MNCS Morning Navigator

29 Agustus 2022

MNCS Morning Navigator August 29, 2022

Global Market Highlights
The DJIA weakened -3.03% on Friday (26/08), followed by the S&P500 (-3.37%) and the Nasdaq (-3.94%). Wall Street weakened significantly as investors responded to the Fed's hawkish statement at the Jackson Hole Symposium, where the Fed would forcibly bring the inflation rate to 2% through aggressive FFR hikes. Market participants were also worried that the Fed will prioritize controlling inflation over economic growth. Today, the market will be looking toward several data releases such as: 1) US Dallas Fed Manufacturing Index; 2) Japan Coincident Index Final; 3) Japan Leading Economic Index Final.

Domestic Update
The increase in oil prices (>USD100/bbl) caused the government's fuel subsidy cost to increase by IDR306tn as the price of Pertalite, Diesel & 3kg LPG >50% below their economic prices. MNCS Comment: We expect the subsidized fuel prices to be raised soon to support the government's efforts to carry out fiscal consolidation with a budget deficit target of -2.85% of GDP FY23E. On the other hand, the impact of the increase in subsidized fuel prices will have an impact on rising inflation. Every 1% increase in subsidized fuel prices will be followed by an increase of 0.09% on inflation.
Furthermore, the national Covid-19 daily rate had increased by 3,228 active cases (28/08).

Company News
1. UNTR IJ reported sales of Komatsu heavy equipment up to 7M22 reached 3,399 units, while Komatsu's market share was recorded at 28% (Kontan). MNCS Comment: The gain increased by +117.33% YoY. In addition, with the heavy equipment sales target in FY22E reaching 4,800 units, achieving 70.81% of the realization up to 7M22. To support sales, the company is also preparing this year's capex of USD750-800 million (vs USD190 million in FY21). Currently UNTR is traded at the level of 5.96x/1.59x PER/PBV.
2. PTBA IJ recorded revenue growth in 1H22 of +79.02% YoY to IDR18.4 trillion (vs IDR10.29 trillion in 1H21). Meanwhile, net profit increased significantly by +246.14% YoY to IDR6.16 trillion (vs IDR1.78 trillion in 1H21) (Kontan). MNCS Comment: The company's positive performance was supported by a +13% YoY increase in sales volume to 14.6 MT (vs 12.9 MT in 1H21) and a +58% YoY increase in ASP to IDR1.2 million/ton (vs IDR0.8 million/ton in 1H21). Currently, PTBA is traded at the level of 5.52x/1.91x PER/PBV.
3. WMPP IJ posted a -19.62% YoY decline in revenue in 1H22 to IDR2.18 trillion (vs IDR2.71 trillion in 1H21). Meanwhile, the company recorded a net loss of IDR3.02 billion (vs net profit of IDR100.26 billion in 1H21) (Emiten News). MNCS Comment: The decline in revenue was in line with the decline in the cattle segment by -48.46% YoY followed by meat and processed by -20.70% YoY. The net loss was caused by the decrease in the gross profit by -19.77% YoY as well as increased general expenses (+12.61% YoY) and other income and expenses (+36.86% YoY) which weighed on the bottom-line of the company. Currently WMPP is traded at the level of 2.51x PBV.

IHSG Updates
JCI weakened -0.54% to 7,135.25 on Friday (26/08), followed by net foreign buy which reached IDR164.24 billion. The majority of sectors experienced weakness and weighed on the index's pace, led by the technology sector (-1.14%) followed by the transportation sector (-0.99%). On the other hand, the strengthening sectors were led by the energy sector (+0.78%) followed by the property sector (+0.40%). The index continues to weaken, as the Fed's hawkish signal was getting stronger ahead of the Jackson Hole symposium. In addition, market participants were also overshadowed by concerns over the high rate of inflation if subsidized fuel prices are raised. On the other hand, the Rupiah exchange rate closed lower at IDR14,818/USD. We estimate that the JCI will move in the price range of 7,100-7,160. Today's recommendation: AGRO, BBTN, MDKA, PTPP.

Corporate Actions
Cum Rights: BSWD (IDR1,000/share)

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