Global Market Highlight
DJIA rose by +0.95% on Thursday (24/06) followed by S&P 500 (+0.58%), and Nasdaq (+0.69%). The retail industry is among the fastest recovering industries from the pandemic-driven recession. Wall Street strengthened as President Joe Biden on Thursday embraced a bipartisan Senate deal to spend hundreds of billions of dollars on infrastructure projects, building roads, bridges and highways in an expanded effort to stimulate the American economy. The market will look forward to several data releases today, such as: 1) US Core PCE Price Index; 2) US Michigan Consumer Sentiment Final; 3) Germany GfK Consumer Confidence.
Domestic Update
• Indonesia Covid-19 infection surged 20,574 yesterday (24/6/2021) to a record all time high during the pandemic period in the last 1.3 years. MNCS comment: Investors need to closely watch Covid-19 epidemiological data. Infection cases are expected to rise as testing capacity ramps up and widespread viral transmission is reflected by the rising positivity rate to 18.8% yesterday (vs 13.4% last week). Rising active cases to 171,542 as of yesterday would also overwhelm the national healthcare system. Government intervention through PPKM Mikro should be accompanied by increasing testing & tracing capacity as well as boosting vaccination rate.
• Furthermore, there was an addition of 7,505 new Covid-19 cases in Jakarta yesterday.
Company News
1. MAIN IJ will cut capex for FY21E to IDR200 billion. MAIN will postpone a number of expansion steps that have been prepared, such as the construction of an animal feed production factory (feedmill) in Lampung and a number of broiler farms that should be carried out this year (Bisnis Indonesia). MNCS Comment: The capex cuts are in line with the conservative strategy carried out by management considering the pandemic conditions that have not recovered yet. The current budgeted capex is 50-60% lower than the previous budget in the range of Rp500-600 billion. Currently MAIN is trading at 4.69x/0.80x PE/PBV levels.
2. HEAL IJ posted net sales of IDR1.58 trillion in 1Q21, up +61.08% YoY (vs IDR983.89 billion in 1Q20). COGS increased from Rp550.87 billion in 1Q20 to IDR704.82 billion in 1Q21. HEAL posted a net profit of Rp283.25 million in 1Q21, increased by +294% YoY (vs IDR71.84 billion in 1Q20) (Kontan). MNCS Comment: An increase in in/outpatient volume has an impact on improving HEAL performance. The strict health protocol strategy provides comfort for patients to return to the hospital, which is the object with the highest risk of Covid-19 transmission. Currently HEAL is trading at 13.14x/5.31x PE/PBV levels.
3. INCO IJ cooperates with two partners, namely Taiyuan Iron & Steel (Group) Co., Ltd (Taigang) and Shandong Xinhai Technology Co., Ltd (Xinhai) for the Bahodopi nickel processing facility in Morowali, Central Sulawesi, to build 8 rotary kiln-electric furnace ferronickel processing with an estimated production of 73,000 metric tons of nickel per year (Indonesian Business). MNCS Comment: INCO is expanding downstream projects. We believe the increase in smelting nickel will add more value to their future revenue stream. Currently INCO is trading at 22.01x/1.44x PE/PBV levels.
IHSG Updates
JCI weakened by -0.37% to 6,012.06 on Thursday (24/06) followed by net foreign buy reaching IDR88.79 billion. JCI was closing lower along with most sectors, led by infrastructure (-2.28%), transportation (-1.44%), and energy (-0.79%). On the other hand, various sectors strengthened such as industrial (+0.66%), cyclical (+0.47%), and property (+0.44%). JCI was closing lower with an unfavorable growth outlook from Indonesia due to the corona virus outbreak. The Ministry of Health reported that the total number of positive corona patients in Indonesia as of June 24, 2021, recorded 2,053,995 people. An Increase of 20,574 people from the previous day, the highest record daily addition of cases since the first case was announced in early March 2020. Meanwhile, the Rupiah exchange rate was weakening at IDR14,440. We estimate the JCI will move in the range of 5,980-6,080 while waiting for markit manufacturing PMI data release. Today's recommendation: BBRI, PTPP, AGII, BWPT.
Corporate Action
Cum Dividend Date: MKPI (IDR106/share), TPMA (IDR22/share), IPCM (IDR10.17/share)
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