MNCS Morning Navigator

11 Agustus 2022

MNCS Morning Navigator August 11, 2022

Global Market Highlights
The DJIA strengthened by +1.63% on Wednesday (10/08), followed by the S&P500 (+2.13%) and the Nasdaq (+2.89%). Wall Street managed to rebound as data released on Jul-22 inflation slowed to +8.5% (vs +9.1% YoY) and was below consensus expectations of +8.7% YoY. In addition, Chinese military forces completed their military exercises near Taiwan, erasing market concerns about the potential for a larger US-China conflict. Today, the market will be looking toward several data releases such as: 1) US PPI MoM; 2) US Continuing Jobless Claims; 3) France IEA Oil Market Report.

Domestic Update
The reference price of CPO for the determination of Export Duty for the period 9-15 August 2022 decreased 46.02% to USD872.27/MT (vs USD1,615.83/MT previously). MNCS Comment: The decline in the CPO reference price occurred in line with the increase in Indonesian exports and the improvement in global supply along with: 1) flush out program; 2) an increase in export quotas and 3) a 0% CPO export levy until August 31, 2022.
Furthermore, the national Covid-19 daily rate had increased by 5,926 active cases (10/08).

Company News
1. MEDC IJ will distribute an interim cash dividend of USD25 million with cum dividend for the regular market and negotiations on 18-Aug. Furthermore, share repurchases (treasury) do not receive any dividends (CNBC Indonesia). MNCS Comment: With the number of company shares without taking into account treasury shares (160.63 million), the total shares are 24.98 billion. Meanwhile, DPS became USD0.001. Using the assumption of the BI 10-Aug middle rate of IDR14,862, the DPS in Rupiah was IDR15/share, implying a dividend yield of 2.40%. MEDC is currently traded at the level of 3.02/0.96x PER/PBV.
2. ACES IJ posted a -2.36% YoY decline in revenue in 1H22 to IDR3.31 trillion (vs IDR3.39 trillion in 1H21). Furthermore, net profit decreased by +12.47% YoY to IDR242.39 billion (vs IDR276.93 billion in 1H21) (Kontan). MNCS Comment: The decrease in revenue was in line with the decreased of the home improvement products segment revenue by -0.81% YoY and lifestyle products by -5.84% YoY, which contributed 52.66% and 40.94% to the total revenue, respectively (contribution in 1H22: 51.72 % and 42.36%). Even though the company had made efficiencies marked by a decrease in COGS (-1.79% YoY) and operating expenses (-0.48% YoY), the company's margins continued to decline and triggered a decline in net profit, where GPM and OPM were 48.21% and 9.82%, respectively (vs 48.63% and 10.92% in 1H21). ACES is currently traded at 25.47x/2.30x PER/PBV.
3. PTPP IJ recorded revenue to grow by +39.74% YoY in 1H22 to IDR9.02 trillion (vs IDR6.46 trillion in 1H21). Meanwhile, net profit grew by +1.07% YoY to IDR86.96 billion (vs IDR86.04 billion in 1H21) (Emiten News). MNCS Comment: The increase in revenue was in line with the increase in construction segment revenue +47.10% YoY, contributing 79.02% to the total revenue (vs 74.86% in 1H21). Meanwhile, net profit growth was limited along with rising finance costs by +25.27% YoY accompanied by lower JV profit by -41.82% YoY. Noted, NPM slightly corrected to 0.96% (vs 1.33% in 1H21). Currently, PTPP is traded at 33.51x/0.53x PER/PBV.

IHSG Updates
JCI weakened by -0.23% to 7,086.27 on Wednesday (10/08), followed by net foreign buy which reached IDR312.34 billion. The majority of sectors weakened and weighed on the index, led by the transportation sector (-1.15%) followed by the infrastructure sector (-0.61%). On the other hand, the sectors that experienced strengthening were led by the technology sector (+0.85%) followed by the non-cyclical sector (+0.12%). The index was under pressure as investors tended to wait and see ahead of the release of US inflation data on Jul-22. Investors were also watching China's Jul-22 inflation rise by +2.7% YoY (vs 2.5% YoY in Jun-22) yet below consensus of +2.9% YoY. On the other hand, the Rupiah exchange rate closed lower at IDR14,872/USD. We estimate that the JCI will move in the price range of 7,000-7,100. Today's recommendation: AALI, CTRA, DOID, ICBP.

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