Global Market Highlight
DJIA increased by +0.58% on Thursday (11/03) followed by S&P 500 (+1.04%) and Nasdaq (+2.52%).Wall Street rose stronger with The S&P and Dow hit record highs powered by a rally in tech stocks and another round of stimulus that investors anticipate will find its way to stocks, keeping the liquidity-driven rally alive. President Biden's USD1.9 trillion stimulus bill was signed into law on Thursday and is expected to add to the liquidity that has underpinned the rally. Furthermore, the US Department of Labor reported initial jobless claims decreased by 42,000 to 712,000, the lowest since November and above forecasts for a decline to 725,000. Moreover, the market will look forward to several data releases today, such as: 1) US Michigan Consumer Sentiment; 2) US Producer Price Index; 3) UK GDP.
Domestic Update
• The OECD has revised its forecast for Indonesia's economic growth in 2021 to 4.9% YoY. Previously, the OECD estimated that Indonesia would grow by 4.0% YoY. The OECD also estimates that Indonesia's economic growth in 2022 will be 5.4% YoY, the highest compared to other countries.
• Furthermore, there was an addition of 1,754 new Covid-19 cases in Jakarta yesterday.
Company News
1. WTON IJ posted revenue of IDR4.80 trillion in FY20 or -32.18% YoY (vs IDR7.08 trillion in FY19). Sales for services rose by +8.14% YoY to IDR282.35 billion, while for construction dropped by -12.60% YoY to IDR637.62 billion. WTON's net profit in FY20 decreased by -75% YoY to IDR128.05 billion (Bisnis Indonesia).MNCS Comment: FY20 realization fell on the average of construction companies. However, we believe in FY21E the performance of construction will improve as infrastructure tenders begin to recover. Currently WTON is trading at 22.87x/0.88x PE/PBV.
2. HERO IJ recorded net sales of IDR8.89 trillion in FY20 or -27.27% YoY (vs IDR12.18 trillion in FY19). Although the cost of goods sold was recorded at IDR6.49 trillion or -26.43% YoY, the operating expenses increased +2.01% YoY to IDR3.55 trillion. This caused HERO in FY20 to record a loss of IDR1.21 trillion (vs IDR28.21 billion in FY19) (Emitennews).MNCS Comment: The decrease in consumer traffic during the pandemic led to an increase in HERO losses. We estimate that retailers will still face the challenge of decreasing sales up to 1H21E as restrictions on community activities are still in effect. HERO is currently trading at 2.21x PBV.
3. SSMS IJ targets to produce 520,000Mt of crude palm oil in FY21E or an increase of 10% - 15% compared to the realization of FY20 production. SSMS is currently focusing on strengthening its downstream business strategy by increasing the utility of the palm oil refinery which is strived to reach 100% from the previous 70% of the total capacity of 2,500 tonnes per day (IQ Plus). MNCS Comment: We see that the target set is relatively high considering the current La Nina had impact on lesser production. Nonetheless the higher ASP would benefit SSMS in FY21E. SSMS is trading at 27.50x/2.42x PE/PBV.
IHSG Updates
JCI rose by +1.05% to 6,264.68 on Wednesday (10/03) followed by net foreign buy reaching IDR296.16 billion. JCI bounced back following the strengthening of the global indices, as the stimulus is about to be released, increasing investor optimism. Furthermore, almost all sectors strengthened except for miscellaneous industry. Meanwhile, the Rupiah exchange rate was flat at IDR14,405. We estimate JCI will move in the range of 6,154-6,400 while waiting for balance of trade data release. Today's recommendation: INCO, UNVR, JSMR, BBNI.
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