02 Juni 2021
MNCS Morning Navigator 02 June 2021
Global Market Highlight
DJIA rose by +0.13% on Tuesday (01/06) while S&P 500 and Nasdaq weakened by -0.05%/-0.09%. Wall Street's closing was rather flat as the market is still looking for direction. Meanwhile, the energy sector rose but tech and healthcare weakened. The Fed has maintained its stance that the factors driving the spike in inflation are transitory, but some are concerned that the Fed is behind the curve and could ultimately be forced to rein its accommodative monetary policy measures more aggressively and sooner than many expect. Moreover, the market will look forward to several data releases today, such as: 1) US MBA Mortgage Applications; 2) Germany Retail Sales; 3) Eurozone Purchasing Price Index.
Domestic Update
• Indonesia’s Markit Manufacturing PMI recorded further expansion in May although slightly lower than previous month at 55,3 (IHS Markit, Trading Economics). MNCS Comment: This is the seventh straight month of PMI reading above 50 since November 2020 marking Indonesia’s economy on track on its recovery path.
• Inflation is expected to hike in May with CPI +0.28% MoM/+1.64% YoY. Slightly below consensus estimate at 1.67% YoY, data will officially be released today at 11:00 AM (Bank Indonesia). MNCS Comment: Rising inflation is likely supported by better mobility and Lebaran momentum that historically boosts consumption. However, rising CPI will remain below the central bank target at 3±1%. For 2021, we foresee average inflation outlook will remain benign at 2.35% YoY.
• Furthermore, there was an addition of 519 new Covid-19 cases in Jakarta yesterday.
Company News
1. WIKA IJ posted revenue of IDR3.92 trillion in 1Q21, decreased -6.4% YoY (vs IDR4.19 trillion in 1Q20). However, WIKA's COGS also fell -1.08% to IDR3.65 trillion in 1Q21. WIKA posted a net profit of IDR78.16 billion in 1Q21 which is down -21.21% YoY (vs IDR99.21 billion in 1Q20) (Kontan). MNCS Comment: This realization was due to low new contracts in FY20, as well as several delays in project payments, so WIKA's performance was depressed in 1Q21. Currently WIKA is trading at the levels of 35.86/0.82x PE/PBV.
2. PGAS IJ posted a gas distribution volume of 843 Billion British Thermal Units per Day (BBTUD) in Mar-2021, down -2.35% MoM (vs 912 BBTUD in Feb-2021). As for transmission volume, PGAS recorded a volume of 1,268 MMSCFD in March 2021, up +2.67% MoM. However, PGAS recorded a decrease in regasification volume of -10.97%, from 82 BBTUD in Mar-2021 to 73 BBTUD in Apr-2021 (Kontan). MNCS Comment: The lack of activity in several industries has also put pressure on the distribution of PGAS volume. However, it is expected that in 2H21 it will increase again, as the economy recovers. PGAS is currently trading at 7.53x/0.81x PE/PBV.
3. ERAA IJ will distribute FY20 cash dividends of around IDR13.8/share or reaching IDR219.39 billion of the total FY20 net profit of IDR612 billion (CNBC Indonesia). MNCS Comment: ERAA's dividend distribution ratio is 36% of FY20 net profit, while the dividend yield offered is 2.3%, this value is better than FY19 where the company did not distribute dividends in the FY19 financial year. ERAA is currently trading at 8.60/0.22x PE/PBV.
IHSG Updates
JCI rose by +1.69% to 5,947.46 on Monday (31/05) followed net foreign buy reaching IDR748.39 billion. JCI rose as most sectors strengthened, led by tech (+8.66%), infrastructure (+3.50%) and basic industry (+2.19%), while the energy sector fell.Meanwhile, the Rupiah exchange rate was strengthening at IDR14,280. We estimate JCI will move in the range of 5,800-6,005 while waiting for the Inflation Rate release. Today's recommendation: BBRI, MDKA, DOID, JPFA.
Corporate Action
Cum Dividend Date: MFIN (IDR19/share)
RUPS: POWR, CASH
Disclaimer On
BBRI,
MDKA,
DOID,
JPFA,
WIKA,
PGAS,
ERAA
