Global Market Highlights
DJIA slipped by -0.08% on Thursday (16/12) followed by S&P 500 (-0.87%) and Nasdaq (-1.25%). Wall Street ended at the red zone due to profit taking action, and market response regarding the Federal Reserve's decision to taper sooner than previously stated, pushing investors toward more economically sensitive sectors and away from growth and technology stocks. Meanwhile, oil settled above USD75 a barrel, supported by record US implied demand and falling crude stockpiles, as well as the positive economic outlook indicated. Today, the market will be looking toward several data releases such as: 1) Germany Ifo Business Climate; 2) Eurozone Core Inflation Rate YoY Final; 3) Japan BoJ Interest Rate Decision.
Domestic Update
• Bank Indonesia (BI) is expected to hold the benchmark policy rate (BI 7 Days Repo Rate) at 3.5%, Lending Facility at 4.25% and Deposit Facility at 2.75% in Dec-21. MNCS Comment: We believe, BI policy will focus on maintaining rates to stay competitive, averting massive outflows that will trigger Rupiah depreciation and shock in financial markets. On the other hand, BI also needs to remain accommodative in order to support economic recovery. Therefore holding interest rates unchanged will be appropriate policy in time of global monetary policy normalization.
• Furthermore, the second dose of vaccination rate nationally has reached 50.3% or equivalent to 104.79 million people.
Company News
1. SAMF IJ recorded IDR1.65 trillion non-subsidized premium fertilized sales in 11M21 or 89.19% of the FY21E sales target of IDR1.85 trillion. SAMF targets future sales growth to increase by +29.73% YoY in FY22E or IDR2.4 trillion (Kontan). MNCS Comment: The company is optimistic to achieve FY21E sales target by seeing the increase in CPO prices which contributes 90% to the fertilizer market absorbed by SAMF. In achieving the FY22E target, the company has prepared business strategies, from increasing efficiency to increasing factory capacity from 600,000 tons/ year to 700,000 tons/year. SAMF is trading at the level of 41.56x/6.89x PER/PBV.
2. IRRA IJ is optimistic that the target for operating income growth in FY22E of 110%-130% will be achieved, seeing from the high demand for medical devices such as rapid tests or syringes for vaccination (Kontan). MNCS Comment: We see the company’s performance target can be achieved in FY22E with the sentiment that the government will realize the booster vaccination (third dose) next year which can drive demand for the Oneject syringe product that was attributed by the company. Currently, IRRA is trading at level 29.53x/6.58x PER/PBV.
3. LPPF IJ expands company business by opening two new outlets on December-21 located at Cianjur Citimall 2, West Java and One Batam Mall, Riau Islands. Thus far, LPPF has had 139 outlets spread throughout Indonesia (Kontan). MNCS Comment: We see that the opening of the third and fourth new outlets in 2021 is in line with the company’s plan to get closer to customers and accelerate expansion. In addition, for FY22E the company has targeted to open 10 new outlets. LPPF trading at the level of 17.51x/9.67x PER/PBV.
IHSG Updates
JCI weakened by -0.47% to 6,594.80 on Thursday (16/12) followed by net foreign sell reaching IDR733.94 billion. JCI closed lower, with declines led by the cyclical consumer sector (-1.15%), followed by the industrial sector (-1.12%). On the other hand, the health sector strengthened by +1.51%, followed by the technology sector (+0.40%). The weakening of the JCI was driven by the news delivered by the minister of health regarding the confirmed entry of the Covid-19 Omicron variant in Indonesia. Meanwhile, BI decided to keep the benchmark BI 7-Day Reverse Repo Rate at 3.5%. On the other hand, the Rupiah weakened at 14,362/USD level in the spot market. We estimate the JCI will move in the range of 6,560-6,620 while waiting for the released data loan growth YoY. Today's recommendations: SMGR, AKRA, PTBA, MMLP.
Corporate Action
RUPS: BNGA, WSBP, MPRO
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