Daily Brief Indonesia: Medco Energi, Multi Bintang Indonesia, Bukit Uluwatu Villa and more

• In today’s Morning Views publication we comment on developments of the following high yield issuers: Medco Energi
• UST yields climbed 3-4 bps across the curve yesterday, amid heightened corporate supply after Alphabet Inc issued USD 25 bn of USD- and EUR-denominated bonds. The yield on the 2Y and 10Y UST rose 3 bps each to 3.61% and 4.11%, respectively.
• Equities climbed, supported by tech stocks after Amazon’s Cloud unit inked a USD 38 bn deal with OpenAI. The S&P 500 edged up 0.2% to 6,852, while the Nasdaq grew 0.5% to 23,835.

• Multi Bintang Indonesia (MLBI IJ) reported Q3FY25 YoY revenue/profit declines of 4.3%/5.8%. 9MFY25 revenues/profits were +2%/-5% YoY, due to a slight decrease in margins. 
• After a strong recovery in demand of 10% YoY in Q2, demand in Q3 was subdued at -4.3% YoY despite more substantial tourism numbers (10% YoY in Q3FY25, 12% Ytd)
• The stock trades at 10.7x FY25 PE, offers a 9.4% dividend yield, is net cash, and has a substantial ROCE of >70%. 

• Poised for a Cyclical Upswing: As a pure-play operator of luxury villas and hotels in Bali, BUVA is a direct beneficiary of the robust recovery and positive outlook for Indonesian tourism. International arrivals are projected to continue growing, driving demand for high-end accommodation.
• Operational Turnaround Amid Financial Volatility: The company has demonstrated a significant revenue recovery post-pandemic, with a 3-year revenue CAGR of 79.5%. However, profitability remains volatile, as evidenced by significant net losses in 2022 and certain quarters of 2023/2024, highlighting operational gearing and sensitivity to occupancy rates.
• Stretched Valuation and No Yield: The stock trades at a premium valuation with a P/E ratio of 141.3x. This expensive multiple, combined with a long-term history of negative market cap growth and a consistent no-dividend policy, suggests the market has priced in a significant portion of the anticipated recovery.

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