Global Market Highlights
DJIA rose +0.28% on Thursday (24/02), followed by S&P 500 (+1.50%) and Nasdaq (+3.35%). Wall Street managed to rebound in the midst of the ongoing Russian invasion of Ukraine. Panic selling occurred in the early trade, but the situation turned around after President Joe Biden responded to the invasion by Russia by issuing a number of additional sanctions related to exports, Russian banking and state-owned companies. This has succeeded in allaying investor concerns and triggering a buy on weakness action. The positive catalyst also came from the US GDP growth forecast 4Q21 which grew 7% QoQ. In addition, initial jobless claims as of 19 Feb'22 fell to 232 thousand indicating a strong labor market and growing optimism for investors about the economy going forward. Today, the market will be looking toward several data releases such as: 1)US PCE Price Index YoY; 2)US Durable Goods Orders MoM ; 3) Germany GDP Growth Rate YoY Final.
Domestic Update
• The government will conduct a private placement transaction for Government Securities (SUN) for the purpose of placing funds for the Taxpayer's Voluntary Disclosure Program. Series in this transaction are FR0094 (new issuance) for a 6-year tenor with a 5.6% coupon and USDFR0003 (new issuance) for a 10-year tenor with a 3.0% coupon. MNCS Comment: We view that apart from obtaining an alternative financing, this Taxpayer Voluntary Disclosure Program will also strengthen the domestic government bond market.
• Furthermore, the second dose of vaccination rate nationally has reached 68.3% or equivalent to 142.27 million people.
Company News
1. ITMG IJ recorded USD2.076 billion of revenue, up +75.16% YoY in FY21. The company's net profit also rose +1.117% YoY to USD475.57 million in FY21 (vs USD39.47 million in FY20) (IQ Plus). MNCS Comment: We see that this increase was in line with the increase in coal sales to third parties which reached USD2.01 billion, where exports to Taiwan, China, Hong Kong and Korea reached USD632.28 million. ITMG is trading at the level of 4.46x/1.75x PER/PBV.
2. INCO IJ recorded an increase of +25% YoY revenue to USD953.2 million in FY21. Meanwhile, net profit reached USD167.20 million, up +112.5% YoY in FY21 (vs USD78.76 in FY20) (Kontan). MNCS Comment: We see that the company is optimistic that it might improve its performance in FY22E along with the increase in demand and nickel prices due to the Government's plans for the electric vehicle and battery industry in Indonesia. INCO is trading at the level of 21.41x/1.65x PER/PBV.
3. ADRO IJ targets a coal production volume of 58 - 60 million tons and a stripping ratio target of 4.1x in FY22E. In FY21, the company recorded a coal production volume of 52.70 million tons, in accordance with the set target of 52 - 54 million tons (Emiten News). MNCS Comment: We see that the company can increase its sales volume in FY22E in line with the global economic recovery, amid the potential decline in ASP in FY22E due to coal prices which we estimate will tend to fall compared to FY21. ADRO is trading at the level of 9.88x/1.37x PER/PBV.
IHSG Updates
JCI weakened -1.48% to 6,817.82 on Thursday (24/02), followed by net foreign buys which reached IDR899.79 billion. Almost all sectors moved into the red zone, led by the transportation sector (-4.93%) followed by the financial sector (-2.42%). On the other hand, the sectors that experienced strengthening were the energy sector (+2.23%) followed by the industrial sector (+0.75%). Panic selling suppressed the index movement after Russia started its invasion of Ukraine marked by a number of explosions that occurred in several Ukrainian cities, while foreign investors still consistently recorded inflow. The outbreak of war added to investor concerns and uncertainty in global markets as sanctions were imposed on Russia. Investors are also worried that rising commodity prices could trigger an increase in inflation and encourage the Fed to be more aggressive in raising interest rates and other monetary tightening instruments. On the other hand, the Rupiah weakened at IDR14,328/USD level. We estimate that the JCI will move in the range of 6,800-6,890 while waiting for the Loan Growth YoY data to be released. Today’s recommendation: IMJS, ASRI, BNBA, BRMS.
Corporate Action
RUPS: MEDC, CENT, MEGA
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