Global Market Highlight
DJIA rose by +0.44% on Friday (02/07) followed by S&P 500 (+0.75%), and Nasdaq (+0.81%). Wall Street closed higher as markets reacted to improving economic data, which created 850,000 jobs in June-21 (vs 583,000 in Apr-21), well ahead of economists’ consensus of 720,000. It was the largest gain in 10 months. The market will look forward to several data releases today, such as: 1) UK Markit/CIPS Composite PMI Final; 2) Germany Markit Composite PMI Final; 3) China Caixin Composite PMI
Domestic Update
• In response to Covid-19 cases spike, the government will increase spending on social assistance and healthcare. There will be additional cash assistance and extension of electricity bill discounts according to Minister of Finance Sri Mulyani Indrawati. MNCS comment: In order to soften the blow on the economy due to pandemic curb measures, additional stimulus is needed. The market reacted negatively to the rising Covid-19 infections that already stood at more than 25,000 daily cases. Rupiah dropped -1.79% MoM against USD. JCI was corrected by 0.14% MoM & Indo Gov't Bond benchmark yield rose by 18.7 bps as of 2 July 2021. We downgraded our GDP forecast for FY21 to 4.18% from 4.46% primarily due to stricter emergency brake policy enacted by the government for Java & Bali that contributed ~60% from total output.
• Furthermore, there was an addition of 10,485 new Covid-19 cases in Jakarta yesterday.
Company News
1. CTRA IJ recorded marketing sales of IDR 2.8 trillion up to 5M21 or up 89% YoY, currently CTRA is focusing on the segment below IDR2.5 billion which is the main driver of increasing realization of marketing sales (Bisnis Indonesia). MNCS Comment: Affordable residential prices will remain the choice of consumers, supported by low interest rates and government incentives, so that marketing sales have the potential for full recovery in FY21. Currently CTRA is trading at 17.73x/1.11x PE/PBV levels.
2. DOID IJ through its subsidiary PT Bukit Makmur Mandiri Utama (BUMA) has signed a mining service contract with PT Adaro Indonesia until the end of 2025. The mining service contract includes mining services for overburden stripping and coal located in Tabalong Regency , South Kalimantan and South Barito District, Central Kalimantan. The total volume is more than 234 million bcm for stripping and 44 million tons of coal (Bisnis Indonesia). MNCS Comment: We hope that with this cooperation, DOID can improve their overburden removal. Currently DOID is trading at 0.82x PBV levels.
3. IMAS IJ posted revenue of IDR4.54 trillion in 1Q21, up +1.78% YoY (vs IDR4.46 trillion in 1Q20). COGS also increased from IDR3.55 trillion in 1Q20 to IDR3.60 trillion in 1Q21. IMAS posted an improved net loss of IDR61.76 billion in 1Q21 (vs IDR164.50 billion in 1Q20) (CNBC Indonesia). MNCS Comment: IMAS sales growth has not been able to push the bottom line to record profits, this is due to the company's expenses which are still quite high, and car sales are not stable where for Mitsubishi car sales there is an increase but for Nissan it has not reached the level before the pandemic. But besides that, 1Q21's performance was quite good by reducing the company's net loss. Currently IMAS is trading at 0.33x PBV levels.
IHSG Updates
JCI rose by +0.28% to 6,023.01 on Friday (02/07) while net foreign sell reaching IDR257.73 billion. JCI closing was higher along with most sectors, as the cyclical sector climbed by +1.75%, followed by energy (+1.48%), and non-cyclical (+0.71%). On the other hand, infrastructure weakened -0.87% followed by basic-ind (-0,61%) and health (-0,44%). Daily case of Covid-19 outbreak as the main factor of the JCI movement, currently hospital occupancy in Jakarta has increased to 90%. The government implemented the Java-Bali emergency PPKM on July 3 until July 20.
It will decrease the economist convention on economic growth in 2021, and the recovery of economic growth will only occur in 2022. Meanwhile the Rupiah exchange rate was weakening at IDR14,532. We estimate the JCI will move in the range of 5,913-6,134 while waiting for foreign exchange reserves data MoM release. Today's recommendation: SIMP, HMSP, HRUM, PNBS.
Corporate Action
Cum Dividend Date: TSPC (IDR60/share), BAYU (IDR25/share), TPAG (IDR15,11/share)
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