MNCS Morning Navigator

14 Januari 2022

MNCS Morning Navigator January 14, 2022

Global Market Highlights

DJIA dropped -0.49% on Thursday (13/01) followed by S&P 500 (-1.42%) and Nasdaq (-2.51%). Wall Street compactly weakened after the release of data on initial jobless claims as of January 08, which rose to 230,000 (vs 207,000 in the past 2 previous weeks) where this figure exceeded market expectations of 200,000. This increased data also boosted the 4-week average of jobless claims to 210,750 (vs 204,500 in the previous). The negative news from the employment data amid the US monetary tightening plan tends to make investors aware of the threat of future economic stagflation. Today, the market will be looking toward several data releases such as: 1) US Michigan Consumer Sentiment Prel; 2) US Retail Sales MoM; 3) Germany Full Year GDP Growth.

Domestic Update
• The Government of Indonesia permitted 18/34 loaded coal vessels to be released for exports. The 18 vessels were carrying coal from companies that had fulfilled their Domestic Market Obligation (DMO), under which miners are required to sell 25% of output to local buyers with a price cap at USD70 per tonne for power plants. MNCS Comment: Indonesia had banned all exports of thermal coal since the start of 2022 after state-owned power company, PLN, reported for the critically-low coal stocks at power plants. However, as the condition improved with stockpiles sufficient for 15 - 25 days, government relaxation would be taken on Jan 12 gradually. Furthermore, we see that coal prices are likely to stabilize, yet remain high due to Australia's coal rejection by China and tight supply in Russia and South Africa.
• Furthermore, the second dose of vaccination rate nationally has reached 56.7% or equivalent to 118.14 million people.

Company News
1. PGAS IJ has budgeted USD746 million capex for FY22E resourced by the company’s internal cash. This budget will be allocated for independent gas network projects and developing liquefaction technology to obtain liquefied natural gas (LNG) independently (Kontan). MNCS Comment: With the increasing amount of capex compared to FY21 which was USD400 million, it is expected that the company can achieve the gas network construction target in FY22E of 500,000 household connections. In addition, we see that the company's commitment to owning its own LNG might have a positive impact on the company's operational performance. PGAS is trading at the level of 5.95x/0.90x PER/PBV.
2. MTDL IJ targets revenue growth up to 15% YoY and net profit growth of 20% YoY in FY22E. The Company focuses on the distribution unit and the solution & consulting unit as its main business. Currently, MTDL has worked with various partners for cloud services, AI, data analytics, and business applications (Kontan). MNCS Comment: We see the company's optimism is supported by the fast digital transformation in Indonesia. Subsequently, the company plans to expand by adding strategic partners and investing in startup companies to improve the company’s performance. MTDL is currently running at 20.70x/3.74x PER/PBV levels.
3. CPRO IJ targets sales above IDR8.5 trillion or rose by 5% - 10% YoY with EBITDA around IDR1 trillion and net income around IDR500 billion for FY22E. The sales target comes from pet feed and aquaculture feed as the main contributors (IQ Plus). MNCS Comment: We see that the company is optimistic that it can achieve the target through the construction of a new feed and processed food factory. In addition, the company's expansion plan potentially increased production capacity in line with the economic recovery in FY22E. CPRO is trading at the level of 1.86x/1.86x PER/PBV.

IHSG Updates
JCI strengthened by +0.17% to 6,658.35 on Thursday (13/01) followed by net foreign buy reaching IDR587.55 billion. The infrastructure sector supported the index's strengthening which rose by +1.90% followed by the industrial sector (+1.28%). On the other hand, the tech sector still led the decline in all sectors (-3.33%) followed by the property sector (-0.32%). The rebound in the JCI in line with the strengthening of Wall Street (12/01) was supported by a positive catalyst, namely the strengthening of US inflation in line with market expectations of 7% YoY, thus easing investors' concerns about the US monetary tightening plan. Another encouraging news came from the release of data on car sales for the month of Dec-21 which increased +68.11% YoY due to the PPnBM incentives provided by the government to restore the national economy, especially the automotive industry. On the other hand, Rupiah closed higher at IDR14,295/USD level. We estimate that the JCI will move in the range of 6,625-6,670. Today's recommendations: IRRA, TOWR, AKRA, CPRO.

Corporate Action

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