Global Market Highlights
The DJIA strengthened by +0.97% on Friday (29/07), followed by the S&P 500 (+1.42%) and the Nasdaq (+1.88%). Wall Street continued its solid strength and was resilient to the release of 2Q22 GDP data which contracted -0.9% QoQ. The financial performance reports of 75% of companies on the S&P 500 that exceeded expectations became a positive catalyst and reduced investor concerns about the impact of the economic recession. Today, the market will be looking toward several data releases such as: 1) US ISM Manufacturing PMI; 2) US Construction Spending MoM; 3) UK S&P Global/CIPS Manufacturing PMI Final.
Domestic Update
• Bank Indonesia (BI) expects inflation to increase by +0.50% MoM/+4.79% YoY in Jul-22. Consensus expects inflation to rise +4.82% YoY Jul-22. MNCS Comment: We expect inflation to rise +0.59% MoM/+4.89% YoY and become the highest inflation in more than 6 years. The increase in inflation was driven by an increase in food prices such as chili and shallots. On the other hand, the price of fuel and air transportation also experienced an increase which led to an increase in inflationary pressure.
• Furthermore, the national Covid-19 daily rate had increased by 4,205 active cases (31/07).
Company News
1. ISAT IJ posted +50.4% YoY revenue growth in 1H22 to IDR22.53 trillion (vs IDRR14.98 trillion in 1H21). Meanwhile, net profit fell -41.68% YoY to IDR3.26 trillion (vs IDR5.59 trillion in 1H21) (Kontan). MNCS Comment: Lower net profit amid higher revenue was due to the higher cost of service by +66.83% YoY which lowered operating profit -13.80% YoY to IDR6.10 trillion (vs IDR7.07 trillion in 1H21) and rising finance costs + 50.83% YoY which contributed to lower PBT -29.84% YoY to IDR3.98 trillion (vs IDR5.67 trillion in 1H21). Currently, ISAT is traded at 8.25x/1.86x PER/PBV.
2. BMRI IJ recorded +61.7% YoY consolidated net profit growth in 1H22 to IDR20.2 trillion. Meanwhile, total assets grew +13% YoY to IDR1,786 trillion and ROE increased to 23.03% (Kontan). MNCS Comment: BMRI posted a consolidated net interest income of IDR52.93 trillion or grew +10.02% YoY (vs IDR48.11 trillion in 1H21). This positive performance was supported by consolidated loans growth of +12.22% YoY to IDR1,072.85 trillion and NIM which grew +0.32 ppt YoY to 5.37%. BMRI is currently traded at the level of 1.98x PBV.
3. ISSP IJ posted +44.84% YoY revenue growth in 1H22 to IDR3.17 trillion (vs IDR2.19 trillion in 1H21). Meanwhile, net profit decreased -24.94% YoY to IDR191.80 billion (vs IDR254.19 billion in 1H21) (Kontan). MNCS Comment: Raw material costs rose +40.12% YoY leading to a +60.27% YoY increase in COGS to IDR2.73 trillion (vs IDR1.71 trillion in 1H21) and weighed on the gross profit performance which fell -9.39% YoY to IDR439.44 billion (vs IDR485.01 billion in 1H21). It is hoped that ASP spreads with raw material prices can increase and offset the increase in raw material prices to increase the company's margins. Currently, ISSP is traded at 5.36x/0.52x PER/PBV.
IHSG Updates
JCI flat -0.08% to 6,951.12 on Friday (29/07), followed by net foreign buy which reached IDR621.18 billion. The majority of sectors experienced weakness, led by the health sector (-2.66%) followed by the raw materials sector (-1.18%). On the other hand, the strengthening sectors were led by the industrial sector (+3.90%) followed by the energy sector (+1.02%). Investors were watching the release of US GDP data in 2Q22 which contracted -0.9% QoQ and marked the onset of an economic recession. Furthermore, investors are also likely to wait and see ahead of the release of Jul-22 inflation data which is expected to grow +4.82% YoY according to consensus, higher than Jun-22's +4.35% YoY. On the other hand, the Rupiah exchange rate closed higher at IDR14,833/USD. We estimate that the JCI will move in the price range of 6,930-7,000 pending the release of S&P Global Manufacturing PMI Final JUL, Inflation Rate YoY & MoM JUL and Core Inflation Rate YoY JUL data. Today's recommendation: ASRI, LPPF, MEDC, SRTG.
Corporate Action
Cum Dividend: ICBP (IDR215/share), INDF (IDR278/share), EKAD (IDR50/share)
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