MNCS Morning Navigator

19 April 2022

MNCS Morning Navigator April 19, 2022

Global Market Highlights
DJIA weakened -0.11% on Monday (18/04), followed by S&P 500 (-0.02%) and Nasdaq (-0.14%). The rise in US T-note 10Y yield to 2.88% weighed on Wall Street's performance. In addition, the lockdown in China created a negative outlook for the global economy, following the decline in retail sales of Mar-22 (-3.5% YoY) in China. The World Bank also slashed global GDP growth to 3.2% from its Jan-22 estimate of 4.1% due to the Russia-Ukraine conflict. Today, the market will be looking toward several data releases such as: 1) US Building Permits MoM; 2) US Housing Starts MoM; 3) Japan Industrial Production YoY Final.

Domestic Update
• Bank Indonesia is expected to maintain its benchmark interest rate at 3.5%. MNCS Comment: We view that the need to raise the benchmark interest rate is not too significant for the time being, considering that inflation is still within the target range and stable Rupiah.
• Furthermore, the second dose of vaccination rate nationally has reached 78.2% or equivalent to 162.88 million people.

Company News
1. ARNA IJ recorded consolidated revenue of IDR743.61 billion in 1Q22 or up +11.08% QoQ/+12.26% YoY (vs IDR662.38 billion in 1Q21). Net profit increased by +38.17% QoQ/+44.16% YoY to IDR170.58 billion in 1Q22 (vs IDR118.33 billion in 1Q21) ( Market Bisnis). MNCS Comment: Total Sales outside Java managed to dominate the company's revenue with a contribution of 59.35% (+55.30% QoQ) with the efficiency is getting better marked by an increase in gross profit margin to 40.58% in 1Q22 (vs 35.00% in 1Q21). We see that the sales mix is ​​getting better with the presence of the Porcelain Tile product “ARNA” supported by an increase in production volume along with a strong marketing network that will continue to support the company's business performance going forward. ARNA is currently trading at 10.28x/5.04x PER/PBV.
2. ADRO IJ reaffirmed its commitment to develop the aluminum business through the construction of a smelter in North Kalimantan which is targeted to operate in FY24F (Kontan). MNCS Comment: We view positively the company's diversification focus on the aluminum business, where this can maintain the company's sustainability so as to bring future income benefits, in addition to the main coal business and also accelerate the development of the electric vehicle (EV) industry and domestic electric batteries. Moreover, the smelter will be powered by new and renewable energy, namely PLTA and PLTS. ADRO is currently trading at 7.91x/1.79x PER/PBV.
3. DMAS IJ recorded marketing sales in 1Q22 of IDR615 billion, or up +169.73% YoY (vs IDR228 billion in 1Q22) supported by sales of 16.8 Ha of industrial land especially data center, commercial and residential segments, as well as transaction settlement pending in the previous period ( MNCS Comment: The company has set a marketing sales target of IDR1.8 trillion in FY22F, a decrease compared to the target in FY21 of IDR2 trillion with the realization reaching IDR1.76 trillion (88%), while the company's landbank as of 9M21 reached 1,186 Ha. We see that with the easing of PPKM mobility, the recovery of economic activity and low interest rates can be the driving force for DMAS performance. In addition, the company is focusing on developing industrial land in the data center sector of 70 Ha which has high demand in line with the rapid development of technology. Currently DMAS is trading at 11.46x/1.53x PER/PBV.

IHSG Updates
JCI rose +0.55% to 7,275.29 on Monday (18/04), followed by net foreign buys which reached IDR696.08 billion. The majority of sectors strengthened and supported the index's pace, led by the raw materials sector (+2.62%) followed by the transportation sector (+1.90%). On the other hand, the weaker sector was led by the technology sector (-1.48%) followed by the non-cyclical sector (-0.19%). Investors positively welcomed the release of trade balance data which maintained a surplus for 23 months where in Mar-22 it was recorded at USD4.53 billion, while on a quarterly basis in 1Q22 Indonesia's trade balance surplus was recorded at USD9.33 billion (vs USD5.52 billion in 1Q21). On the other hand, the Rupiah exchange rate closed low at IDR14,354/USD. We estimate that the JCI will move in the price range of 7,210-7,300 while waiting for the release of Interest Rate Decision, Deposit Facility Rate APR and Lending Facility Rate APR data. Today’s recommendation: IMJS, ASRI, ISAT, BBNI.

Corporate Action
Cum Dividend: UNTR (IDR905/share), BNGA (IDR94.07/share), MFIN (IDR73/share)

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