Global Market Highlight
DJIA increased by 0.76% on Monday (01/02) followed by S&P 500 (+1.61%) and Nasdaq (+2.55%).Wall Street made a positive start to the week Monday, as the spike in volatility that rattled markets in the final days of January subsided after investor focus shifted to another busy week of quarterly results. The 4Q20 earnings is shaping up to be one of the strongest on record, with the roll out of vaccines and easing pandemic impact also helping. Moreover, the market will look forward to several data releases today, such as: 1) US Total Vehicle Sales; 2) Eurozone GDP Growth Rate; 3) Italy GDP Growth Rate.
Domestic Update
• The IHS Markit Indonesia Manufacturing PMI rose to 52.2 in January 2021 from 51.3 a month earlier. This was the highest in six years as the recovery from the Covid-19 hit in the sector continued.
• BPS released Indonesia's annual inflation which declined to 1.55% in January of 2021, the lowest since October last year and below market expectations of 1.66%, as food, drinks and tobacco inflation eased to a three-month low of 2.81% in January, while housing & utilities inflation slowed to 0.25%.
• Furthermore, there was an addition of 3,614 new Covid-19 cases in Jakarta yesterday.
Company News
1. WIKA IJ get two new contracts with a total contract value of IDR967.95 billion. The first is the construction project of 1,091 official houses for soldiers of the Indonesian Army. This development project is worth IDR603.35 billion. Through its subsidiary WIKA - Hutama Karya, received a project from the Ministry of PUPR as the contractor for the construction of the Kretek II Bridge, Bantul, Yogyakarta, valued at IDR364.6 billion with WIKA's share of 53% (Kontan). MNCS Comment: WIKA's new contract achievement is quite good with a great value. In addition, WIKA is preparing to conduct tenders for several other government-owned projects. Currently WIKA is trading at 268.07x/1.33x PE/PBV.
2. EXCL IJ estimates that the capital expenditure budget in FY21E will not be different from the allocation in FY20, at Rp7.5 trillion. The Capex will be used to continue the expansion of the 4G network to support the increase in the data service business outside Java, and EXCL is still working to prepare the network for the implementation of 5G services (Investor Daily). MNCS Comment: EXCL shows its commitment to continue to maintain business growth, in line with increasing demand in FY21E. Management projects that fiberization will be carried out at 7,000-8,000 telecommunication sites up to FY21E. EXCL is currently trading at 8.94x/1.18x PE/PBV.
3. KRAS IJ targets the volume of export shipments to increase by 20.77% in FY21E to 155 kilotons (vs 128.34 kilotons in FY20), on Monday (1/2/2021) KRAS sent steel weighing 31.76 kilotons to Malaysia or a significant increase compared to the export volume in January 2020 of 830.97 tonnes (Bisnis). MNCS Comment: We see that the increase on export is inline with the reopening and recovering business activities on several countries. KRAS is trading at 1.84x PBV levels.
IHSG Updates
JCI rose by +3.50% to 6,067.55 on Monday (01/02) followed by net foreign sell reaching IDR616.29 billion. JCI rebounded after a week full of decline, this is backed by the strengthening of almost all sectors except miscellaneous industry. Mining posted the highest rebound of +6.67% as the nickel stocks rose despite the weakening on metal commodity prices. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,022. We estimate JCI will move in the range of 5,920 – 6,280 while waiting for GDP Growth Rate data Release. Today's recommendation: UNTR, BBNI, INCO, WIKA.
Corporate Action
IPO: WMUU (IDR180/share)
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