Global Market Highlights
The DJIA weakened by -0.50% on Wednesday (17/08), followed by the S&P500 (-0.72%) and the Nasdaq (-1.25%). Wall Street corrected as the US T-note yield increased to 2.89%, triggered by the UK's Jul-22 inflation rate (+10.1% YoY) which was the highest in the last 40 years, and raised market participants' concerns about potential stagflation. On the other hand, US retail sales Jul-22 grew by +10.3% YoY, the highest since Mar-22. Today, the market will be looking toward several data releases such as: 1) US Philadelphia Fed Manufacturing Index; 2) US Continuing Jobless Claims; 3) US CB Leading Index MoM.
Domestic Update
• RAPBN 2023 state revenues/expenditures are pegged at IDR 2,444/3,042tn and implying a budget deficit of IDR598tn (-2.85% GDP). MNCS Comment: The key policy theme for 2023 is fiscal consolidation to maintain a healthy and sustainable budget. The risks that the APBN still have to face in 2023 include: 1) the global economic slowdown; 2) continued global monetary tightening and 3) faster-than-expected decline in commodity prices.
• Furthermore, the national Covid-19 daily rate had increased by 5,253 active cases (17/08).
Company News
1. SIDO IJ targeted the contribution of export product sales to reach 7% of total revenue in FY22E (Kontan). MNCS Comment: In 1H22, the contribution of export product sales reached 6%, amid a decline in revenue of -2.58% YoY. We are optimistic about the company's target where in 3Q22, the company will expand to Ghana and Cameroon, while in 4Q22 it will expand to China, Kenya and Vietnam. The company's export product penetration also recorded a positive achievement, where 16% of total sales of Kuku Bima Ener-G in 1H22 came from exporting countries. Currently, SIDO is traded at the level of 25.92x/7.13x PER/PBV.
2. PTPP IJ reported that the realization of new contracts in 7M22 had reached IDR13.55 trillion, supported by the construction of the Kalibaru Terminal project at Tanjung Priok Port, Semarang-Batang Pipeline and Pertamedika Sanur Bali. Meanwhile, from the new contract portfolio, BUMN contributed 74%, the Government 22% while the private sector accounted for 4% (Bisnis Indonesia). MNCS Comment: New contract acquisition increased by +41.90% YoY from 7M21 period of IDR9.55 trillion. With the new contract value achievement target in FY22E amounting to IDR31.01 trillion, the realization in 7M22 had reached 43.70%. Currently, PTPP is traded at the level of 36.18/0.57x PER/PBV.
3. AKRA IJ targeted growth in revenue and net profit to reach double-digits, where revenue in FY22E can potentially reach >IDR40 trillion. MNCS Comment: In 1H22, the company's revenue and net profit grew by +106.51% YoY/+73.60% YoY to IDR22.11 trillion/IDR955.46 billion, respectively. We are optimistic that the company can achieve this target in line with the high price of energy commodities amidst the decline that tends to be moderate. AKRA is currently traded at the level of 12.24x/2.34x PER/PBV.
IHSG Updates
JCI was closed commemorating Independence Day on Wednesday (17/08). Meanwhile, Asian markets managed to close in the green zone as the Chinese government will provide stimulus to the property market amid default risk. Investors are also keeping an eye on India's Jul-22 inflation rate which grew slower +13.93% YoY (vs +15.18% YoY in Jun-22). Domestically, the RI property index in 2Q22 grew by +1.72% YoY (vs +1.77% YoY in 1Q22). On the other hand, the Rupiah exchange rate closed at IDR14,768/USD. We estimate that the JCI will move in the price range of 7,030-7,160. Today's recommendation: CPRO, DGIK, GOTO, HRUM.
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