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MNCS Morning Navigator

05 Januari 2022

MNCS Morning Navigator January 05, 2022

Global Market Highlights

DJIA rose (+0.59%) on Tuesday (04/01) while the S&P 500 edged down -0.06% followed by Nasdaq (-1.33%). Investors are still optimistic about the Omicron variant which will not have a significant impact on the global economy, the weakening of technology stocks was a laggard for the S&P 500 index as concerns regarding the rising interest rates may have an impact on meeting its debt obligations. Another negative sentiment was the release of job vacancies data (JOLTs Job Openings) for Nov-21 which decreased to 10.56 million (vs 11.03 million in Oct-21) as the increase in Covid-19 cases created a number of mobility restrictions and affected retail shops. Today, the market will be looking toward several data releases such as: 1) US MBA Mortgage Applications; 2) Germany Markit Composite PMI Final; 3) Eurozone Markit Composite PMI Final.

Domestic Update
• The Ministry of Health reported 92 new cases of Covid-19 Omicron in Indonesia bringing the total cases to 254 (239 imported cases and 15 local transmission). MNCS Comment: Despite the mild symptoms experienced by patients, the Omicron variant seemed to have a faster pace of transmission compared to other variants. In only a matter of months, this variant has been found in 110 countries including Indonesia. With the recent development, we believe that Covid-19 remains a factor that may hinder the global and domestic economy to reach its full recovery.
• Furthermore, the second dose of vaccination rate nationally has reached 54.9% or equivalent to 114.30 million people.

Company News
1. PPRE IJ managed to reach IDR5.6 trillion of new contracts in FY21, or rose by +100% YoY (vs IDR2.8 trillion in FY20), exceeding the company target by 153% due to the company continuously adding new contracts. At the end 2021, the company still obtained new contracts of IDR280 billion from mining development and civil works projects (IQPlus). MNCS Comment: We see that this achievement drives the company's optimism to target new contract acquisition growth for up to 10% in FY22E focusing on mining services, particularly nickel, which was in line with the increase of demand and nickel price. Currently PPRE is trading at the level of 24.71x/0.84x PER/PBV.
2. BBHI IJ plans to issue preemptive rights of 10.05 billion common shares with a value of IDR100 per share. The company has set the exercise price of the right issue at IDR478 per share, and PT Mega Corpora as BBHI's largest shareholder with 90% ownership will only exercise 2.71 billion shares or about 30% of all Mega Corpora's rights (Bisnis Indonesia). MNCS Comment: The funds will be used for the company's business development by developing business activities in the credit sector with technological innovation or digital banking which will encourage the growth of the company's performance in the future. BBHI is currently trading at the level of 899.4x/79.88x PER/PBV.
3. BBKP IJ provide subordinated loans to its subsidiary, PT Bank Bukopin Syariah (KBBS) with a total amount of IDR350 billion. This acts as the company's strategy to complete the restructuring program and increase core capital as a risk mitigation of accumulated CAR (Emitennews). MNCS Comment: We see that the company's support in developing KBBS is driven by the good prospect of sharia banking business in the future. Currently BBKP is trading at the level of 1.13x PBV.

IHSG Updates
JCI strengthened +0.45% to 6,695.37 on Tuesday (04/01) followed by net foreign sell reaching IDR546.63 billion. The technology sector still led the index movement which rose by +4.49%, followed by the financial sector (+1.08%). On the other hand, the basic industry sector decreased by -1.15%, followed by the infrastructure sector (-0.73%). The strengthening of Wall Street on (03/01) provided a positive catalyst for the index to continue its rally. In addition, the release of manufacturing PMI data for a number of Asian countries for the month of Dec-21 such as Japan (54.3) and China (50.9) which returned to expansionary levels (vs 49.9 Nov-21) created optimism among investors. On the other hand, Rupiah closed slightly lower at IDR14,303/USD level. We estimate that the JCI will move in the range of 6,661-6,750. Today's recommendations: BANK, BMHS, AGII, EXCL.

Corporate Action
RUPS: YELO

Disclaimer On

BANK BMHS AGII EXCL PPRE BBHI BBKP

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