External broker reports(aggregated public sources), MNC Sekuritas

MNC Sekuritas

External broker reports(aggregated public sources)

MNC Sekuritas, the first wholly-owned subsidiary established by the Group back in 1989, provides a complete range of services, from equity, fixed income, investment banking to providing research to optimize clients’ investments. Thus far, the company has more than 140 points of sales with over 100,000 clients. Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Equity Bottom-Up

<ul><li>We anticipate that the chip shortage has subsided and will begin recovering in FY24E, signalling positive prospects for the handset industry to boost volume growth.</li><li>After experiencing negative returns for 14 consecutive months, world chip sales recorded a growth of +5.7% YoY in Nov-23.</li><li>ERAA outlined its focus on leveraging the brand portfolio at the affordable prices for handsets and accessories.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

We anticipate that the chip shortage has subsided and will begin recovering in FY24E, signalling positive prospects for the handset industry to boost volume growth.After experiencing negative returns for 14 consecutive months, world chip sales recorded a growth of +5.7% YoY in Nov-23.ERAA outlined its focus on leveraging the brand portfolio at the affordable prices for handsets and accessories.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

ERAA IJ - MNC Sekuritas Equity Report February 2, 2024

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

Tower Bersama Infrastructure / Index Rebalance

<ul>
<li>The review period for the LQ45 Index ended on 29 December. The changes should be announced in the last week of January, becoming effective after the close on 31 January.</li>
<li>Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for <a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat (BBRI)</a> and <a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA)</a>.</li>
<li>The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.</li>
</ul>


The review period for the LQ45 Index ended on 29 December. The changes should be announced in the last week of January, becoming effective after the close on 31 January.
Based on the index methodology, there could be up to 5 changes at the rebalance. Plus there will be capping changes for Bank Rakyat (BBRI) and Bank Central Asia (BBCA).
The impact of passive trading will be higher on the deletions than the inclusions since lower liquidity stocks are replaced with higher liquidity stocks.


LQ45 Index Rebalance Preview (Jan): Reading the Tea Leaves

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<ul>
<li>
<a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya Swasembada (ERAA IJ)</a> had a tempestuous 3Q2023, with one-off write-downs of inventory in both Indonesia and Malaysia, despite booking strong sales and gross profit growth overall. </li>
<li>The company has also expanded its store network more aggressively in 9M2023, which meant higher opex and financing to build the new inventory, whilst stores take time to ramp up. </li>
<li>
<a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya</a> should see a recovery in 4Q2023, given plans to limit store expansion plus a lack of write-offs. Trading on 5x FY2024E PER with forecast +25% EPS growth is attractive.</li>
</ul>



Erajaya Swasembada (ERAA IJ) had a tempestuous 3Q2023, with one-off write-downs of inventory in both Indonesia and Malaysia, despite booking strong sales and gross profit growth overall. 
The company has also expanded its store network more aggressively in 9M2023, which meant higher opex and financing to build the new inventory, whilst stores take time to ramp up. 

Erajaya should see a recovery in 4Q2023, given plans to limit store expansion plus a lack of write-offs. Trading on 5x FY2024E PER with forecast +25% EPS growth is attractive.


Erajaya Swasembada (ERAA IJ) - Coming Out a Squall

<ul>
<li>
<a href="https://www.smartkarma.com/entities/gudang-garam-tbk-pt" target="_blank" data-smartkarma-citation="entities:722:1" rel="noopener">Gudang Garam (GGRM IJ)</a> and <a href="https://www.smartkarma.com/entities/mitra-adiperkasa-tbk-pt" target="_blank" data-smartkarma-citation="entities:18684:1" rel="noopener">Mitra Adiperkasa (MAPI IJ)</a> will replace <a href="https://www.smartkarma.com/entities/timah-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:11174:1" rel="noopener">Timah Persero (TINS IJ)</a> and <a href="https://www.smartkarma.com/entities/japfa-comfeed-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:8258:1" rel="noopener">Japfa Comfeed Indonesia (JPFA IJ)</a> in the LQ45 Index next week.</li>
<li>There are some large changes to free float plus capping changes for <a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a> and <a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia (BBRI IJ)</a>. </li>
<li>There could be jumps in the stocks of the adds/deletes today, though there should be pre-positioning and a potential reversal later in the week.</li>
</ul>



Gudang Garam (GGRM IJ) and Mitra Adiperkasa (MAPI IJ) will replace Timah Persero (TINS IJ) and Japfa Comfeed Indonesia (JPFA IJ) in the LQ45 Index next week.
There are some large changes to free float plus capping changes for Bank Central Asia (BBCA IJ) and Bank Rakyat Indonesia (BBRI IJ). 
There could be jumps in the stocks of the adds/deletes today, though there should be pre-positioning and a potential reversal later in the week.


​​​LQ45 Index Rebalance: Two Changes in a Few Days

<ul>
<li>
<a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya</a> recently released its 1Q2023 results with net sales increasing by +29% YoY but with -20.5% decrease in net profit due to increased opex related to its expansion and inventory build.</li>
<li>The company plans to add 400 new outlets this year, lower than last year's 575, as it ramps up its newer stores, which should help to improve profitability in 2H2023.</li>
<li>
<a href="https://www.smartkarma.com/entities/erajaya-swasembada-tbk-pt" target="_blank" data-smartkarma-citation="entities:18869:1" rel="noopener">Erajaya</a> continues to add to its stable of brands outside mobile handsets, including JD Sports, Wellings, Grand Lucky, The Face Shop, Paris Baguette, and has launched EraBlue with <a href="https://www.smartkarma.com/entities/mobile-world-investment-corporation" target="_blank" data-smartkarma-citation="entities:22638:1" rel="noopener">Mobile World</a>.</li>
</ul>



Erajaya recently released its 1Q2023 results with net sales increasing by +29% YoY but with -20.5% decrease in net profit due to increased opex related to its expansion and inventory build.
The company plans to add 400 new outlets this year, lower than last year's 575, as it ramps up its newer stores, which should help to improve profitability in 2H2023.

Erajaya continues to add to its stable of brands outside mobile handsets, including JD Sports, Wellings, Grand Lucky, The Face Shop, Paris Baguette, and has launched EraBlue with Mobile World.


Erajaya Swasembada (ERAA IJ) - In Ramping Up Mode

Indonesia

PT Erajaya Swasembada Tbk is an integrated company engaged in the distribution and retail of mobile telecommunication devices, including mobile phones, tablets, SIM cards, operator vouchers, accessories, and IoT devices. The company also provides value-added services such as mobile phone protection and handset leasing. Erajaya Swasembada also operates in the active lifestyle, beauty and wellness, and food and nourishment sectors. The company is headquartered in Jakarta, Indonesia, and was established in 1996.

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Erajaya Swasembada (ERAA IJ)

ERAA IJ - MNC Sekuritas Equity Report February 2, 2024

We anticipate that the chip shortage has subsided and will begin recovering in FY24E, signalling positive prospects for the handset industry to...

MNC Sekuritas

LQ45 Index Rebalance Preview (Jan): Reading the Tea Leaves

There could be 5 potential changes for the LQ45 Index in January. The potential adds have performed well while the potential deletes are trading...

Brian Freitas