FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Mitra Keluarga Karyasehat: Proven strategy execution led to solid 1H24; expect sustainable earnings momentum in FY24-25F (MIKA.IJ Rp 3,010; BUY; TP Rp 3,400)

·         We believe MIKA’s solid 1H24 net profit of Rp601bn (+33%yoy) has demonstrated its execution of marketing and cost efficiency strategies.

·         We upgrade our FY24F/FY25F EPS forecast by +5%/+9%, with key revenue drivers from high-intensity cases and private patients.

·         We maintain our Buy rating on MIKA with a slightly higher TP of Rp3,400 on its attractive growth outlook.

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Macro Strategy: The Monetary Easing Coercion

·         The latest Beige Book report further supports Fed’s rate cut proposition given more signals of economic moderation.

·         BI’s historic rate cut consistently reflects anticipatory moves in response to global economic downturn to mitigate the spillover effects.

·         While China’s Third Plenum yet to offer substantial reform. The PBOC unprecedented rate cut on the 1Y and 5Y LPR could risk IDR volatility.

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RESEARCH COMMENTARY

HMSP’s (Hold – TP Rp730) 1H24 sales volume down 2.9% yoy (1Q24: +1.6% yoy)

  • Indonesia’s 2Q24 cigarette sales volume was 71.9bn sticks (down 0.5% yoy), leading to 1H24 sales volume of 145.8bn sticks (+ 3.1% yoy vs 1H23: -5.6% yoy).
  • HMSP’s 2Q24 sales volume was down 6.4% yoy, leading to 1H24 volume of 39.4bn sticks (down 2.9% yoy) and reaching 46% of our FY24F volume estimate of 84.8bn sticks (+ 0.3% yoy) i.e slightly in line with previous years’ range of 47-49%.
  • In 2Q24, HMSP’s market share slightly declined to 27.3% (1Q24: 27.5% and 2Q23:29.1%), while 1H24 market share was 27.3% (1H23: 28.8%).
  • By end of Jun-24, HMSP reported a 1H24 HTU sales volume of 0.5bn, showing robust growth (vs 1Q24: 0.2bn and 1H23: 0.1bn). PMI stated that Indonesia is a new promising growth market for IQOS and HTU, supported by increasing geographic reach and clove HTU innovation.
  • Based on our price survey, HMSP’s cigarette products saw an ASP adjustment of 8.4% ytd in Jul24 (vs 1Q24: 6.1% ytd), which we believe is intended to pass on the higher excise cost.

 

Comment:

  • We see lingering challenges for the tier-1 producers due to persisting downtrading driven by weak purchasing power and unfavorable regulations. On a positive note, the robust growth in 1H24 HTU volume offers hope for a new LT growth driver, but we think it is currently still too small at 1% of total volume.
  • Upside risks include potential new govt regulations to narrow the gap between tier-1 and below-tier-1 excise tax tariffs and a sub-inflation increase in the FY25 excise tax tariff. Maintain Hold with a TP of Rp730 based on -2SD avg 3y FY25F P/E of 9.6x. (Natalia Sutanto – BRIDS)

 

MARKET NEWS

 
       
         
             
                   
                       
                           

MACROECONOMY

Indonesia: The Carbon Exchange Transactions Amounted to Rp36.7bn as of Jun24

The value of carbon market transactions in Indonesia has reached Rp36.7bn since its launch on September 26, 2023, until June 30, 2024. The trading volume on the carbon exchange amounted to 608k tons of CO2 equivalent. In 1H24, the government recorded carbon transaction values amounting to Rp5.9bn, with a trading volume of 114.5k tons of CO2 equivalent. (Emiten News)

 

SECTOR

The Government Plans to Impose of Excise Tariffs on Plastic Products and Packaged Sweetened Beverages

  • The Ministry of Finance's Directorate General of Customs and Excise will impose excise tariffs on plastic products, including plastic bags, multi-layer packaging, polystyrene, and plastic straws.
  • The government will also stipulate exemptions for certain products, such as those intended for scientific research/development, exempted for foreign representatives/experts, passenger luggage, border crossers, and certain border shipments, as well as for social purposes.
  • Tariffs will be set per kilogram for domestic manufacturers and importers for foreign-produced goods.
  • The government will also impose excise tariff on ready-to-drink beverages, including fruit juice with added sugar, energy drinks, and refreshing solution drinks.
  • Exemptions are provided for medical purposes, honey, juice, or drinks without added sweeteners. Tariffs will be imposed per liter based on sugar content. (Bisnis Indonesia)

 

Comment: This will increase the price of beverage products from ICBP, SIDO and UNVR

 

CORPORATE

ANTM Produced 4.19mn wmt of Nickel Ore in 1H24

ANTM recorded nickel ore production of 4.19mn wet metric tons (wmt) in 1H24, marking a 39.53% yoy decline (1H23: 6.93mn wmt). Additionally, nickel ore sales reached 3.36mn wmt in 1H24. Furthermore, ANTM produced 10,169 tons of nickel in ferronickel (TNi) during 1H24, with sales totaling 6,778 TNi. (Kontan)