Global Market Highlights
DJIA weakened by -0.17% on Friday (03/12) followed by S&P 500 (-0.84%) and Nasdaq (-1.92%). Wall Street ended lower due to high inflation rate, concerns regarding the Omicron variant, and weak monthly job gains. The US created far fewer jobs than expected last month with the US Non Farm Payrolls falling to 210,000 in November-21 from previously at 546,000. On the other hand, the US Unemployment Rate fell to its 21-month low of 4.2% in November-21, suggesting the rapid tightening in the labor market. Today, the market will be looking toward several data releases such as: 1) UK Construction PMI; 2) Eurozone Construction PMI; 3) Germany Factory Orders MoM.
Domestic Update
• Foreign investors booked a net sell of IDR12.50 trillion from the domestic financial market (IDR9.82 trillion from government bond market and IDR2.68 trillion from equity market) during Nov 29 to Dec 3, according to Bank Indonesia (BI). MNCS Comment: We believe negative sentiment came from the emergence and the spread of a new Covid-19 variant named Omicron triggered the outflows. As a consequence, domestic financial assets prices tumbled with JCI dropping by -1%, Rupiah weakened 0.5% against USD and the 10-year Indo GB yield rose 10 bps last week. We expect market volatility to remain high going forward as the new Covid-19 variant poses another downside risk for economic recovery and complicates policymaking.
• Furthermore, the second dose of vaccination rate nationally has reached 47.5% or equivalent to 98.91 million people.
Company News
1. INTP IJ will buy back shares worth IDR3 trillion by using the company's internal cash. Buyback will be implemented in stages over a three-month period, starting at December 6, 2021 to March 4, 2022 (Kontan). MNCS Comment: The Company plans to use internal cash that reflects a decent and sufficient capital and cash flow. This action is expected to improve the position of INTP’s share price which in the last month has weakened by -12.8%. INTP is trading at the level of 25.31x/1.89x PER/PBV.
2. PTRO IJ obtained a new contract from PT Mekko Metal Mining as the client with PT Perkasa Investama Mineral as the guarantor of the client. From this project, PTRO achieved an increase in the contract value to USD100 million with a cooperation period of up to five years (Kontan). MNCS Comment: The acquisition of this new contract is expected to increase PTRO's revenue and strengthen the company's financial condition in the future. Currently, PTRO is trading at level 6.92x/0.69x PER/PBV.
3. UNTR IJ projected the increase in heavy equipment sales by +20% YoY next year from 3,000 units in 2021 to 3,600 units in FY22E. In accumulation, UNTR sales up to 10M21 recorded 2,590 units of Komatsu heavy equipment or reached 86.33% of the FY21E sales target (Kontan). MNCS Comment: We see the company’s optimism that it will target FY22E sales, supported by the increasing demand for heavy equipment in the mining, construction, and agribusiness sectors. It is estimated that these three sectors will support demand from heavy equipment amidst the economic recovery from the pandemic. UNTR trading at the level of 8.12x/1.28x x PER/PBV.
IHSG Updates
JCI weakened by -0.69% to 6,538.51 on Friday (03/12) followed by net foreign sell reaching IDR527.68 billion. JCI closed lower, with the decline led by the industrial sector (-1.33%), followed by the non-cyclical consumer sector (-1.09%). On the other hand, the technology sector strengthened by +0.88%, followed by the property sector (+0.67%). The weakening of the JCI was driven by the profit taking action of a number of investors after a fairly high increase in yesterday's trading, where investors still tended to wait and see on the development of the Omicron Covid-19 variant. Nevertheless, positive news came from Hong Kong scientists who had successfully isolated the Omicron variant for medical samples and the British health regulators had successfully granted permission for the use of the latest Covid-19 drug. On the other hand, the Rupiah weakened to IDR14,398 in the spot market. We estimate the JCI will move in the range of 6,509-6,574. Today's recommendations: WIFI, BGTG, INDY, TLKM.
Corporate Action
Cum dividend date: ISAT (IDR1,748.27/share)
Cum right issue date: MPPA (IDR760/share)
IPO: CMYR (IDR3,080/share)
Disclaimer On
