Global Market Highlight
DJIA slipped by -0.21% on Wednesday (23/06) followed by S&P 500 (-0.11%), while Nasdaq strengthened by +0.13%. Wall Street closing was varied as U.S. manufacturing PMI climbed to a record high in June, supporting Wall Street shares in early trade. On the other hand manufacturers are still struggling to secure raw materials and qualified workers, substantially raising prices for both businesses and consumers. The market will look forward to several data releases today, such as: 1) US GDP Growth QoQ; 2) Germany IFO Business Climate; 3) UK BoE Interest rate decision.
Domestic Update
• The value of loans in Indonesia fell -1.3% YoY in May 2021 according to Bank Indonesia (BI) on its Money Supply (M2) report. The working capital & investment credit figures contracted by -1.9% YoY and -3.2% YoY respectively last month. Meanwhile credit for consumption booked another positive figure +1.3% YoY in May (vs +0.3% YoY in April). MNCS comment: We see both demand and supply of credit remained limited although economic activities seemed to have gradually rebounded. Loan restructuring continue but started to slowing down. NPL figure seemed to be manageable at 3.22% in April. However Loan at Risk (LaR) should be taken into account. Higher LaR means higher probability of its credits turn to NPL. Banks risk aversion behaviour have made it clear that they are carefully channeling credits. In addition, limited credit interest rate decrease relative to benchmark rate also curtailing demand for credit on top of limited mobility. We foresee that 2021 credit figure will grow 5-6% YoY.
• Furthermore, there was an addition of 4,693 new Covid-19 cases in Jakarta yesterday.
Company News
1. ACES IJ posted net sales of IDR1.68 trillion in 1Q21, down -14.72% YoY (vs IDR1.97 trillion in 1Q20). COGS decreased from IDR991.59 billion in 1Q20 to IDR861.65 billion in 1Q21. ACES posted a net profit of IDR161.65 billion in 1Q21 which decreased -34.20% YoY (vs IDR245.68 billion in 1Q20) (IQ Plus). MNCS Comment: The decline in retail sales is in line with the still not strong consumer spending, supported by restrictions on social activities. The weakening of the rupiah exchange rate also weighed on sales volume because ACES implemented the cost plus margin scheme so that the selling price to consumers was potentially higher. ACES is trading at 35.54x/4.28x PE/PBV.
2. INKP IJ posted net sales of USD801.28 million in 1Q21, up +14.72% YoY (vs USD780.47 million in 1Q20). COGS increased from USD533.83 million in 1Q20 to USD553.44 million in 1Q21. INKP posted a net profit of USD139.31 million in 1Q21 which decreased by -22.29% YoY (vs USD179.26 million in 1Q20) (Bisnis Indonesia). MNCS Comment: We see the top line performance growing, on the other hand, the increase in costs causes a decrease in the bottom line. INKP is currently trading at 5.24x/0.67x PE/PBV levels.
3. TKIM IJ posted net sales of USD266.77 million in 1Q21, slightly down -0.19% YoY (vs USD267.30 million in 1Q20). COGS fell from USD232.36 million in 1Q20 to USD230.79 million in 1Q21. TKIM posted a net profit of USD74.99 million in 1Q21 which decreased by -51.99% YoY (vs USD156.23 million in 1Q20) (Kontan). MNCS Comment: We expect demand of paper will increase for the rest of the year so as to improve TKIM's performance. Currently TKIM is trading at 5.88x/1.11x PE/PBV levels.
IHSG Updates
JCI slipped by -0.88% to 6,034.54 on Wednesday (23/06) followed by net foreign sell reaching IDR432.80 billion. JCI weakened along with most sector, led by health (-2.42%), finance (-2.09%), and property (-1.20%). On the other hand, various sectors closed higher such as infrastructure (+1.26%), transport (+0.84%), and industrial (+0.21%). In our point of view the rise of daily cases Covid-19 outbreak and the tightening of PPKM is still a weight for the JCI movement. Meanwhile, the Rupiah exchange rate was weakening at IDR14,432. We estimate the JCI will move in the range of 5,980-6,080 while waiting for loan growth data release. Today's recommendation: WIKA, ANTM, INDY, SMRA.
Corporate Action
Cum Dividend Date: MERK (IDR122/saham), MREI (IDR50/saham), MICE (IDR4/saham)
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