Global Market Highlights
DJIA rose +0.51% on Tuesday (11/01) followed by the S&P 500 (+0.92%) and Nasdaq (+1.41%). The rebound in the US market was initiated by a statement from the Fed Chair Jerome Powell, regarding monetary tightening measures which are currently the focus of global attention. In addition, the World Bank cut its projection for global GDP growth in FY22E to 4.1% (vs 4.3% from the previous one) in line with the potential for an economic slowdown due to the spread of the Omicron variant. Today, the market will be looking toward several data releases such as: 1) US Inflation Rate YoY (DEC); 2) China Inflation Rate YoY; 3) China New Yuan Loans.
Domestic Update
• Government successfully raised IDR11 trillion through Sukuk Auction on Tuesday (11/01). Robust investors demand reflected from total incoming bids reaching IDR55.35 trillion. MNCS Comment: We see robust investor demand on SPNS12072022 (new issuance/<1 year maturity) with the bid value of IDR21.36 trillion implying bid-to-cover-ratio of 21.36x. We understand that during rising interest rate risk, fixed income investors gravitate towards shorter maturity bonds (shortening the duration).
• Furthermore, the second dose of vaccination rate nationally has reached 56.2% or equivalent to 117.12 million people.
Company News
1. BJBR IJ plans to issue preemptive right of 925 million series B shares in 1Q22 or equal to 9.4% of the issued and fully paid capital (Bisnis Indonesia). MNCS Comment: The proceeds from the right issue will be used to strengthen the capital structure which is a good step for the company to increase the company's credit penetration in the future. BJBR is trading at the level of 7.02x/1.08x PER/PBV.
2. INCO IJ has budgeted USD120 million capex in FY22E, resourced by the company’s internal cash, which is lower compared to the previous year (vs USD130 million in 2021). The funds will be allocated to rebuild furnace 4, equipment renewal, and mine development (Kontan). MNCS Comment: The company’s target for total nickel production was 64,000 tons. However, we see that after the rebuild of furnace 4 is completed in May 2022, total nickel production has the potential to increase and hopefully increases INCO performance for the future. INCO is trading at the level of 18x/1.40x PER/PBV levels.
3. ANTM IJ through the Indonesia Battery Corporation (IBC) canceled its acquisition of StreetScooter, a Germany based electric vehicle manufacturer since it has been taken over by Odin Automotive, a motor vehicle company based in Luxembourg (Investor Daily). MNCS Comment: This proves to be a challenge for Indonesia to become a global player in the Battery Industry. We consider the cancellation of this acquisition as a negative sentiment for IBC, including ANTM and INCO as nickel suppliers for EVs in Indonesia. ANTM is trading at the level of 21.92x/2.46x PER/PBV.
IHSG Updates
JCI weakened -0.64% to 6,647.97 on Tuesday (11/01) followed by net foreign buy reaching IDR1.10 trillion. The index's decline was led by the technology sector (-4.94%) followed by the property sector (-1.83%). On the other hand, the sector that experienced strengthening was the transportation sector (+0.73%) followed by the energy sector (+0.31%). The index's weakness was still overshadowed by US monetary tightening after Goldman Sachs released a statement that the Fed plans to increase its benchmark interest rate by 4x in 2022 and reduce its balance sheet starting in July. In addition, the IMF also announced to developing countries to be more vigilant regarding and prepare for the impact of this monetary tightening, which made the market even more depressed. In addition, the unstoppable spread of the Omicron variant of the Covid-19 case added to a row of negative sentiment on the index. On the other hand, Rupiah closed higher at IDR14,303/USD level. We estimate that the JCI will move in the range of 6,600-6,650. Today's recommendations: UNVR, BRPT, DOID, BIRD.
Corporate Action
RUPS: PALM, MBAP, ABMM
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