Sales Commentary
Weekly Sectoral Performance
> JCI finally had a good week, up +3.5%, reached >Rp7.3k. This is driven by foreign inflows of Rp1.2tn, despite USDIDR still on the high side (>Rp15.8k).
> *Renewables sector was the most outperforming sector this week,* +22.9%, as up by 24%. Additionally, O&G and Poultry sector were also up by 4.3% and 4.1%, respectively.
> On the other hand, *Cement, Healthcare, and Tower sector were the most underperforming sector this week,* down by -2.2%, -1.0%, and -0.8%, respectively.
Weekly Recap
1. : Inevitable slowdown in growth amid tight liquidity; downgrade to Hold
> Our recent meeting with corroborated our previous concerns on macro. * guides for 6-8% yoy loan growth for FY25F*, attributed to: 1) weaker purchasing power in low class has started to crept up to middle class which may result in slower consumer loan; 2) and potential slowing down of corporate demand from mining and downstreaming.
> *Liquidity is also getting tighter*, while BI remained adamant on its tightening stance. *We forecast to maintain flat NIM in FY25F; while CoC may increase to 50-60bp* vs. 30-40bp this year.
> *D/G to Hold with TP Rp10,400*. As the growth slowdown is yet to be priced in, *we believe this may create further downside risks for the other big banks as well.*
> _Link to report: https://r.ipot.id/?g=r/s/3cie4r_
2. : Unlocking thermal expansion; current valuation is too attractive to ignore*
> Our analysts Reggie and Ryan initiate with a *BUY* rating and *Rp12,000 TP*. IPO valuation at 2.9x FY25F P/E is too cheap to ignore (plus dividend yield of c.16% assuming conservative c.45% payout), with risk/reward skewed to the upside owing to: 1) *potential expansion from Pari & Ratah* (which we have yet to include in our model), 2) *potential MSCI & FTSE inclusion (as soon as 1Q25)*, and 3) *royalty rate-cut* - i.e. in which we estimate to enjoy *~2.6% upside to FY25F NP for every 1% royalty rate cut.*
> _Link to report: https://r.ipot.id/?g=r/s/3cie4q_
3. : Improving adj. EBITDA & easing share price overhang shall lead to overhang. Lift TP to Rp110/sh*
> We expect its adj. EBITDA to grow to Rp1.2-1.5tr in FY25F (from only 119bn in FY24F) primarily driven by ODS and GTF. *Remaining buyback funds shall be able to mitigate incremental sellers*, while further clarity on MVS shall pave clearer path for M&A Our Adj. EBITDA upgrade translates into FY25F/26F EV to Adj. EBITDA of 49x/15x for business (lower vs. peers valuation of 25x EV/EBITDA.) *We lift our TP to Rp110/sh.*
> _Link to report: https://r.ipot.id/?g=r/s/3cie44_
4. Macro: Assessing the impact of minimum wage increase by 6.5% in FY25*
> Official decision on the minimum wage increase has been decided at 6.5%. We think it as the impasse figure between employee-employers. Our simulation suggests the adverse impact of the increase will start in year three (T+3) post the increase. Nominal GDP will contract by c.-0.3%. *We believe the minimum wage increase needs to be accompanied by a stimulus for employers*, such as lower corporate income tax, etc.
> _Link to report: https://r.ipot.id/?g=r/w/3cie4p_
5. Prabowo approves VAT hike to 12% for some items in Jan24*
> It is reported that Prabowo has approved VAT hike to 12% for luxury goods starting from Jan24. The implementation would be in phases and would start from luxury goods.
6. : Robust Oct-Nov24's sales indication may provide a re-rating catalyst*
> Based on our channel check, 's Oct-Nov24 indicative sales grew by mid-teens yoy as this was driven by both domestic and export sales. *With Oct-Nov24' run-rate, we estimate to book c.13% yoy sales growth in FY24F or slightly above its FY24F guidance of 10-12%.* Additionally, recently adjusted its coffee and chocolate product price by c.10% in Oct24, resulting into 2-3% blended ASP hike, thus could lead to higher GPM in 4Q24F. In FY25F, aims revenue to grow by 10-12% driven by domestic market, and GPM at the range of 23-26%.
> _Link to report: https://r.ipot.id/?g=r/s/3cie4p_
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