The rupiah exchange rate was recorded as almost touching Rp16,000 per US dollar. If the rupiah weakens, the performance of energy sector issuers on the Indonesia Stock Exchange (IDX) is considered to be negatively impacted.

In todays trading, Friday (11/22), the rupiah Jisdor strengthened 0.19% to Rp15,911 per US dollar. The spot rupiah also strengthened 0.35% to Rp15,875 per US dollar today. Rupiah fluctuations are considered to have a direct impact on the performance of energy issuers with revenues in US dollars, have global bonds, and have businesses that are closely related to raw material imports.

For issuers with revenues in US dollars, the impact can be positive and can improve their performance which was eroded in the third quarter of 2024, one of which was due to the exchange rate difference.

Take for example, PT Perusahaan Gas Negara Tbk (PGAS) aka PGN, PT Austindo Nusantara Jaya Tbk (ANJT), and PT Adaro Energy Indonesia Tbk (ADRO).

PGAS recorded a net profit of US$ 263.38 million, up 32.69% year on year (YoY). However, PGAS experienced a foreign exchange loss on the translation of the subsidiarys financial statements of US$ 891.40 thousand.

PGAS Corporate Secretary Fajriyah Usman said that the movement of the rupiah exchange rate against the US dollar did not actually significantly affect the main operations.

However, PGAS continues to monitor exchange rate fluctuations and implement risk mitigation strategies, including through natural hedges and prudent financial policies.

This is done to ensure that performance remains solid. Our focus is to continue to maintain operational efficiency and provide the best service for customers amidst economic dynamics, Fajriyah told Kontan.co.id, Friday (11/22).

Fajriyah admitted that PGAS currently has no bond debt. PGAS has paid off all bonds in May 2024, so it has no bond exposure, either in US dollars or other currencies. In addition, as of September 30, 2024, PGASs debt-to-equity ratio (DER) was at a healthy level, namely 0.3x. Fajriyah admitted that this reflects a solid financial structure and PGASs ability to maintain a balance between equity and liabilities.

With this financial position, we can focus on efficient operational management and remain resilient in the face of fluctuations in the rupiah exchange rate, he said.

ANJT recorded a net profit of US$ 1.49 million per quarter III of 2024, up US$ 610,300 per the same period last year. The exchange rate difference for the translation of the subsidiarys financial statements was US$ 2.83 million, down from US$ 2.92 million.

ANJT Management revealed that the rupiah exchange rate against the US dollar strengthened to Rp15,138 per US dollar at the end of September 2024.

As a result, the asset value of several subsidiary entities whose books are recorded in rupiah fell to US$2.83 million at the end of September 2024, he said in an official statement dated October 31, 2024. ADRO also recorded a decline in foreign exchange gains due to the translation of financial statements of US$ 301 thousand per Q3 2024, down from US$ 15.18 million per the same period last year. ADRO finally recorded a 10.6% YoY decline in net profit to US$ 4.45 billion per Q3 2024.

Sectorally, Economist NH Korindo Sekuritas Indonesia, Ezaridho Ibnutama, saw that the energy sector in general had a positive impact. This is because energy issuers export many commodities abroad.

The consumer sector will also be negatively impacted, because there are many imports of raw materials from abroad, he told Kontan, Friday (11/22).

Ezaridho saw that the performance of energy issuers and consumers is very diverse in the future. With the election of Donald Trump as US President, the United States will return to their previous foreign policy, namely speaking softly and carrying a big stick.

So, the United States will show its teeth to stop the war between Ukraine-Russia and Israel-Palestine, he explained. As a result, energy commodity prices will tend to fall, especially coal and oil. If we look at Trumps first term, he will also deregulate domestic oil production and ease the use of fracking for oil extraction.

Trump is also expected to return the US to being a net exporter for oil, as in his first term.

However, the weakening of the rupiah will not have too much impact on the performance of issuers shares, he said.

Ezaridho recommends buying INDF with a target price of IDR 10,200 per share.

Its performance could increase supported by the CPO business and instant noodle sales volume. However, there is a risk of decreasing demand due to food subsidies and increasing tariffs on the international market, he said. On the other hand, Head of Customer Literacy and Education Kiwoom Sekuritas Indonesia Oktavianus Audi said that the weakening of the rupiah against the US dollar is considered to have a direct impact on a number of issuers, especially those with debt in US dollars.

However, Audi sees that the current movement of the rupiah exchange rate is moving in the range of Rp15,400 per US dollar-Rp15,900 per US dollar or similar to the October-November period last year.

If we look at it from a sectoral perspective, the energy sector dominates revenue in US dollars, Audi told Kontan.co.id.

Meanwhile, issuers that have debt in dollars will tend to be under pressure amid the weakening of the rupiah exchange rate along with the potential for widening exchange rate losses.

For example, INDF which has bond debt in US dollars. As of the third quarter of 2024, bond debt in US dollars was recorded as equivalent to Rp41.30 trillion. INDFs subsidiary, PT Indofood CBP Sukses Makmur Tbk (ICBP), also has long-term bond debt in US dollars equivalent to around IDR 41.62 trillion.

PT Modernland Realty Tbk (MDLN) has an outstanding debt in US dollars of IDR 104.34 billion. MDLN also has US dollar bond debt of IDR 5.72 trillion.

Then, PT Aspirasi Hidup Indonesia Tbk (ACES) which could suffer losses when the US dollar strengthens because the inventory of goods sold is supplied through imports. As of the third quarter of 2024, ACES recorded a cost of goods sold of IDR 3.20 trillion.

However, this sentiment tends not to significantly change the performance of the issuers as a whole, he said. Audi estimates that the movement of the rupiah exchange rate against the US dollar is still dynamic. Moreover, there is the potential for monetary policy easing from the central bank which will continue even though it will be slower than the market expects.

Not only that, the weakening of the rupiah exchange rate can ultimately suppress the liquidity of issuer shares along with the increasing financial burden. Thus, their share prices will tend to be depressed by the issuers slowing performance.

On the other hand, issuers with US dollar revenues tend to get positive sentiment along with the potential increase in foreign exchange profit recorded by the issuer, he explained.

As a result, Audi recommends a trading buy for PGAS with a target price of IDR 1,660 per share. A buy recommendation is given to ACES with a target price of IDR 980 per share.

Source : Kontan.co.id

Nov 23,2024