MNCS Morning Navigator

03 Januari 2022

MNCS Morning Navigator January 03, 2022

Global Market Highlights

DJIA corrected by -0.16% on Friday (31/12) followed by S&P 500 (-0.26%) and Nasdaq (-0.61%). Wall street closed in the red zone along with the rising numbers of daily Covid-19 cases globally. Subsequently, The US Labor Department reported that the number of Americans filing for new unemployment claims dropped to a seasonally adjusted 198,000 in the week leading up to Christmas (25/12), from a revised 206,000 a week earlier (18/12). Today, the market will be looking toward several data releases such as: 1) US Markit Manufacturing PMI Final; 2) US Construction Spending MoM; 3) Germany Markit Manufacturing PMI Final.

Domestic Update
• Bank Indonesia expects domestic inflation remains benign and below central bank target at 1.79% yoy by Dec-21. MNCS Comment: Despite the low inflationary pressure throughout 2021, consumer prices started to pick up in 3Q21 marking gradual economic recovery. Furthermore, the end-year seasonality factor may also play a role in increasing inflation.
• Furthermore, the second dose of vaccination rate nationally has reached 54.8% or equivalent to 104.04 million people.

Company News
1. WIKA IJ recorded IDR11.65 trillion net revenue in 9M21 increased by +12.18% YoY (vs IDR10.38 trillion in 9M20). COGS increased from IDR9.49 trillion in 9M20 to IDR10.67 trillion in 9M21. WIKA recorded IDR104.94 billion net profit in 9M21 or rose by +109.08% YoY (vs net profit of IDR50.19 billion in 9M20) (Bisnis Indonesia). MNCS Comment: We see an increase in top line was driven by an increase from the infrastructure and building sector as the largest contributor recorded at IDR6.92 trillion in 9M21 or grew by +5.67% YoY (IDR6.55 trillion in 9M20), followed by an increase in revenue from concrete industry was IDR2.85 trillion or rose +50% YoY. On the one hand, the increase in the bottom line was supported by selling expenses efficiency and general and administrative expenses which fell -22.30% YoY and -5.65 YoY, respectively. WIKA is trading at the level of 70.84x/0.73x PER/PBV.
2. WTON IJ recorded IDR2.48 trillion net revenue in 9M21 decreased by -16.17% YoY (vs IDR2.96 trillion in 9M20). COGS decreased from IDR2.79 trillion in 9M20 to IDR2.36 trillion in 9M21. WTON recorded IDR54.01 trillion net profit in 9M21 or fell by +1.64% YoY (vs net profit of IDR54.92 trillion in 9M20) (Bisnis Indonesia). MNCS Comment: We see the decline in top line was due to the decrease in revenue from rotary products as the largest contribution worth IDR992.08 billion or down -13.20% YoY (vs IDR1.14 trillion in 9M20). On the other hand, the company managed to reduce operating expenses and interest expenses efficiently, which fell -6.04% YoY and -58.05% YoY, respectively. However, this cost efficiency has not been able to record an increase in the company’s bottom line. Currently, WTON is trading at level 29.77x/0.64x PER/PBV.
3. KAEF IJ targets the use of imported medicinal raw materials to decrease from 95% to 75% which is expected to be achieved in FY24E in line with the government’s program to reduce dependence on raw materials imports (Kontan). MNCS Comment: Various strategy steps have been prepared by the company, one of which is by establishing drug factories and producing their own material imports since 2016 which has obtained certification from BPOM and MUI. Followed by, the current growth of the material imports industry will potentially improve KAEF’s performance in the future. KAEF is trading at the level of 33.52x/1.89 PER/PBV.

IHSG Updates
JCI weakened -0.29% to 6,581.48 on Thursday (30/12) followed by net foreign sell which reached IDR304.07 billion. The sector that weighs the index is the industrial sector (-1.47%) followed by the energy sector (-1.46%). On the other hand, the technology sector strengthened significantly (+3.62%) followed by the health sector (+0.68%). The movement of the JCI was dominant in the negative territory in line with the last trading day of the stock exchange and approaching the new year holiday which made investors tend to cash out. As for other sentiments, investors tend to wait and see ahead of the release of Markit's version of PMI and inflation data for December on Monday (03/01) coinciding with the opening of trading in early 2022. On the other hand, Rupiah closed slightly lower at IDR14,253/USD level. We estimate that the JCI will move in the range of 6,555-6,600 while waiting for the release of data inflation YoY. Today's recommendations: AKRA, BBTN, MIKA, BSDE.

Corporate Action
IPO: ADMR (IDR100/share)

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