MNCS Morning Navigator

22 Agustus 2022

MNCS Morning Navigator August 22, 2022

Global Market Highlights
The DJIA weakened by -0.86% on Friday (19/08), followed by the S&P500 (-1.29%) and the Nasdaq (-2.01%). Wall Street was depressed as the US T-note 10Y yield rose to 2.98%. In addition, the Fed's hawkish tone stating its seriousness to bring inflation to the range of 2%, through a sustained increase in the FFR at the next FOMC, also weighed on Wall Street's performance. Today, the market will be looking toward several data releases such as: 1) US Chicago Fed National Activity Index; 2) US 3-month Bill Auction; 3) US 6-month Bill Auction.

Domestic Update
Indonesia's current account balance booked a surplus of USD3.9 billion (1.1% of GDP) in 2Q22, a significant increase compared to 1Q22 of USD0.4 billion (0.1% of GDP). MNCS Comment: The current account surplus was supported by the goods trade balance which recorded a surplus of USD16.8 billion in 2Q22 which exceeded the increase in services and primary income deficits. The trade balance surplus was largely driven by high prices of leading export commodities in 2Q22.
Furthermore, the national Covid-19 daily rate had increased by 3,949 active cases (21/08).

Company News
1. TOWR IJ targeted a +20% YoY revenue growth to IDR10.5 trillion and 85% EBITDA margin in FY22E (Kontan). MNCS Comment: In 1Q22, TOWR revenue had grown by +33.88% YoY, followed by slightly expansionary EBITDA margin to 85.9% (vs 85.8% in 1Q21). We are optimistic about the company's target, which will be supported by a tower portfolio of 29,011 towers in 1Q22, as well as long-term contracts of IDR65.38 trillion up to FY38, thus supporting the company's expansion in the future if any. TOWR is currently traded at the level of 17.86x/4.73x PER/PBV.
2. ELSA IJ targeted a contract value growth of +10% YoY in FY22E, so that the projected contract value managed in FY22E reaches IDR9 trillion (Kontan). MNCS Comment: We hope that the continued increase in community mobility in line with the post-pandemic increase in fuel demand, as well as the oil lifting target in the 2023 RAPBN which grew +4.76% from the FY22E outlook to 660 thousand barrels per day could become the catalysts for the company to achieve its target. Currently, ELSA is traded at the level of 7.40/0.58x PER/PBV.
3. WOOD IJ posted a +46.49% YoY increase in 1H22 revenue to IDR3.13 trillion (vs IDR2.14 trillion in 1H21). Meanwhile, net profit rose +36.52% YoY to IDR299.89 billion (vs IDR219.30 billion in 1H21) (Emiten News). MNCS Comment: Revenue growth was supported by export growth +44.52% YoY. The company's GPM expanded to 35.49% (vs 31.47% in 1H21). However, OPM and NPM shrunk slightly to 15.09% and 9.56% (vs 18.59% and 10.25% in 1H21), with courier and export expenses which increased significantly +168.41% YoY, thus driving the increase in selling expenses by +183.44% YoY. WOOD is currently traded at the level of 5.94x/0.92x PER/PBV.

IHSG Updates
JCI weakened by -0.20% to 7,172.43 on Friday (19/08), followed by net foreign buy which reached IDR949.58 billion. The majority of sectors weakened and weighed on the index, led by the property sector (-0.65%) followed by the industrial sector (-0.63%). On the other hand, the sectors that experienced strengthening were led by the health sector (+0.59%) followed by the energy sector (+0.54%). The index weakened amid the release of current account data for 2Q22 which recorded a surplus of USD3.9 billion (vs USD0.2 billion in 1Q22) or equivalent to 1.1% of GDP. We see that investors tend to wait and see regarding the BI7DRR interest rate decision ahead of the BI RDG on 22-23 August 2022. On the other hand, the Rupiah exchange rate closed lower at IDR14,838/USD. We estimate that JCI will move in the price range of 7,100-7,200. Today's recommendation: CPIN, DEWA, JPFA, BMRI.

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