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MNCS Morning Navigator

04 Agustus 2021

MNCS Morning Navigator August 04, 2021

Global Market Highlight


DJIA rose by +0.80% on Tuesday (03/08) followed by the S&P 500 (+0.82%), and Nasdaq (+0.55%). The Wall Street closing was higher due to gains in the Oil & Gas, Healthcare and Basic Materials sectors. Subsequently, most of the companies financial reports released were positive and able to decrease renewed concerns about China's technology restrictions and the outbreak of delta variant Covid. Today the market may be watching several data releases such as: 1) US ISM Non-Manufacturing PMI; 2) Germany Markit Composite PMI Final; 3) China Caixin Composite PMI.

Domestic Update
• Government has successfully raised IDR34 trillion for the budget financing program in debt securities auction yesterday (08/02/21). There were 7 series of debt securities auctioned including among others SPN12211104 (reopening), SPN12220527 (reopening), FR0090 (reopening), FR0091 (reopening), FR0088 (reopening), FR0092 (reopening) and FR0089 (reopening). MNCS Comment: Total incoming bids were IDR107.78 trillion while amounts awarded were IDR34 trillion or IDR1 trillion higher than the indicative target already set. The success was in line with our expectations. High investors for fixed income assets in our view was attributable to : 1) ample liquidity in the financial system; 2) investor preference towards safer assets as well as 3) low external pressure as 10 year U.S. treasury yield continued its downtrend while rupiah strengthened against USD.
• Furthermore, there was an addition of 1,601 new Covid-19 cases in Jakarta yesterday.

Company News
1. PTBA IJ recorded coal production of 13.27 million tons in 1H21 increased +10.6% YoY (vs 12 million tons in 1H20). PTBA targeted 30 million tons of coal production until FY21E (CNBC Indonesia). MNCS Comment: PTBA's coal production is quite in line reaching 49% of our estimate. We see that the lower rainfall has improved mining activities in 2Q21. PTBA can catch up their production in time with the increase in coal price. PTBA maintained their COGS as well as decreased their stripping ratio by 16% QoQ. Along with the government policy of additional coal export quota, PTBA managed to increase their export sales by 63% QoQ. We are still waiting for the PTBA’s financial report to be released. Currently PTBA is trading at 12.77x/1.47x PE/PBV levels.
2. RALS IJ posted IDR1.71 trillion revenue in 1H21 rose by +16.49% YoY (vs IDR1.49 trillion in 1H20). COGS increased from IDR860.08 billion in 1H20 to IDR953.17 billion in 1H21. RALS recorded a net profit of IDR137.82 billion in 1H21 or a significant increase of +2,471.27% YoY (vs IDR5.36 billion in 1H20) (CNBC Indonesia). MNCS Comment: RALS's improved performance was supported by higher sales during Lebaran in 2Q21. The performance was above the management target in the midst of the Covid-19 pandemic. We see a potential decline in performance in 3Q21 in line with the implementation of Emergency PPKM. Currently RALS is trading at 15.96x/1.21x PE/PBV levels.
3. LPKR IJ IDR1.71 trillion revenue in 1H21 or up +16.49% YoY (vs IDR1.49 trillion in 1H20). COGS increased from IDR860.08 billion in 1H20 to IDR953.17 billion in 1H21. RALS recorded a net profit of IDR137.82 billion in 1H21 or a significant increase of +2,471.27% YoY (vs IDR5.36 billion in 1H20) (CNBC Indonesia). MNCS Comment: LPKR's success in selling Cendana parc landed houses in Tangerang, as well as clusters in Bintaro and also Cikarang in 3Q-4Q20 had a positive impact on revenue in 1H21. Furthermore, LPKR will optimize Cendana Parc sales in 2H21 by launching phase 2 and phase 3. Currently LPKR is trading at 0.60x PBV levels.

IHSG Updates
JCI rose by +0.56% to 6,130.57 on Tuesday (03/08) followed by net foreign sell reaching IDR126.90 billion. JCI closing was higher along with most sectors led by the transport sector (+1.68%) followed by industrial (+1.36%). On the other hand, the energy sector slipped by -0.40%, followed by property (-0.28%). JCI closing was higher due to markets no longer worried about the pandemic even though the government extended the implementation of PPKM Level 4 policy until August 9, 2021. In the last week, the average daily additional positive cases was 38,295 per day, or declined to the last two weeks at 40,429 cases per day. The downward trend made the market more optimistic that the pandemic was well handled. Meanwhile the Rupiah exchange rate was strengthening at IDR14,342. We estimate the JCI will move in the range of 6,050-6,166 while waiting for GDP growth YoY. Today's recommendation: PNBS, INDF, CPIN, BRMS.

Corporate Action
Cum Dividend Date: WIIM (IDR20.5/share)
Public Expose: BOLA

Disclaimer On

PNBS, INDF, CPIN, BRMS, PTBA, RALS, LPKR

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