Midi Utama Indonesia: Eyeing major expansion ahead (NOT RATED) MIDI should be quite resilient amid higher minimum wages given its non-cyclical retail business focus ahead of the elections. MIDI has sound profitability with a 25.4% gross margin in 9M22 with more SKUs giving greater flexibility to manage its product mix. MIDI is looking to open 200 Alfamidi outlets and 500 Lawson stores in 2023 with its main focus on outer Java areas for Alfamidi and Java for Lawson. Its 29x PE multiple based on the latest filings, MIDI offered attractive multiple than AMRT’s PE 23F at 36.8x. To see the full version of this report, please click here   BTPN Syariah: Deep dive the ultra-micro market (BTPS.IJ IDR 2,590 BUY.TP IDR 4,000) We reiterate our BUY call on BTPS with an unchanged GGM-derived TP of IDR4,000 (implying 3.2x PBV 2023F) post the release of inline FY22 results. By building the sharia digital ecosystem specialized to cater to the ultra-micro segment, BTPS hopes to increase the loyalty of borrowers while, at the same time, explore new business ventures. The ecosystem has several initiatives, ranging from the mobile apps of field staff, Warung Tepat (agent banking) to setting up a VC subsidiary. As such, our estimates of 12.6% yoy financing growth and 550bps credit costs should support FY23F net profits of IDR2.2tn. To see the full version of this report, please click here   To see the full version of this snapshot, please click here   MARKET NEWS

MACROECONOMY

Indonesia Retail Sales December 2022 Grew 0.7%

In December 2022, annual retail sales growth remained in positive territory, with the Real Sales Index (RSI) growing 0.7% (yoy) despite moderating from 1.3% (yoy) in the previous period. On a monthly basis, retail sales growth accelerated to 7.0% (mom).

 

In terms of prices, respondents anticipate a build-up of inflationary pressures in March 2023 driven by higher prices during the holy fasting month of Ramadan 1444 H, before normalizing in June 2023, as reflected by an increase in the 3-month Price Expectations Index (PEI) to 139.1 from 134.6 and a decrease in the 6-month PEI to 138.3 from 140.2.

 

Respondents of the latest Retail Sales Survey conducted by Bank Indonesia predict annual retail sales to increase in Jan-23, as reflected by 1.7% (yoy) growth in the Real Sales Index (RSI) to a level of 213.2. However, respondents forecast a -2.1% (mom) contraction in Jan-23 on broad-based declines across all commodity groups, in line with seasonal trends as demand normalizes after the Christmas and New Year festive period. (Bank Indonesia)

 

MSCI Indonesia Index Quarterly Review

Citing from Bloomberg, MSCI announced changes to its global standard indexes under its quarterly index review, effective as of the close on Feb. 28. MSCI Indonesia Index had no additions in members while Deletions occurred for Bank Jago (ARTO.IJ) (Bloomberg).

 

CORPORATE

ADRO to Invest USD 3 bn. on Building Hydropower

ADRO plans to build a hydropower plant with a capacity of 1.5 gigawatts (GW), ready to invest USD 3 bn. to work on the project, by cooperating with strategic partners. According to ADRO, the company is still studying new renewable energy (EBT) power generation projects, including hydropower, aiming to diversify the power generation energy mix. (Investor Daily)

 

MDKA Prepares Subsidiary for IPO in March 2023

MDKA will deliver its subsidiary Mederka Battery Materials (MBM) for an IPO in March 2023. According to MDKA, this is in accordance with the master plan, PT Saratoga Investama Sedaya Tbk. (SRTG), to conduct an IPO in the first quarter of 2023. (Bisnis)

 

MEDC 9M22 Oil and Gas Production Increased 73%

Medco E&P's oil and gas production in 9M22 reached 161 MBOEPD (+73% yoy). According to Medco E&P, the acquisition of the Corridor PSC and the development of new gas projects in the Hiu, Malong and Belida fields in the South Natuna Sea Block B PSC have supported the achievement of this oil and gas production. (Investor Daily)

 

HMSP’ 4Q22 Cigarette Sales Volume Down 3.7% yoy; FY22 +4.8% yoy

• Total 4Q22 industry cigarette sales in Indonesia down 5.1% yoy to 74.8bn sticks (3Q22: +11.5% yoy and 4Q21: +5.4% yoy), following the impact of inflationary pressure by fuel price increases.
• This led to FY22 industry sales volume of 309.6bn sticks (+4.5% yoy vs FY21: 7.2% yoy), supported by increasing consumption following the reopening of economy. Below tier-1 segment still drive the growth in the industry.
• HMSP reported 4Q22 sales volume of 21.2bn sticks, down 3.7% yoy (3Q22: +12.1% yoy and 4Q21: +4% yoy), reflecting the impact of inflationary pressure.
• This led to HMSP’ FY22 sales volume of 86.8bn sticks: +4.8% yoy (this is lower than our FY22 sales volume estimates of 6.8% yoy)
• By end of December 2022, HMSP maintained its market share at 28% (Natalia Sutanto – BRIDS)

UNVR FY22 result: Below Estimates

• UNVR reported 4Q22 net profit of IDR753bn, down 45% yoy and 36% qoq, leading to FY22 bottom line of IDR6tn, down 6.8% yoy.
• 4Q22 gross margin decline to 42.6% (3Q22: 45.7%) with higher 4Q22 opex and also one-off cost in 4Q22 for portfolio transformation leading to tepid FY22 earnings.
• UNVR reported 4Q22 top line growth of 1.7% yoy, mostly driven by price and continue sell-out activities for better inventory in the trade channel. This led to FY22 revenue growth of 4.2% yoy (driven by UPG 12.5% yoy).
• FNR revenue reported +6% yoy growth in FY22, while HPC revenue only increase 3.3% yoy. The FY22 margin of FNR improved to 20% (FY21: 15.9%) while HPC margin down to 23.1% (FY21:29.5%)
• The FY22 net profit is 89% to our FY22F and 87% to consensus, i.e below