Global Market Highlights
DJIA rose +0.86% on Wednesday (09/02), followed by the S&P 500 (+1.45%) and the Nasdaq (+2.08%). Wall Street rose significantly during the closing as US bond yield fell causing an increase in technology stocks. On the other hand, the sentiment of positive performance of the earnings reports, which surpassed their earnings estimates, also encouraged investors to buy on these stocks. About 76% of the S&P 500 firms have released their FY21 results and booked good performance with profits coming at nearly 6% above projected levels. Investors will watch consumer price data on Thursday, inflation is forecasted at a four-decade high of 7.3% YoY. Today, the market will be looking toward several data releases such as: 1) US Inflation Rate YoY; 2) US Continuing Jobless Claims; 3) China New Yuan Loans.
Domestic Update
• Bank Indonesia is expected to hold its benchmark policy rate (BI 7-day reverse repo rate) at 3.5% at the Feb-22 meeting. MNCS Comment: We believe BI will hold benchmark policy rate on the back of benign inflationary pressures and needs to support the economy. Despite rising CPI recently, inflationary pressure remains benign and manageable. We expect BI to hike interest rate in 2H22 by 25-50 bps.
• Furthermore, the second dose of vaccination rate nationally has reached 63.6% or equivalent to 132.39 million people.
Company News
1. KLBF IJ plans to buyback shares using internal cash and loans in stages from 9 Feb-22 to 8 May-22. The maximum share purchase price is IDR1,700 per share with a maximum value of IDR1 trillion (Kontan). MNCS Comment: The company estimates that there will be an impact on interest expense of around IDR29 billion per year from the loan. This buyback is expected to maintain the stability of the company's share price in the market. KLBF is trading at the level of 25.36x/4.17x PER/PBV.
2. MTEL IJ has added 2,580 new tenants through the acquisition of towers owned by Telkomsel by the end of Jan-22. The addition of these tenants is in line with the development of telecommunication operators that continue to strengthen and expand their network (Bisnis Indonesia). MNCS Comment: We see that the company has succeeded in utilizing the momentum of increasing demand for telecommunication towers by expanding continuously. Previously in FY20 until FY21, the company had acquired 10,050 towers owned by Telkomsel. MTEL is trading at the level of 2.93x/0.30x PER/PBV.
3. BRMS IJ through its subsidiary PT Citra Palu Minerals (CPM), obtained additional gold reserves of 4.6 million tons at the Poboya gold mine project, Palu. The company is also building a gold ore processing factory in Palu with a capacity of 4,000 tons of ore per day (Bisnis Indonesia). MNCS Comment: We see that with the completion of the construction of the factory in 3Q22, the company's revenue has the potential to increase along with the increase of gold production. BRMS is currently trading at 1.06x PBV.
IHSG Updates
JCI rose +0.66% to 6,834.61 on Wednesday (09/02), followed by net foreign buys which reached IDR1.44 trillion. The sector that accelerated the index's strengthening was led by the transportation sector (+4.01%) followed by the raw materials sector (+0.93%). On the other hand, the cyclical sector weakened (-0.92%) followed by the property sector (-0.33%). Investor optimism was driven by large inflows along with the growth of the Indonesian economy FY21 by +3.69% YoY. The sentiment of the release of the fantastic big caps banking financial reports also contributed to the strengthening of the index amid the increasing number of positive Covid-19 cases where up to (09/02), there was an additional case of +46,843. On the other hand, the Rupiah strengthened at IDR14,393/USD level. We estimate that the JCI will move in the range of 6,750-6,850 while waiting for the interest rate decision to be released. Today’s recommendation: ELSA, PGAS, IRRA, BBYB.
Corporate Action
RUPS: BHIT, DNET, BANK
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