MNCS Mornimg Navigator 16 June 2021

Global Market Highlight

DJIA dropped by (-0.27%) on Tuesday (15/06) followed by S&P 500 (-0.20%) and Nasdaq (-0.71%). Wall Street fell as data showing stronger inflation and weaker U.S. retail sales in May spooked already-jittery investors awaiting the results of the Federal Reserve's latest policy meeting. The market will look forward to several data releases today, such as: 1) US Foreign Bond Investment; 2) US Overall Net Capital Flows; 3) UK Inflation Rate YoY.

Domestic Update

• According to BI, Indonesia’s external debt position as of April 2021 has reached USD 418 bn or grew 4.8% YoY, lower than 7.2% YoY in the previous period. The external debt position in April contributed 49.3% from Indonesia’s total foreign debt. MNCS Comment: The increase in external debt position is in line with our expectation as global interest rates are at historically low, high liquidity due to central bank injection as well as Government run a large budget deficit to cushion further economic deterioration during pandemic. We expect fiscal deficit will be 5.42% GDP at the end of the year, hence Government debt to GDP ratio will continue to rise. 
• Indonesia's trade surplus widened to USD2.37 billion in 5M21 (vs USD2.01 billion 5M20), and slightly above market consensus of USD 2.3 billion. The exports rose 58.76% YoY, while imports also increased by 68.68% YoY. MNCS Comment: This was the thirteenth straight month of trade surplus and the largest figure since 11M20, amid a further rise in exports as global demand improved and rising commodity price. The hikes in imports is mainly due to the increase in domestic consumption and investment activities. Rising both exports and imports is a positive signal for Indonesia’s economic recovery. Trade balance surplus also indicates that foreign reserves remain ample thus supporting rupiah’s fundamental.
• According to industry association (Gaikindo) data, automobile wholesales soared 1,443.6% YoY but dropped 30.5% MoM to 54,815 units in May. Meanwhile retail sales also experienced the same trend booking an increase 275.7% YoY but decreased 19.3% MoM to 64.175 units. MNCS Comment: Although Government has enacted 100% discount of automobile luxury tax (PPnBM) and extending it to August from previously up until May, the demand drops was likely due to low production capacity. Hence we foresee that FY21 car sales won’t be able to reach pre-pandemic level at 1 mn units this year.
• Furthermore, there was an addition of 1,502 new Covid-19 cases in Jakarta yesterday.

Company News

1. WIKA IJ received new contracts of up to IDR8.13 trillion as of May-21, of which 62% came from infrastructure projects, 26% from construction support industries, and the rest came from energy and property projects. As of May-21 WIKA has realized 20.26% of the new FY21E contract target of IDR40.12 trillion (Bisnis Indonesia). MNCS Comment: Several PSN projects have entered the tender phase, as the government continues to prioritize infrastructure development in FY21. WIKA is trading at 35.58x/0.81x PE/PBV.

2. LPKR IJ posted revenue of IDR3.28 trillion in 1Q21, an increase of +7.18% YoY (vs IDR3.06 trillion in 1Q20). However, LPKR's COGS also fell from IDR1.77 trillion in 1Q20 to IDR1.76 trillion in 1Q21. LPKR posted a net profit of IDR255.84 billion in 1Q21 which increased (vs net loss of IDR2.11 trillion in 1Q20) (Kontan). MNCS Comment: The improvement in performance was due to LPKR's relatively good residential sales in 3Q20-1Q21. So that LPKR recorded profit again in 1Q21. LPKR is expected to be able to maintain consistency this year. LPKR is currently trading at 12.75x/0.74x PE/PBV.

3. ELSA IJ has secured contracts of around IDR6 trillion until Apr-21. The contract was obtained from PT Pertamina (Persero) with a contract duration ranging from 3-12 months. On Apr-21, ELSA has achieved around 77.92% of the FY21E contract acquisition target of IDR7.7 trillion (Kontan). MNCS Comment: We see that ELSA has almost fully achieved its contract target in FY21E. While the ~+90% YoY growth on oil price will support ELSA's performance. Currently ELSA is trading at 358.79x/0.62x PE/PBV levels.

IHSG Updates

JCI rose by +0.14% to 6,089.04 on Tuesday (15/06) followed by net foreign buy reaching IDR239.74 billion. JCI Strengthened along was supported by surplus at Balance of Trade data released. JCI strengthened along  with various sectors, led by basic industry (+2.85%), technology (+1.70%), and health (+0.68%). On the other hand, the property sector managed to weakened by (-1.32%), followed by transportation  (-1.07%), and energy (-0.71%).Meanwhile, the Rupiah exchange rate was weakening at IDR14,225. We estimate the JCI will move in the range of 6,030-6,120 while waiting for interest rate decision. Today's recommendation: BBNI, BRPT, INDY, CTRA.

Corporate Action

Cum Dividend Date: SCCO (IDR300/share), HRUM (IDR39.38/share), MTDL (IDR37/share)

Disclaimer On

BBNI, BRPT, INDY, CTRA, WIKA, LPKR, ELSA