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MNCS Morning Navigator

08 Juni 2021

MNCS Morning Navigator 08 June 2021

Global Market Highlight
DJIA slipped by -0.36% on Monday (07/06) followed by S&P 500 (-0.08%) while Nasdaq rose by +0.49%. Wall Street closing was varied as investors await for news of a global minimum corporate tax rate, lingering inflation fears, and a lack of market-moving economic news. The market will look forward to several data releases today, such as: 1) US Balance of Trade; 2) Germany ZEW Economic Sentiment Index; 3) Japan GDP Growth Annualized Final (Q1).

 

Domestic Update
Bank Indonesian (BI) will release the FX reserves position for May today at 10:00 AM. FX Reserves are expected to increase from USD 138.8 bn from April to USD 140 bn last month. MNCS Comment: Increasing foreign reserves is likely due to : 1) surging commodity price boosting exports; 2) withdrawal of gov’t foreign loans & tax revenues; 3) minimum needs for currency stabilization as rupiah appreciated 1.1% against USD in May. High FX reserves will bolster Indonesia’s external sector, macroeconomic & financial system stability.
Jan-May 2021 Indonesia’s coal production reached 237 mn ton (38% from gov’t target 625 mn ton) according to MEMR. MNCS Comment: Extreme weather has hindered domestic coal output and supply chain. However we see a positive catalyst for domestic coal price due to : 1) rising domestic & global coal benchmark to surpass USD 100/ton; 2) tight coal supply in China; 3) supply chain disruption in major producing countries (South Africa & Russia); 4) high geopolitical tension between China & Australia.
Indonesia Crude Price (ICP) rose 5.69% MoM in May-21 to USD65.49/barel from USD61.96/barel in Apr-21. MNCS Comment: Surging global crude oil price has supported ICP this year. If rising price is accompanied by increasing Indonesia’s fossil fuel imports on the back of better mobility as vaccination program ramped up trade balance will likely to book a deficit & widening CAD threating rupiah’s fundamental.
Furthermore, there was an addition of 1,197 new Covid-19 cases in Jakarta yesterday.

Company News
1. PWON IJ posted revenue of IDR1.1 trillion in 1Q21, down -32.37% YoY (vs. IDR1.65 trillion in 1Q20). However, COGS PWON also decreased from IDR673.45 billion in 1Q20 to IDR596.74 billion in 1Q21. PWON posted a net profit of IDR236.69 billion in 1Q21 which increased by 254.53% YoY (vs. IDR66.76 billion in 1Q20) (Bisnis Indonesia). MNCS Comment: PWON efficiency has succeeded in increasing the company's net profit. PWON is working to improve the company's sales and recurring income in FY21. PWON is trading at 24.92x/1.59x PE/PBV.

2. PZZA IJ posted revenue of IDR713.92 billion in 1Q21, down -25.29% YoY (vs IDR955.64 billion in 1Q20). However, COGS PZZA also decreased from IDR324.94 billion in 1Q20 to IDR292.66 billion in 1Q21. PZZA posted a net profit of IDR4.87 billion in 1Q21 which was down -19.37% YoY (vs IDR6.04 billion in 1Q20) (IQ Plus). MNCS Comment: Although 1Q21's performance still grew negatively, we believe PZZA will be able to record quarterly growth in 2Q21 supported by strong demand during the Eid season and THR. In addition, PZZA's optimism is reflected in the target of adding 50 new outlets in FY21E. PZZA is currently trading at 1.93x PBV.

3. SSMS IJ will improve sales performance this year by channeling most of the CPO to the company's downstream business sector, namely PT Citra Borneo Utama (CBU), a subsidiary of SSMS with a 32% share ownership. The sale will benefit from not being subject to export duties for palm oil, and the sales of downstream products have a high price. SSMS targets production and sales volume in FY21E to grow 10% - 15% YoY (Bisnis Indonesia). MNCS Comment: The strategy is quite decent to avoid the export tax and levy that accounts for ~30% of CPO price. We hope that the future government policy regarding the tax and levy would benefit SSMS through its subsidiary. Currently SSMS is trading at 12.45x/1.72x PE/PBV levels.

 

IHSG Updates
JCI rose by +0.08% to 6,069.94 on Monday (07/06) followed net foreign buy reaching IDR124.10 billion. JCI rose as most sectors strengthened, led by tech (+12.15%), cyclical (+2.14%), and health (+0.87%). On the other hand basic industry and non-cyclical fell. JCI was increased by market optimism related to a number of economic data that are likely positive in early June. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,265. We estimate JCI will move in the range of 6,000-6,113 while waiting for Foreign Exchange Reserves data release. Today's recommendation: INKP, AALI, TINS, BTPS.

Corporate Action
Cum Dividend Date: TLKM (IDR168.01/share), SSMS (IDR30.49/share), MYOH (IDR97.32/share)

 

Disclaimer On

PWON PZZA SSMS INKP AALI TINS BTPS

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