Global Market Highlights
DJIA weakened -0.96% on Wednesday (19/01) followed by S&P 500 (-0.97%) and Nasdaq (-1.15%). Wall Street indices opened higher after the release of the 4Q21 financial report performance of several banking issuers that exceeded expectations. However, the index fell back depressed and closed in the red zone due to the weakening of technology stocks as bond yields strengthened and the threat of an accelerated increase in the Fed's interest rates. Housing Starts data for Dec-21 appreciated to 1.70 million (+1.4% MoM) exceeding market expectations of 1.65 million. Today, the market will be looking toward several data releases such as: 1) US Continuing Jobless Claims; 2) Eurozone Core Inflation Rate YoY Final; 3) Eurozone ECB Monetary Policy Meeting Accounts.
Domestic Update
• Bank Indonesia is expected to hold BI 7 Day Reverse Repo Rate at the current level of 3.5%. MNCS Comment: Given the low inflationary pressure and stable rupiah, pressure on BI to hike interest rate is minimum. However, we estimate BI to start monetary tightening by mid year of 2022 on the back of rising inflation and firmer Fed in increasing benchmark policy rate.
• Furthermore, the second dose of vaccination rate nationally has reached 58.1% or equivalent to 121.08 million people.
Company News
1. WEGE IJ targets to obtain IDR7.1 trillion worth contracts in FY22E which consist of government projects of IDR3.8 trillion, SOE of IDR2.3 trillion, internal Wika Group of IDR200 billion, and others of IDR800 billion. The company also sees the potential for the new capital city development project (Emiten News). MNCS Comment: We see the company's optimism is supported by the recovery of the national economy that might encourage the acceleration of infrastructure development. In addition, the company has prepared modular and precast concrete for the new capital city project, which is expected to add to the company's new contract. WEGE is trading at the level of 8.77x/0.77x PER/PBV.
2. ROTI IJ plans to buy back around 220 million shares worth IDR374 billion from 21 January 2022 until 20 April 2022. This action is considered as necessary due to the significant fluctuation of the market conditions (IQ Plus). MNCS Comment: We see that this step was taken to stabilize market prices, which tend to remain volatile. The company said this action had no effect on the company's revenue performance, considering that the funds used were internal funds. ROTI is trading at the level of 30.97x/2.93x PER/PBV.
3. HEAL IJ opened the operation of Hermina Cilegon Hospital on 18 Jan-22. Hermina Cilegon Hospital has inpatient facilities for Super VIP Room, VIP, Class 1, II, and III classes. The company also plans to inaugurate 2 new hospitals in Soreang, West Bandung Regency and Tasikmalaya (Bisnis Indonesia). MNCS Comment: We see the healthcare sector still has potential along with the Covid-19 booster vaccine program. In addition, the company is actively expanding its business through the construction of new hospitals and service development. Therefore, it might be an opportunity for the company to increase its revenue. HEAL is trading at the level of 16.25x/5.36x PER/PBV.
IHSG Updates
JCI weakened -0.33% to 6,591.98 on Wednesday (19/01) followed by net foreign buy which reached IDR159.11 billion. The sector that led the index weakening was the raw materials sector (-0.94%) followed by the industrial sector (-0.82%). On the other hand, the energy sector strengthened +1.39% followed by the non-cyclical sector (+0.49%). The sell off action that occurred on Wall Street helped to restrain the JCI movement. The weakening was also triggered by the growing situation of the development of cases of the Omicron variant both domestically and globally. It was recorded that up to (19/01) the cases of the Covid-19 in Indonesia reached 1,745 cases. In addition, investors also tend to be wary of waiting for BI's decision regarding the BI-7DRR interest rate. On the other hand, Rupiah closed lower at IDR14,338/USD level. We estimate that the JCI will move in the range of 6,529-6,688 while waiting for an interest rate decision. Today's recommendations: BNBA, JPFA, DOID, ADHI.
Corporate Action
Cum Dividend Date: PALM (IDR43/share)
RUPS: HELI, BRNA
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