Global Market Highlights
DJIA fell -2.06% on Tuesday (21/02), followed by the S&P500 (-2.00%) and the Nasdaq (-2.50%). Wall Street is under pressure ahead of the Fed's FOMC which has the potential to raise its benchmark interest rate. In addition, investors are also paying close attention to the release of Existing Home Sales data in Jan-2023 which fell -0.7% MoM. Today, the market will be looking toward several data releases such as: 1) US MBA 30-Year Mortgage Rate Feb 17; 2) Germany Inflation Rate YoY Final Jan; 3) Germany Ifo Business Climate Feb.
Domestic Update
• The government puts forth a plan to enact 0% lending interest for SMEs to stimulate the economy, taking into account that SMEs contribute 62.6% of the GDP and absorb 97% of the domestic workforce. The policy is planned to be effective in a month’s time. MNCS Comment: We view that the policy still needs further scrutiny, as it has the potential to disrupt the finance sector and requires prudent risk mitigation schemes. If implemented, it would benefit the SMEs from the consumer and retail sector, particularly throughout the festive Ramadhan.
Company News
1. AUTO IJ posted a +117.0% YoY net profit growth in FY22 to IDR1.3 trillion (vs IDR611.3 billion in FY21) (Market Bisnis). MNCS Comment: Net profit growth was supported by a +22.6% YoY increase in revenue to IDR18.6 trillion (vs IDR15.2 trillion in FY21) coupled with efficiency which created margins to expand, where GPM was recorded at 14.5% (vs 12.3% in FY21). Currently, AUTO is traded at the level of 5.61x/0.62x PER/PBV.
2. STAA IJ plans to expand through the acquisition of new oil palm plantations in FY23E, plantation selection will be implemented to maintain the average age of the plants around 13 years (Kontan). MNCS Comment: The company's inorganic expansion which can increase the number of oil palm plantation areas can boost the company's performance going forward, where this expansion will be supported by a capex allocation of IDR335 billion. In addition, with an average age of plants that are still in the prime category, they can maintain high FFB yields. Currently, STAA is traded at the level of 9.47x/2.74x PER/PBV.
3. AKRA IJ plans to acquire the remaining 350 ha of JIIPE SEZ land in the next 2-4 years (Market Bisnis). MNCS Comment: It is hoped that through this land expansion, it can boost the company's profitability, where sales of JIIPE's land contribute the highest margins of all the company's segments. Currently, AKRA is traded at the level of 12.71x/2.62x PER/PBV.
IHSG Updates
JCI weakened -0.31% to 6,873.40 on Tuesday (21/02), followed by net foreign sell reaching IDR231.94 billion. The majority of sectors experienced weakness and weighed on the index, led by the energy sector (-0.87%) followed by the financial sector (-0.70%). On the other hand, sectors that experienced strengthening were led by the transportation sector (+2.31%) followed by the raw materials sector (+0.69%). The index's weakening was in line with the majority of Asian market movements, which were overshadowed by the hawkish sentiment from The Fed ahead of this week's FOMC. On the other hand, the Rupiah exchange rate closed lower at the level of IDR15,190/USD. We estimate that the JCI will move in the price range of 6,860-6,890. Today's recommendation: EXCL, HRUM, SMDR, TKIM.
Corporate Actions
RUPS: ASMI
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