Global Market Highlight
DJIA rose by +0.03% on Wednesday (26/05) followed by S&P 500 (+0.19%) and Nasdaq (+0.59%). Wall Street rose as consumers and energy stocks continued to benefit from the economic reopening. Retail stocks grew as investors digested another wave of mostly positive retail earnings followed by travel and leisure stocks. The reopening has been boosted by ongoing optimism over the recovery as consumer spending is expected to boost the growth of the economy to reach 7% YoY. Moreover, the market will look forward to several data releases today, such as: 1) US Durable Goods Orders; 2) US GDP Growth Rate QoQ 2nd Est; 3) Germany GfK Consumer Confidence.
Domestic Update
• Bank Indonesia decided to maintain the BI 7-Day Reverse Repo Rate (BI7DRR) at 3.50%, the Deposit Facility rate at 2.75%, and the Lending Facility rate at 4.25%.
• BI remains consistent in quantitative easing to banks until May 21, 2021, BI has purchased assets of IDR88.91 trillion. This supported the circulation of money in which M1 in April 2021 was recorded to have grown 17.4% YoY and M2 grew 11.5% YoY.
• BI plans to issue a digital currency or Central Bank Digital Currency (CBDC). Whereas, BI's considerations include: 1) digital currency is the authority of BI as the central bank; 2) CBDC will support the implementation of monetary, macroprudential and payment system policies including the preparation of financial market infrastructure, foreign exchange and the financial sector; 3) Consider the technology used.
• Furthermore, there was an addition of 617 new Covid-19 cases in Jakarta yesterday.
Company News
1. BBRI IJ posted net interest income of IDR23.18 trillion in 1Q21 (+ 10.6% YoY; + 0.1% QoQ). Net profit was recorded at IDR6.86 trillion in 1Q21, down -16.42% YoY. NIM was observed to increase at the level of 7% and bank credit growth to increase by 1.4% YoY. Meanwhile, Cross NPL was maintained at the level of 3.16% (Analyst Meeting). MNCS Comment: BBRI's performance is still in line with the MNCS forecast which reflects 24% of the FY21E target. We estimate that BBRI's performance will further improve in FY21E supported by credit growth in the micro segment, low cost of funds and BBRI's digital strategy. BBRI is trading at 18.34/2.61x PE/PBV.
2. PTPP IJ get a new contract worth IDR2 trillion in May 2020 or has booked a new contract worth IDR5.8 trillion to 5M21. The new contract comes from the Dawuan Toll Road Intersection project with a value of IDR800 billion, with the rest being the building project at Taman Ismail Marzuki, Pegadaian Tower, and Banten Hospital. PTPP is targeting new contracts worth IDR30.1 trillion in FY21E or growing 35.22% YoY from FY20 realization of IDR22.26 trillion (Kontan). MNCS Comment: PTPP will try to optimize new contracts from BUMN and BUMD. PTPP is also reviewing the divestment of one of its assets in FY21. PTPP is currently trading at 53.69/0.44x PE/PBV.
3. KRAS IJ posted revenue of USD1.35 billion in FY20, which is down -4.93% YoY (vs USD1.42 billion in 1Q20). However, cost of revenue also decreased from USD1.40 billion in FY19 to USD1.21 billion in FY20. KRAS posted a net profit of USD22.64 million in FY20 which increased (vs net loss of USD505.39 million in FY19) (Bisnis Indonesia). MNCS Comment: We see that despite the drop in the top line, KRAS still managed to record a turnaround with cost-efficiency. Currently KRAS is trading at 36.61x/1.44x PE/PBV.
IHSG Updates
JCI rose by +0.91% to 5,815.84 on Tuesday (25/05) followed by net foreign buy reaching IDR408.12 billion. JCI rose along with most sectors led by energy, finance, infra and basic industry. On the other hand, technology, transport and consumer non cyclical sectors dropped. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,328. We estimate JCI will move in the range of 5,735-5,850 while waiting for the PMI Markit Manufacturing data release. Today's recommendation: BBRI, WSBP, ELSA, ISAT.
Corporate Action
Cum Dividend Date: GHON
Pubex: PEHA, TRIS
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