Global Market Highlights
DJIA fell by -0.89% on Monday (13/12) followed by S&P 500 (-0.91%) and Nasdaq (-1.39%). Wall Street ended lower due to market expectation that there's going to be an acceleration of tapering by the Fed. Japan Core Machinery Orders rose by +3.8% in October-21 for the first time in three months as service sector firms ramped up investment amid low COVID-19 infections. Today, the market will be looking toward several data releases such as: 1) UK Employment Change; 2) UK Unemployment Rate; 3) US PPI MoM.
Domestic Update
• The Government of Indonesia set 2022's debt financing strategy as opportunistic, flexible and prudent. The financing strategy includes : 1) optimize Rupiah's bond for medium and long tenure; 2) increase retail bond target to IDR100 trillion and 3) will use bond purchase agreement with central bank as needed. MNCS Comment: We see that this strategy is not only aimed to sustain fiscal policy and maintain a healthy outlook but also to strengthen domestic government bond markets to weather risks particularly related to outflows amid rising potential of aggressive monetary policy tightening in 2022.
• Furthermore, the second dose of vaccination rate nationally has reached 49.4% or equivalent to 102.92 million people.
Company News
1. AUTO IJ targets a positive performance in FY22E, with reference to the association’s target, the company targets the domestic car sales to reach 940,000 units and two-wheeled vehicles to reach 5.6 million units for FY22E (Kontan). MNCS Comment: Although the company will face several challenges such as PPnBM policy which will end in FY21E next year, the increase in VAT, and carbon taxes, AUTO remains optimistic that it can achieve the company’s target in the recovery year of FY22E by carrying out innovations and several steps to accelerate digitalization in trading and manufacturing. AUTO is trading at the level of 10.12x/0.57x PER/PBV.
2. LINK IJ projects high single digits revenue growth in FY21E. supported by the addition of a large number of residential customers, especially from housing and apartments, LINK's revenue is estimated to contribute 80% from the housing segment and 20% from companies (Bisnis Indonesia). MNCS Comment: We are optimistic about the growth in demand for cable television and internet services, along with community activities during the pandemic. Currently, LINK is trading at level 13.57x/2.47 PER/PBV.
3. AGRS IJ will conduct a right issue by issuing 10.93 billion shares with a nominal value of IDR100/share. The EGMS is planned to be held on January 19, 2022 (Bisnis Indonesia). MNCS Comment: Through this right issue, the company plans to strengthen the capital structure, as well as ensure the company has sufficient funding to fulfill future business strategies. AGRS trading at the level of 1.69x PBV.
IHSG Updates
JCI strengthened by +0.15% to 6,662.87 on Monday (13/12) followed by net foreign sell reaching IDR659.09 billion. JCI closed higher, led by the transportation sector (+3.14%), followed by the cyclical consumer sector (+2.40%). On the other hand, the industrial sector weakened by -1.55%, followed by the infrastructure sector (-0.70%). The strengthening of the JCI was driven by the strengthening that also occurred on the Wall Street index last Friday. Subsequently, positive sentiment came from the US which reported that the Omicron Covid-19 variant virus had entered the country for more than 2 weeks but was not accompanied by a spike in death rate or patients, which indicated that the Omicron variant did not trigger death and severity even though it was easily contagious. On the other hand, the Rupiah strengthened at IDR14,343 level in the spot market. We estimate the JCI will move in the range of 6,580-6,700. Today's recommendations: ISSP, BRPT, BSDE, AGRO.
Corporate Action
Cum right issue date: BBHI (IDR478/share)
Public expose: APLN, META
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