Global Market Highlight
DJIA rose by +0.30% on Wednesday (07/07) Followed by S&P 500 (+0.34%), and Nasdaq (+0.01%). The Wall Street closing was higher after minutes from the last Federal Reserve meeting indicated may not be ready to continue interest rate tightening policies. The market will look forward to several data releases today, such as: 1) US FOMC Minutes; 2) Germany Balance of Trade; 3) Eurozone ECB Monetary Policy Meeting Accounts.
Domestic Update
• Indonesia credit growth slipped by 1.28% YoY in May-2021 according to Bank Indonesia. Loan disbursement gradually improved although remained limited. MNCS comment: Credit contraction was primarily due to limited demand both from corporations and consumers. From the supply side, banks' risk perception indicated by tight lending standard also contributed to weak loan disbursement. In our view, implementation of emergency social restriction will likely to further limit credit growth.
• Furthermore, there was an addition of 9,366 new Covid-19 cases in Jakarta yesterday.
Company News
1. MEDC IJ plans to buy back 190 million shares or 0.8% of the issued capital. MEDC has prepared funds of IDR135 billion from internal cash (Tren Asia). MNCS Comment: We observe that the buyback portion is not significant and does not have an impact on the Company's performance. However, ROE has the potential to increase from the current annual level of 1.88%. Currently MEDC is trading at 53.14x/0.98x PE/PBV levels.
2. DMAS IJ recorded marketing sales of IDR905 billion in 1H21 or around 45.2% of the FY21E target of IDR2 trillion. This marketing Sales comes from the sale of 43.3 hectares of industrial land from the automotive sector, data center, residential and commercial segments (Kontan). MNCS Comment: It has not reached 50% of the target due to delays in the absorption of DMAS industrial land. The company needs to catch up its target in 2H21. Currently DMAS is trading at 9.35x/1.75x PE/PBV levels.
3. DSNG IJ plans to start the installation of solar power plants (solar panels) in the wood products business segment with an area of 16,000 m2 located in Temanggung, Central Java and capable of producing electrical energy with a capacity of 2 megawatts. As well as wood products, DSNG continues to be committed to reducing carbon emissions gradually (IQ Plus) MNCS Comment: We see that DSNG is very focused on their ESG, with the highest national rank on SPOTT. We see that maybe initial investment on this project might be potential, but it will bring in future value as well. With this, DSNG will be able to get more ESG financing. Currently DSNG is trading at 13.81x/0.89x PE/PBV levels.
IHSG Updates
JCI slipped by -0.05% to 6,044.04 on Wednesday (07/07) followed by net foreign sell reaching IDR189.46 billion. JCI closing was lower along with most sectors, led by energy -0.22%, followed by industrial (-0.51%). On the other hand, both finance and cyclical sectors strengthened by +0.94%. JCI closed lower along with negative sentiment regarding to Covid-19 outbreak. In the last 14 days, the average daily case was 23,350 people per day, or more than 2 times higher than the average for the previous 14 days (10,628 people per day). While, foreign exchange reserves last month increased USD700 million, to USD137.1 billion. Meanwhile the Rupiah exchange rate was strengthening at IDR14,482. We estimate the JCI will move in the range of 5,985-6,134 while waiting for consumer confidence data release. Today's recommendation: EXCL, CPIN, ELSA, BRIS.
Corporate Action
Cum Dividend Date: ADMF (IDR513/share), SMDR (IDR10/share), TRJA (IDR3/share)
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