Aldira Sunrise 27 Mei 2024

Economy: Government proposes cuts to fuel subsidies in 2025
The government has announced plans to reduce fuel subsidies and compensation starting in 2025. This reform is expected to save the national budget IDR 67.1T. The government will launch the subsidy and compensation reform, which is part of a broader energy reform that includes the 3-kilogram gas canister subsidy and tariff adjustments for non-subsidized electricity customers in the upper-middle-income household category (3,500 VA and above) and government sectors. (Jakarta Post)
What we think: The rising consumption of Biosolar and Pertalite increases the subsidy and compensation burden. However, reducing the subsidies will cause pressure to inflation and purchasing power, especially the middle income. The consensus forecasts inflation of 3% for 2025, but the government’s subsidy cut should increase the inflation next year. We need to watch this plan further as it will affect the financial market.
DLTA recorded sluggish revenue growth in 1Q24
Delta Djakarta (DLTA) booked IDR 171B revenue (-13% yoy) in 1Q24. In line, net profit also fell 26.8% yoy to IDR 43.1B. The management confirmed that in 2024, the alcoholic beverage business will still be corrected, considering that consumer purchasing power has decreased significantly. However, the company will continue to focus on expanding distribution, especially in areas with many foreign and domestic tourists, such as Sumatra, Bajo, and Papua. (Kontan)
What we think: While the Ramadan seasonality also plays a part in the revenue decline in 1Q24, the rise in alcohol excise tax also put pressure on domestic revenue (net of excise tax), as the company hasn’t increased prices yet to reflect the increase in production cost.