewer rides. After those efficiencies, GOTO is seeking to acquire new customers in 2Q24 to onboard the platform found in the lower segments / the mass market using the Hemat products), but the acquisition cost CAC is recorded whole in the same quarter. It is expected, that in 2H with increased use of services and new MTUs, GOTO will generate operational leverages in the cost of technology.

The larger user base will help GOTO to cross-up to BNPL and later after cycles onto digital loans. Gopay is still in the early days, being able to grow by underwriting loans across platforms including BFIN and Tiktok (although might take a bit longer). GOTO will strive to be a good partner for Tiktok. 

Corporate costs have now limited upside for efficiencies as the company is seeking to grow. GOTO reiterates its target for adjusted EBITDA breakeven in FY24 based on these premises.

MARKET NEWS

MACROECONOMY

US Service PMI Rose to 51.4 in Jul24

US Service PMI rose to 51.4 in Jul24, reversing the contraction seen in Jun with a PMI of 48.8. New orders recovered significantly, while demand from foreign expanded. Service accounted for a third of US economy. (Trading Economics)

 

Indonesia's GDP Expanded by 5.05% yoy in 2Q24

Indonesia's GDP expanded by 5.05% yoy in 2Q24, inline with our expectations of 5.00% (vs. consensus of 4.99%). Household consumption growth remained subdued at 4.9%, matching Q1's growth rate, but was offset by an acceleration in Gross Fixed Capital Formation (GFCF) to 4.4% yoy (vs. 3.8% in Q1). Government consumption growth dipped significantly to 1.4% yoy (vs. 19.9% in Q1), falling well below our estimates. Net export growth surged to 6.9% yoy, following a contraction of -1.1% in Q1.

 

Nominal GDP improved to 5.95% yoy in 2Q (vs. 4.28% in 1Q), leading to GDP deflator inflation of 0.9% yoy, the first increase since 3Q23. Export prices increased for the first time since 1Q23, benefiting the export sectors.

 

Manufacturing, the largest sector in GDP, grew by 4% yoy, relatively unchanged from 1Q and 4Q23. Its contribution to overall GDP also steadied at around 19%. Manufacturing growth was led by Food Products and Beverages at 5.5% yoy, Chemical and Pharmaceuticals at 8% yoy, and Base Metals at 16.6% yoy. The manufacturing of Coal and Refined Petroleum Products extended its annual decline to 2.8% yoy.

 

Comment: Going forward, we revised our GDP projection to 5.06% in FY24, a slight revision from 5.05% in our previous estimate. The upward revision came from better net export figure in 2Q. Household Consumption is downwardly revised to 5.0% from 5.1% on the back of subdued 2Q figure. (BPS, Economic Research BRIDS)

 

CORPORATE

ACES Writes Off 29.61Mn Shares from Buyback

The ACES EGMS approved the Company's reduction of issued and paid-up capital by withdrawing treasury shares worth Rp296,103,000 or 29,610,300 shares. The issued and paid-up capital, previously Rp171,500,000,000 or 17,150,000,000 shares, has now been Rp171,203,897,000 or 17,120,389,700 shares with an unchanged nominal value (Rp10/shares). (IDX)

 

ASII Subsidiary Signs Agreement worth Rp320.8bn

A subsidiary of ASII, UNTR and PT Komatsu Astra Finance (KAF) signed a Lease Agreement with an Option through a Sale and Leaseback method on July 31, 2024. According to UNTR, under this agreement, UNTR will receive a leasing facility from KAF in the form of capital goods, specifically heavy equipment, with a purchase option at the end of the lease. This facility is valued at a maximum of Rp320.8bn, is a Committed type with an interest rate of 9.5% per annum and has a term of 8 years from the date of the agreement. (Emiten News)

 

BYD Receives 2,920 Orders During GIIAS 2024

BYD received 2,920 orders at GIIAS 2024, making it one of the top-selling brands at the 12-day event. The company is continuing to invest in expanding its dealer network and improving after-sales service to provide customers with the best possible experience. This commitment ensures that customers can quickly enjoy the innovation and quality of BYD vehicles. (Kontan)

 

GOTO-TikTok Collaborate on Food Delivery Services

GOTO is collaborating with TikTok on food delivery services. According to GOTO, GoFood is partnering with TikTok Indonesia as part of a pilot task for TikTok’s local delivery service feature. Additional information, to support Tokopedia, GOTO has also divested its ownership of the delivery and fulfillment services operated by GoTo Logistics. GoTo Logistics has been deconsolidated from the group’s financial records since May 2024. (Bisnis)

 

MEDC Spent US$188Mn CAPEX During 1H24

MEDC spent US$188MnCAPEX during 1H24. This included US$152Mn for oil and gas and US$36Mn for power, focusing on drilling production wells in Block 60 Oman, ongoing developments in Natuna, Corridor, and Ijen geothermal projects. MEDC reported that the 25 MWp East Bali solar power plant is on schedule to be completed by the end of 2024, and the 34 MW phase I Ijen geothermal development is making good progress, with completion expected in the 1Q25. (Bisnis)

 

PGEO Explores Acquisition of Domestic and International Geothermal Power Plants in 2025

PGEO plans to expand inorganic growth through the acquisition of domestic and international geothermal power plants (PLTP) with a total capacity of 175 MW by 2025. However, PGEO has not yet detailed the specific PLTP assets to be acquired or the transaction value. The additional capacity of 175 MW represents 26% of PGEO’s total capacity, which stands at 672 MW as of 1Q24. According to PGEO, this plan remains in the pipeline as of now. (Kontan)

 

Toyota’s Car Exports Increase by 33.2% in 1H24, Boosted by Hybrid Models

GAIKINDO reported that Toyota's car exports increased by 33.2% in 1H24 to 79,585 units, primarily due to the shipment of hybrid models such as Innova Zenix Hybrid and Yaris Cross Hybrid. These models cater to market needs in Asia, Latin America, the Middle East, and Africa. The TMMN factory shipped 2,175 Kijang Innova Zenix Hyrid units and 1,912 Yaris Cross Hybrid units to export destinations in 1H24. (Bisnis)