MNCS Morning Navigator

23 Agustus 2022

MNCS Morning Navigator August 23, 2022

Global Market Highlights
The DJIA weakened by -1.91% on Monday (22/08), followed by the S&P500 (-2.14%) and the Nasdaq (-2.55%). Wall Street continued its correction after investors made a sell-off, as speculation grew that the Fed would maintain its hawkish stance at the symposium at Jackson Hole 25-27 Aug. In addition, the yield on the US T-note 10Y increased to a level of 3.04% and contributed to pressure on Wall Street's performance. Today, the market will be looking toward several data releases such as: 1) US S&P Global Composite PMI Flash; 2) UK S&P Global/CIPS Manufacturing PMI Flash; 3) Germany S&P Global Manufacturing PMI Flash.

Domestic Update
Consensus estimates that Bank Indonesia (BI) will still maintain its benchmark 7-day reverse repo rate at 3.5%. MNCS Comment: The pressure on global financial markets is indeed easing. However, the IDR is still depreciating against the USD and inflationary pressures are still likely to increase in the future. The urgency to raise the benchmark interest rate as a pre-emptive measure to maintain stability is still needed.
Furthermore, the national Covid-19 daily rate had increased by 3,300 active cases (22/08).

Company News
1. AGII IJ posted a -2.27% YoY decline in revenue in 1H22 to IDR1.27 trillion (vs IDR1.29 trillion in 1H21). Meanwhile, net profit fell -46.67% YoY to IDR50.61 billion (vs IDR94.89 billion in 1H21) (Emiten News). MNCS Comment: The decline in revenue was in line with the decline in revenue from the gas product segment -4.74% YoY, which contributed 91.80% to total revenue in 1H22. Meanwhile, the services and equipment segment recorded a +37.62% YoY growth. The decline in net profit was in line with the shrinking of the company's margins where GPM and OPM were recorded at 45.40% and 18.73%, respectively (vs 45.89% and 20.87% in 1H21). AGII is currently traded at the level of 38.31x/1.91x PER/PBV.
2. ADHI IJ posted a +42.3% YoY increase in revenue in 1H22 to IDR6.3 trillion (vs IDR4.4 trillion in 1H21). Meanwhile, net profit rose by +23.5% YoY to IDR10.2 billion (vs IDR8.3 billion in 1H21) (Bisnis Indonesia). MNCS Comment: The increase in revenue was supported by the growth in all segments of the company, led by the engineering and construction segment (+42.55% YoY) and contributed 83.27% to total revenue in 1H22. However, the company's margins fell, with GPM, OPM and NPM being 11.05%, 5.81% and 0.16%, respectively (vs 15.13%, 7.60% and 0.19% in 1H21) , in line with the increase in COGS by +49.17% YoY. ADHI is currently traded at the level of 134.01x/0.48x PER/PBV.
3. CENT IJ plans to acquire 397 towers worth IDR1.17 trillion through a corporate entity, namely PT Centratama Menara Indonesia (CMI) through the Conditional Asset Purchase Agreement scheme (Emiten News). MNCS Comment: As of 1Q22, the company's towers totaled 8,518. With the planned acquisition and 289 additional towers obtained from LSP and TGF, the company's total towers will be 9,204 units. It is hoped that this addition will encourage the company's performance in the future. Currently, CENT is traded at the level of 5.73x PBV.

IHSG Updates
JCI weakened by -0.90% to 7,107.98 on Monday (22/08), followed by net foreign buy which reached IDR957.32 billion. The majority of sectors weakened and weighed on the index, led by the technology sector (-2.75%) followed by the transportation sector (-2.75%). On the other hand, the only sector that experienced strengthening was the non-cyclical sector (-0.02%). The index continued to weaken as investors tended to wait and see ahead of the BI7DRR interest rate decision at the BI RDG August 22-23, where the consensus estimates that BI will maintain the benchmark interest rate at 3.5%. We see that investors tend to be worried about BI maintaining interest rates amid the inflation rate which has the potential to continue to increase so that it can suppress public purchasing power. On the other hand, the Rupiah exchange rate closed lower at IDR14,888/USD. We estimate that JCI will move in the price range of 6,970-7,140 pending the release of Interest Rate Decision, Deposit Facility Rate Aug and Lending Facility Rate Aug. Today's recommendation: ADMR, ASII, EXCL, TLKM.

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