MNCS Morning Navigator

16 Agustus 2022

MNCS Morning Navigator August 16, 2022

Global Market Highlights
The DJIA strengthened by +0.45% on Monday (15/08), followed by the S&P500 (+0.40%) and the Nasdaq (+0.62%). Wall Street strengthened amid the release of NY Empire State Manufacturing Index Aug-22 data which contracted to a level of -31.3 points (vs 11.1 points on Jul-22). The release of negative economic data led investors to speculate on a slower Fed rate hike (FFR) in Sep-22, and the US T-note 10Y yield contracted to a level of 2.78% and became a driving force for Wall Street. Today, the market will be looking toward several data releases such as: 1) UK Employment Change; 2) UK Unemployment Rate; 3) Germany ZEW Economic Sentiment Index.

Domestic Update
Indonesia's trade balance July 22 surplus USD4.23 billion, export performance increased +32.03% YoY while import performance also grew +39.86% YoY MNCS Comment: Indonesia's export performance Jul-22 was still supported by high commodity prices, especially coal. Meanwhile, the increase in the value of imports indicates an improvement in domestic economic conditions in line with improving mobility and consumption. However, market players need to be aware of the possibility of a decrease in the trade balance surplus in line with weakening commodity prices.
Furthermore, the national Covid-19 daily rate had increased by 3,588 active cases (15/08).

Company News
1. CTRA IJ posted a +16.04% YoY increase in revenue in 1H22 to IDR4.67 trillion (vs IDR4.02 trillion in 1H21). Meanwhile, net profit grew by +107.83% YoY to IDR1.00 trillion (vs IDR483.47 billion in 1H21) (Emiten News). MNCS Comment: Revenue growth was supported by the increase in real estate revenue segment by +18.56% YoY and rental by +29.11% YoY. The increase in net profit was in line with the company's expansive margins, where GPM and OPM rose to 50.79% and 35.26%, respectively (vs 48.78% and 32.83% in 1H21). Currently, CTRA is traded at 11.03x/1.07x PER/PBV levels.
2. ERAA IJ in collaboration with Nokia through HMD Indonesia, had carried out the first production of feature phones, the production of which is located in Semarang, Central Java (Kontan). MNCS Comment: Even though the mobile phone product is a feature phone, which is actually an early generation concept phone with certain additional features, we see that the demand for the cell phone is still high as the selling price offered tends to be relatively affordable (<IDR500,000). In addition, we hope that this synergy can have a positive impact on the company in the future as there are fewer non-legal products that can make price competition more competitive, after mobile phone production has been carried out domestically. Currently, ERAA is traded at the level of 6.96/1.28x PER/PBV.
3. FREN IJ posted a +10.16% YoY increase in revenue in 1H22 to IDR5.45 trillion (vs IDR4.95 trillion in 1H21). Meanwhile, on the bottom-line, the company managed to record a net profit of IDR54.60 billion (vs a net loss of IDR451.91 billion in 1H21) (Emiten News). MNCS Comment: The increase in revenue was in line with the increase in all segments of the company's revenue, especially in the data segment (+8.23% YoY) and contributed 90.72% of the company's revenue in 1H21. The Company managed to record a profit, as net loss before tax decreased -69.24% YoY and deferred tax income grew +66.94% YoY. Currently. FREN is traded at the level of 323.73x/2.78x PER/PBV.

IHSG Updates
JCI weakened by -0.50% to 7,093.28 on Monday (15/08), followed by net foreign buy which reached IDR209.61 billion. The majority of sectors weakened and weighed on the index, led by the technology sector (-1.48%) followed by the raw materials sector (-1.38%). On the other hand, the strengthening sectors were led by property (+1.21%) followed by the infrastructure sector (+0.60%). The index continued its weakening amid the release of trade balance data for Jul-22 which was a surplus of USD4.22 billion but slowed down compared to Jun-22 (USD5.09 billion) and exceeded consensus expectations of USD3.93 billion. Weakening in a number of Asian bourses also weighed on the index's performance, after investors watched the release of China's Jul-22 retail sales data which grew but slowed +2.7% YoY, and was below consensus at +5% YoY. On the other hand, the Rupiah exchange rate closed lower at IDR14,743/USD. We estimate that the JCI will move in the price range of 7,030-7,160. Today's recommendation: ERAA, INDF, SMGR, TBIG.

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