MNCS Morning Navigator

08 Agustus 2022

MNCS Morning Navigator August 8, 2022

Global Market Highlights
The DJIA strengthened by +0.23% on Friday (05/08), while S&P500 (-0.16%) and Nasdaq (-0.50%). Wall Street closed mixed. Wall Street's movement was influenced by the release of Non Farm Payrolls Jul-22 data which reached +528,000 or exceeded the consensus at +250,000. On the one hand, investors welcomed this achievement and eased fears of a potential economic recession. However, investors were also worried that the Fed will again be aggressive in raising interest rates which could weigh on Wall Street's performance going forward. Today, the market will be looking toward several data releases such as: 1) US 3-month Bill Auction; 2) US 6-month Bill Auction; 3) Japan Eco Watchers Survey Outlook.

Domestic Update
Indonesia's foreign exchange reserves stood at USD132.2 billion as at the end of Jul-22, equivalent to 6.2 months of imports or 6.1 months of imports and payments of government external debt. MNCS Comment: Indonesia's foreign exchange reserves fell by USD4.2 billion compared to the end of Jun-22 due to: 1) payment of government external debt and 2) the need for IDR stabilization.
Furthermore, the national Covid-19 daily rate had increased by 4,279 active cases (07/08).

Company News
1. INDY IJ posted +66.5% YoY revenue growth in 1H22 to USD1.94 billion (vs USD1.16 billion in 1H21). Meanwhile, net profit grew +1.571% YoY to USD200.65 million (vs USD12 million in 1H21) (CNBC Indonesia). MNCS Comment: Revenue growth was supported by the increase in energy resources segment +69.12% YoY. Meanwhile, the increase in net profit was in line with the increase in revenue accompanied by cost efficiency, where the company's GPM and NPM were recorded at 34.50% and 10.35%, respectively (vs 22.23% and 1.03% in 1H21). INDY is currently trading at the level of 3.35/1.19x PER/PBV.
2. WIKA IJ reported that the acquisition of new contract values up to 1H22 reached IDR13.8 trillion, an increase of +31.4% YoY (Kontan). MNCS Comment: With a new contract value target of IDR42.57 trillion, the realization of the new contract value reached 32.42% (still below 50%). We hope the company can improve its performance to achieve the target in FY22E. Currently, WIKA is trading at the level of 74.71x/0.67x PER/PBV.
3. SMRA IJ recorded revenue growth in 1H22 of +11.00% YoY to IDR2.73 trillion (vs IDR2.46 trillion in 1H21). Meanwhile, net profit grew +134.56% YoY to IDR254.61 billion (vs IDR108.54 billion in 1H21) (Bisnis Indonesia). MNCS Comment: The increase in revenue was supported by growth in the investment property segment (+45.92% YoY), Hospitality (+47.44% YoY) and others (+12.69% YoY). The increase in revenue also occurred amid a -17.86% YoY decline in marketing sales to IDR2.3 trillion (vs IDR2.8 trillion in 1H21). The increase in net profit was supported by the increase in the company's margin where GPM and OPM were recorded at 53.24% and 33.22%, respectively (vs 48.26% and 28.90% in 1H21). SMRA is currently traded at the level of 14.62x/1.16x PER/PBV.

IHSG Updates
JCI strengthened by +0.39% to 7,084.65 on Friday (05/08), followed by net foreign buys which reached Rp1.46 trillion. The majority of sectors experienced strengthening and boosted the index rate, led by the transportation sector (+2.42%) followed by the infrastructure sector (+1.01%). On the other hand, the weaker sector was led by the industrial sector (-1.21%) followed by the technology sector (-0.63%). The strengthening of the index was in line with Asian markets. Investors responded positively to the release of Indonesia's GDP data in 2Q22 which grew +5.44% YoY (+5.01% in 1Q22) and exceeded consensus at +5.17% YoY. On the other hand, the Rupiah exchange rate closed higher at IDR14,893/USD. We estimate the JCI will move in the price range of 7,030-7,100 pending the release of Consumer Confidence JUL data. Today's recommendation: BBHI, BBRI, FREN, HRUM.

Corporate Action
IPO: MORA (IDR396/share), ELPI (IDR200/share), KKES (IDR105/share)

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