MNCS Morning Navigator

12 Agustus 2022

MNCS Morning Navigator August 12, 2022

Global Market Highlights
The DJIA strengthened by +0.08% on Thursday (11/08), while S&P500 (-0.07%) and Nasdaq (-0.58%). Wall Street closed mixed. Investors were watching the release of initial jobless claims data as of 6-Aug which rose to 262,000 (vs 248,000 previously). A significant increase in the 10Y T-note yield to 2.88% became the pressure for Wall Street. Today, the market will be looking toward several data releases such as: 1) US Michigan Consumer Sentiment Prel; 2) UK GDP Growth Rate YoY Prel; 3) UK GDP YoY.

Domestic Update
DJPPR reports that there are ~IDR16 trillion worth of HNWI assets readily repatriated in the Voluntary Disclosure Program (PPS) and will be received by the state no later than 30 September 2022. MNCS Comment: From ~IDR16 trillion, as much as ~IDR2.4 trillion will be invested in SBN, the downstream sector of natural resources and renewable energy. However, this value is still minimal when compared to the budget financing needs.
Furthermore, the national Covid-19 daily rate had increased by 5,532 active cases (11/08).

Company News
1. ITMG IJ recorded revenue in 1H22 grew by +110.20% YoY to USD1.42 billion (vs USD676.30 million in 1H21). Furthermore, net profit grew +291.7% YoY to USD460.82 million (vs USD117.62 million in 1H21) (Kontan). MNCS Comment: The increase in revenue was supported by revenue growth in Trubaindo's mining operations business line by +188.86% YoY and Bharinto by +150.07% YoY. The widening of the company's margins where GPM and OPM were recorded at 52.70% and 47.09%, respectively (vs 33.62% and 26.69% in 1H21), became the driving force for net profit performance. Currently, ITMG is traded at the level of 3.10/1.92x PER/PBV.
2. AALI IJ reported that the realization of capex until 1H22 had reached IDR497 billion, with the use of capex aimed at maintaining non-productive plants and purchasing new transportation units (Emiten News). MNCS Comment: With the target capex in FY22E reaching IDR1.5 trillion, the realization of capex is 33.13%. The amount realized also increased by +29.80% YoY. AALI is currently traded at the level of 11.24/0.87x PER/PBV.
3. UNTR IJ reported that the realization of capex until 1H22 had reached 30%-35% of the target of USD750-800 million, with the majority of capex being used for heavy equipment needs in the mining business line (Kontan). MNCS Comment: The allocation of capex increased compared to FY21 of USD190 million, in line with the increasing demand for heavy equipment in the midst of the commodity boom. Currently, UNTR is traded at the level of 5.74x/1.53x PER/PBV.

IHSG Updates
JCI strengthened by +1.05% to 7,160.38 on Thursday (11/08), followed by net foreign buy which reached IDR661.65 billion. The majority of sectors experienced strengthening and boosted the index rate, led by the technology sector (+2.76%) followed by the raw materials sector (+1.96%). On the other hand, the only weakening sector was the cyclical sector (-0.13%). The index's gains were supported by the release of US inflation data on Jul-22 which grew slower by +8.5% YoY (vs 9.1% YoY in Jun-22), or below market expectations of +8.7% YoY. This had fostered optimism among market players amid concerns over the potential for a global economic recession. On the other hand, the Rupiah exchange rate closed higher at IDR14,768/USD. We estimate that the JCI will move in the price range of 7,100-7,200. Today's recommendation: ADRO, BBYB, BNBA, MPMX.

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