Global Market Highlights
DJIA rose by +0.55% on Thursday (23/12) followed by the S&P 500 (+0.62%) and the Nasdaq (+0.85%). Wall Street closed at the green zone due to a positive catalyst such as jobless benefits claims as of December 18, 2021, which was low at 205,000 or below pre-pandemic levels amid the ongoing surge in inflation (6.8% Nov-21 YoY). In addition, the easing of concerns due to the latest variant of Omicron which makes it less likely for the exposed patients to be hospitalized and the breakthrough of the Covid-19 antiviral by several leading vaccine companies such as Pfizer gave optimism among investors. The release of consumption spending (PCE) data for November rose +0.6% MoM and +4.7% YoY which was above market expectations which had forecast gains of only +4.5% YoY and +0.5% MoM. Today, the market will be looking toward several data releases such as: 1) US Baker Hughes Oil Rig Count; 2) Japan Inflation Rate YoY; 3) Japan Housing Starts YoY.
Domestic Update
• Bank Indonesia (BI) reported an increase in Indonesia’s money supply (M2) to IDR7,572.2 trillion in Nov-21, equivalent to 11% YoY growth which was slightly higher than Oct-21’s pace at 10.5% YoY. MNCS Comment: Factors affecting the growth of M2 were the acceleration in credit supply and net foreign assets 4.4% and 10.6% YoY respectively, up from 3.0% and 5.7% YoY recorded in the previous month. All in all the liquidity in the economy remained ample.
• Furthermore, the second dose of vaccination rate nationally has reached 52.3% or equivalent to 108.83 million people.
Company News
1. ADRO IJ has signed a Letter of Intention to Invest amounting to USD728 million to build an aluminum smelter in Indonesia’s largest Green Industrial Estate with the hope of supporting the industrial downstream program (Emitennews). MNCS Comment: We see the diversification with the construction of aluminum smelter as a form of the company's commitment to transform their business through a long term green initiative. Going forward, it hopes to reduce aluminum imports, create added value for alumina and state tax revenue. ADRO is trading at the level of 8.56x/1.19x PER/PBV.
2. KRAS IJ has confirmed that the company will supply 1.5 million tons/year of steel after signing the Long Term Supply Agreement (LTSA) with consumers. KRAS is optimistic that changing the sales method from spot sales to long-term contracts will drive an increase in projected revenue to reach USD1.4 billion in FY22E (Bisnis Indonesia). MNCS Comment: We see that the guarantee of optimal sales of steel products will help increase plant utility. On the consumer side, the contract also warrants the availability of raw material supply which will affect the company’s operational plans later. Currently, KRAS is trading at level 6.96x/0.96x PER/PBV.
3. HOKI IJ targets sales growth of 10% - 15% until FY22E by launching corn and cassava rice products in January 2022 (Kontan). MNCS Comment: We see that this target is quite in line with the economic recovery as well as improvements in the consumer sector which was depressed during the tight restrictions due to Covid-19. On the other hand, the company also carried out several expansions which are expected to boost performance growth in FY22E. HOKI trading at the level of 114.47x/2.65 PER/PBV.
IHSG Updates
JCI strengthened +0.40% to 6,555.55 on Thursday (23/12) followed by net foreign sell which reached IDR50.10 billion. The majority of sectors experienced strengthening, led by the industrial sector (+1.14%) followed by the cyclical sector (+1.03%). On the other hand, the technology sector weakened (-0.88%) followed by the property sector (-0.54%). JCI solidly maintained its movement in positive territory until the end of the trading session, the strengthening of the US indices in response to the FDA's move to provide emergency use authorization for the Covid-19 (Paxlovid) antiviral pill was allegedly a positive catalyst for JCI and globally amid the outbreak of the latest variant of Omicron. Meanwhile, the Ministry of Health recorded the addition of domestic Omicron cases to 8 active cases on Thursday. On the other hand, Rupiah closed higher at IDR14,249/USD level. We estimate that the JCI will move in the range of 6,514-6,600. Today's recommendations: AGRO, ASRI, CENT, DNAR.
Corporate Action
Cum Right Issue Date: WSKT (IDR620/share)
Public Expose: BEKS, WOWS
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