MNCS Morning Navigator

03 Agustus 2022

MNCS Morning Navigator August 3, 2022

Global Market Highlights
The DJIA weakened by -1.23% on Tuesday (02/08), followed by S&P 500 (-0.67%) and Nasdaq (-0.16%). The negative sentiment weighing on Wall Street's performance came from: 1) the heating up of US-China tensions following the visit of the Speaker of the US House of Representatives to Taiwan; 2) US T-note 10Y yield increased to 2.75%; 3) the release of JOLTs Job Openings Jun-22 data of 10.70 million, below the consensus of 11 million. Today, the market will be looking toward several data releases such as: 1) US ISM Non-Manufacturing PMI; 2) US S&P Global Services PMI Final; 3) UK S&P Global/CIPS UK Services PMI Final.

Domestic Update
Outflows from domestic financial markets were amounting at ~IDR30tn on Jul-22. The largest contributor remained from the SBN market (~IDR28tn) while outflows from the equity market amounted to ~IDR2tn. MNCS Comment: Outflows pressure was triggered by Fed's aggressive monetary tightening. However, we expect outflows to ease in the short term in-line with: 1) externally priced-in factors; 2) possibility of BI to increase 7-day reverse repo +25 bps in Aug-22 & 3) GDP data release +5% YoY in 2Q22.
• Furthermore, the national Covid-19 daily rate had increased by 5,827 active cases (02/08).

Company News
1. ADRO IJ reported the coal production in 1H22 to reach 28.01 million tons, grew +6% YoY compared to 1H21 of 26.49 million tons (CNBC Indonesia). MNCS Comment: Coal production realization in 1H22 reached 35.01%-48.29% of the company's target of 58-80 million tons. Meanwhile, sales volume in 1H22 increased by 6.67% YoY to 27.50 million tons (vs 25.78 million tons in 1H21). It is hoped that the increase in sales volume accompanied by an increase in the average selling price will encourage better performance by the company. ADRO is currently traded at the level of 4.42x/1.55x PER/PBV.
2. MTEL IJ acquired 6,000 towers owned by Telkomsel for IDR9.59 trillion, leased 712 lands for IDR239.16 billion, as well as in return for a commitment to order rental of 1,000 BTS units worth IDR450 billion (Kontan). MNCS Comment: As of 1H22, the number of towers owned by MTEL was 28,787 towers, and with the acquisition, the total towers became 34,787 towers. In addition, up to 1H22, the total number of tenants owned by the company reached 43,900. Currently, MTEL is traded at the level of 34.89x/1.86x PER/PBV.
3. GOOD IJ recorded revenue growth in 1H22 of +23.8% YoY to IDR5.18 trillion (vs IDR4.18 trillion in 1H21). Meanwhile, net profit fell -10.5% YoY to IDR180.81 billion (vs IDR200.06 billion in 1H21) (Emiten News). MNCS Comment: Lower profit as raw material costs increased +43.43% YoY and manufacturing expenses +16.46% YoY, thus increasing COGS by +32.15% YoY. The company's margin recorded a decline where GPM, OPM and NPM in 1H22 were 24.24%, 5.71% and 3.49%, respectively (vs 29.01%, 7.73% and 4.83% in 1H21). Currently, GOOD is traded at the level of 55.10x/7.67x PER/PBV.

IHSG Updates
JCI strengthened by +0.28% to 6,988.15 on Tuesday (02/08), followed by net foreign buy which reached IDR892.15 billion. A number of sectors experienced strengthening and boosted the index rate, led by the industrial sector (+1.81%) followed by the infrastructure sector (+0.29%). On the other hand, the weaker sector was led by the energy sector (-2.74%) followed by the non-cyclical sector (-0.41%). The movement of the index outperformed Asian markets and Wall Street. We consider that Indonesia's manufacturing PMI Jul-22, which remains expansive and growing with 51.3 amidst the contraction of countries in the region that are entering recession, such as China and South Korea with 49 and 49.8, respectively, had raised investor optimism for the outlook for the economy to be solid in the future. On the other hand, the Rupiah exchange rate closed lower at IDR14,893/USD. We estimate that the JCI will move in the price range of 6,930-7,020. Today's recommendation: ADRO, MDKA, MTEL, TBIG.

Corporate Action
Cum Dividend: AKRA (IDR25/share), EAST (IDR1.7/share)
IPO: GULA (IDR250/share)

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