MNCS Morning Navigator
June 28, 2021
Global Market Highlight
DJIA rose by +0.69% on Friday (25/06) followed by S&P 500 (+0.33%), while Nasdaq slipped by -0.06%. Wall street closing was mixed due to inflation data which was weaker than expected and news that the US President Joe Biden has secured a bipartisan infrastructure agreement with lawmakers gave a positive sentiment to stocks. The plan is valued at USD1.2 trillion over eight years, of which USD579 billion is new spending. The market will look forward to several data releases today, such as: 1) US The Fed Williams speech; 2) UK BoE Haldane speech; 3) Japan BoE summary of opinion.
Domestic Update
• Bank Indonesia (BI) plans to introduce longer tenure contracts of 3-12 months in the USD/IDR Domestic Non-Deliverable Forward (DNDF) by mid 2022 as it is stated in the money market development blue print. MNCS comment: We believe that by deepening Indonesia's money market through offering longer tenure for DNDF contracts as well as deepening repurchase agreement (repo) will bring positive impact for both investors to hedge risks from market volatility & rupiah stability and thus achieving more effective monetary policy and financial stability. So far DNDF contracts only traded in two maturities 1 & 3- month in contrast with Singapore NDF for USD/IDR that offer maturities ranging from a week to 2-year that is often blamed for high volatility of rupiah induced by market speculation.
• Furthermore, there was an addition of 9,394 new Covid-19 cases in Jakarta yesterday.
Company News
1. MEDC IJ posted revenue of USD300.23 million in 1Q21, up +8.56% YoY (vs USD276.49 million in 1Q20). COGS increased from USD166.89 million in 1Q20 to USD180.36 million in 1Q21. MEDC posted a net profit of USD3.29 million in 1Q21 which increased (vs net loss of USD17 million in 1Q20) (Bisnis Indonesia). MNCS Comment: The strong industrial activity in many recovering countries, we believe has boosted MEDC's performance. Hence, we are confident that the FY21E performance will improve as oil price increase. Currently MEDC is trading at 57.39x/1.06x PE/PBV levels.
2. INDY IJ through its subsidiary Kideco succeeded in realizing coal production of 15.1 million tons in 5M21 or grew 8.9% YoY (vs. 14 million tons in 5M20). Meanwhile, another INDY business entity, Multi Tambangjaya Utama (MUTU) produced 0.8 million tons in 5M21 or an increase (vs. 0.6 million tons in 5M20) (Kontan). MNCS Comment: INDY has booked a great production improvement and as the coal price rose ~50% we believe this will surely support INDY's top line. Currently INDY is trading at 0.70x PBV levels.
3. MAIN IJ posted net sales of IDR2.14 trillion in 1Q21, up +27% YoY (vs IDR1.69 trillion in 1Q20). COGS increased from IDR1.55 trillion in 1Q20 to IDR1.91 trillion in 1Q21. MAIN posted a net profit of IDR112 billion in 1Q21 which was up +522% (vs IDR18.06 billion in 1Q20) (Kontan). MNCS Comment: MAIN's improved performance was driven by increased sales of feed (+22% YoY), DoC (+55% YoY) and livestock (+34% YoY). This year, MAIN focuses on developing downstream products by releasing 3 new products. The budgeted capex reaches Rp200 billion which will be used for the construction of poultry slaughterhouses. Currently MAIN is trading at 4.63x/0.79x PE/PBV levels.
IHSG Updates
JCI strengthened by +0.17% to 6,022.40 on Friday (25/06) followed by net foreign buy reaching IDR45.98 billion. JCI closing was higher along with most sectors, led by energy (+0.97%), cyclical (+0.95%), and health sector (+0.64%). On the other hand, various sectors weakened led by transportation (-0.97%), technology (-0.63%), and infrastructure (-0.56%). JCI and several indexes in Asia strengthened as investor's risk appetite improved after the United States Federal Reserve said it wouldn't raise interest rates just because of rising inflation. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,425. We estimate the JCI will move in the range of 5,980-6,080 while waiting for markit manufacturing PMI data release. Today's recommendation: LSIP, BMRI, ADRO, PWON.
Corporate Action
Cum Dividend Date: SMSM (IDR20/share), TURI (IDR7/share), BBLD (IDR4/share)
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