MNCS Morning Navigator

07 Juni 2021

MNCS Morning Navigator 07 June 2021

Global Market Highlight
DJIA rose by +0.52% on Friday (04/06) followed by S&P 500 (+0.88%) and Nasdaq (+1.47%). Wall Street closed higher supported by May's employment report from the U.S. Labor Department  which showed that 559,000 jobs have been created. Meanwhile, the market is also keeping one eye on discussions around an infrastructure spending proposal. Moreover, the market will look forward to several data releases today, such as: 1) China Balance of Trade; 2) China Foreign Exchange Reserves; 3) Germany Factory Orders.
Domestic Update
• MoF recently plans to apply Alternative Minimum Tax (AMT) for loss booking corporations and raising VAT from 10% to 12%. MNCS Comment: In our view, fiscal consolidation through rising tax is aimed to increase much needed revenue for government spending, while at the same time reducing deficits and slowing government debt growth which now stands at 38,5% GDP. Central bank’s participation in government financing programs through the 'burden sharing' scheme should be carried out prudently, hence this option is much preferred. We estimate FY21 government budget deficits will be at 5.42% GDP.
• Furthermore, there was an addition of 1,019 new Covid-19 cases in Jakarta yesterday.
Company News
1. MEDC IJ allocates capital expenditure (capex) of USD215 million in FY21E. This value is up 4% YoY (vs USD207 million in FY20). Capex for the oil and gas segment of USD150 million which will be used for the follow-up program of the exploration findings and development of Hiu gas in Natuna Block B. Meanwhile for the electricity sector, USD65 million (Kontan). MNCS Comment: We see the return of operational activity does affect the increase on capex. We hope it will improve MEDC's performance this year. MEDC is trading at 1,21x PBV.
2. HEAL IJ will distribute FY20 cash dividends of around IDR25/share or reaching IDR74.45 billion of the total FY20 net profit of IDR473.22 billion (Emiten News). MNCS Comment: HEAL dividend distribution ratio is 15.73% of FY20 net profit, while the dividend yield offered is 0.56%, this value is better than FY19 with 0.38% yield. HEAL is currently trading at 28.02x/5.20x PE/PBV.
3. SSMS IJ will distribute FY20 cash dividends of around IDR30.49/share or reaching IDR290.43 billion from the total FY20 net profit of IDR576.63 billion. Cum dividend on June 8, 2021 (Kontan). MNCS Comment: SSMS dividend distribution ratio is 50% of FY20 net profit, while the dividend yield offered is 3.37%, this value is better than FY19 where SSMS did not distribute dividends for the FY19 financial year. Currently SSMS is trading at 12.38x/1.71x PE/PBV levels.
IHSG Updates
JCI fell by -0.43% to 6,065.17 on Friday (04/06) followed net foreign buy reaching IDR265.38 billion. JCI was weakened along with most sectors, led by transport, basic industry and industrial sectors. On the other hand, the technology sector managed to strengthen by 13%. Meanwhile, the Rupiah exchange rate was weakening at IDR14,295. We estimate JCI will move in the range of 6,000-6,113 while waiting for Foreign Exchange Reserves data release. Today's recommendation: BMRI, ICBP, LSIP, ITMG.
Corporate Action
Cum Dividend Date: KLBF (IDR28/share), UNVR (IDR100/share), HMSP (IDR72.8/share)
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