MNCS Morning Navigator

04 Januari 2022

MNCS Morning Navigator January 04, 2022

Global Market Highlights

DJIA rose (+0.68%) on Monday (03/01) followed by S&P 500 (+0.64%) and Nasdaq (+1.20%). The presence of a surge in Covid-19 cases (405,470 average daily cases as of January 2) was ignored by investors who view the better economic prospects in 2022 and welcome the achievements of a number of US indices such as the S&P 500 in 2021 return of + 26.9% YTD and Nasdaq which grew +21.4% and DJIA +18.7%. Markit's Manufacturing PMI for Dec-21 was at 57.7, indicating that the economy remains expansive, although slowing down compared to the previous month (58.3 Nov-21). Today, the market will be looking toward several data releases such as: 1) US ISM Manufacturing PMI; 2) Germany Unemployment Change; 3) UK Markit/CIPS 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 114.11 million people.

Company News
1. BSDE IJ recorded IDR5.16 trillion revenue growth in 9M21 increased by +20.84% ​​YoY (vs IDR4.28 trillion in 9M20). This increase was in line with IDR930.78 billion net profit growth in 9M21 or rose by +154.19% YoY (vs IDR366.18 billion in 9M20) (Kontan). MNCSComment: We see that the increase in the top line was driven by the revenue increase from land and buildings as the main contributor which recorded at IDR3.67 trillion in 9M21 or up +16.05 YoY (vs IDR3.15 trillion in 9M20), followed by an increase in sales of fixed assets by IDR11.73 billion or up +768.88% YoY. On the other hand, COGS rose by +48% YoY to IDR1.85 trillion. BSDE is trading at the level 17.49x/0.70x PER/PBV.
2. IPCM IJ invested IDR90.53 billion to build 4 new vessels (1 Unit Tugboat and 3 Units of Pilot Vessel) (Bisnis Indonesia). MNCS Comment: As a company that is actively expanding its business, we assess that the investment of these 4 vessels can be a positive catalyst and increase the company's operating income in the future. IPCM is trading at the level of 12.96x/1.39x PER/PBV.
3. WOOD IJ targets to obtain sales growth in FY22E by +25% YoY. The company has budgeted IDR250 billion this year for capex. Followed by the purchase of a factory in Lumajang, East Java in FY21 which will operate in early FY22E. This will increase production capacity for building components by around +20% (Kontan). MNCS Comment: We see the company's optimism is driven by opportunities from trade tariff policies, anti dumping and anti subsidies for furniture products and building components from China. In addition, there is a high demand from the furniture and building component segments, which will also drive company growth in the future. WOOD is trading at the level of 11.34x/1.59 PER/PBV.

IHSG Updates
JCI rose significantly +1.27% to 6,665.31 on Monday (03/01) followed by net foreign buy which reached IDR346.13 billion. The sector leading the index strengthening was the technology sector (+4.53%) followed by the transportation sector (+2.35%). On the other hand, the cyclical sector weakened (-0.41%) followed by the health sector (-0.16%). Investors welcomed the positive catalyst that came from the release of the Purchasing Manager's Index (PMI) data for December 2021 which was maintained at an expansionary level (53.5) even though it was considered slowing compared to the previous month period (vs 53.9 Nov-21). In addition, the announcement of the Consumer Price Index (CPI) for December 2021 at the level of 107.65 reflects the strengthening of inflation (+0.57% mom, +1.87% yoy). The strengthening which was maintained below the BI target (2%-4%) showed a relatively positive and stable economic condition amid the recovery due to the Covid-19 pandemic. On the other hand, Rupiah closed slightly lower at IDR14,253/USD level. We estimate that the JCI will move in the range of 6,621-6,715 while waiting for the release of inflation data YoY. Today's recommendations: IRRA, FREN, ISSP, CENT.

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