Global Market Highlights
The DJIA strengthened by +1.27% on Friday (12/08), followed by the S&P500 (+1.73%) and the Nasdaq (+2.09%). Wall Street closed higher following the release of solid economic data, where investors watched the release of the Michigan Consumer Sentiment Prel Aug-22 which grew expansively to the level of 55.1 points (vs 51.5 points in Jul-22) or exceeded the consensus at 52.5 points. In addition, inflation expectations Aug-22 fell to 5% (vs 5.2% in Jul-22). Today, the market will be looking toward several data releases such as: 1) US NAHB Housing Market Index; 2) US NY Empire State Manufacturing Index; 3) Japan Industrial Production YoY Final.
Domestic Update
• The trade balance surplus is expected to continue in July-22. MNCS estimate for trade balance : USD3,804 million; exports : +23.0% YoY; imports : +31.3% YoY. MNCS Comment: The trade balance surplus is likely on the back of : 1) persistently high commodity prices and 2) government policies to re-encourage CPO exports.
• Furthermore, the national Covid-19 daily rate had increased by 4,442 active cases (14/08).
Company News
1. LSIP IJ recorded revenue in 1H22 decreased by -6% YoY to IDR2.05 trillion (vs IDR2.18 trillion in 1H21). Meanwhile, net profit grew by +9% YoY to IDR548.76 billion (vs IDR501.22 billion in 1H21) (Kontan). MNCS Comment: The decreased revenue was due to lower sales volume, where: 1) CPO -36.09% YoY; 2) Palm Kernel - Products -34.04% YoY. The profit growth was in line with the decline in COGS (-15.08% YoY) which made the company's margins expand where GPM and OPM were 41.02% and 31.82% respectively (vs 34.68% and 28.01% in 1H21). Currently, LSIP is traded at the level of 6.89/0.80x PER/PBV.
2. SIMP IJ recorded a -10% YoY decline in 1H22 revenue to IDR8.07 trillion (vs IDR8.96 trillion in 1H21). Meanwhile, net profit grew by +101% YoY to IDR441.00 billion (vs IDR219.00 billion in 1H21) (Kontan). MNCS Comment: The decreased revenue was caused by the decrease in sales volume, where: 1) CPO -13.99% YoY; 2) Palm Kernel - Products -26.19% YoY. Profit growth was in line with the decline in COGS (-14.83% YoY) which made the company's margins expansive where GPM and OPM were respectively 27.26% and 16.45% (vs 23.02% and 12.06% in 1H21). Currently, SIMP is traded at the level of 6.25/0.47x PER/PBV.
3. BIPI IJ acquired PTT Mining Ltd Hong Kong for USD471 million allowing the company to have coal concessions in 5 locations, covering the areas of Madagascar, Brunei Darussalam and Kalimantan (Jembayan, Sebuku and Penajam) (Kontan). MNCS Comment: With coal resources in Kalimantan amounting to 1,429 million tons, as well as stable Jembayan mine production at 6.1 million tons and coal calorie count of 5,200-5,400 kcal/Kg, the company's ecosystem in the future could potentially improve, in addition to its existing business. Currently, BIPI is traded at the level of 119.74x/1.86x PER/PBV.
IHSG Updates
JCI weakened by -0.43% to 7,129.28 on Friday (12/08), followed by net foreign buy which reached IDR762.71 billion. The majority of sectors weakened and weighed on the index, led by the technology sector (-2.09%) followed by the transportation sector (-0.97%). On the other hand, the strengthening sectors were led by infrastructure (+0.64%) followed by the cyclical sector (+0.43%). Investors tended to wait and see ahead of the release of trade balance data on Jul-22 which according to consensus is estimated to have a surplus even though it will shrink to USD3.85 billion (vs USD5.09 billion in Jun-22). On the other hand, the Rupiah exchange rate closed higher at IDR14,668/USD. We estimate that the JCI will move in the price range of 7,090-7,180 pending the release of Balance of Trade JUL, Exports YoY JUL and Imports YoY JUL data. Today's recommendation: ASRI, MDKA, SRTG, TLKM.
Corporate Actions
Cum Dividend: INDY (IDR114.46/share)
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