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MNCS Morning Navigator

21 Januari 2022

MNCS Morning Navigator January 21, 2022

Global Market Highlights

DJIA weakened -0.89% on Thursday (20/01) followed by S&P 500 (-1.10%) and Nasdaq (-1.30%). Action sell off against technology stocks triggered weakness in other sectors after the release of disappointing economic data. Noted, initial jobless claims as of 15th January jumped to 286K (vs 231K previously) and this figure is above the market consensus of 220K. Another negative sentiment came from existing home sales for the month of Dec-21, which fell by -4.6% MoM to 6.18 million units (vs 6.48 million units previously) which was below the consensus of 6.44 million units. Today, the market will be looking toward several data releases such as: 1) US CB Leading Index MoM; 2) Eurozone Consumer Confidence Flash; 3) Japan Inflation Rate.

Domestic Update
• Bank Indonesia (BI) decided to gradually increase reserves requirements for conventional and sharia banks starting from Mar-22. MNCS Comment: Despite keeping the benchmark policy rate unchanged, BI has started to normalize easy policy in order to maintain stability while taking into account banking capability and ensuring adequate liquidity.
• Furthermore, the second dose of vaccination rate nationally has reached 58.5% or equivalent to 121.92 million people.

Company News
1. KRAS IJ targets 3.1 million tons of steel production in FY22E, up +11% YoY (vs 2.7 million tons in FY21). The company has signed a Long-Term Supply Agreement (LTSA) of 1.5 million tons in FY22E (Bisnis Indonesia). MNCS Comment: We see that the company's optimism is supported by its good performance in FY21, where until 11M21, the company earned IDR30 trillion of revenue or +66% YoY. In addition, if the steel import quota is tightened, the company has the potential to exceed the target. KRAS is trading at the level of 6.28x/0.87x PER/PBV.
2. BEBS IJ through its subsidiary, PT Berkah Global Development (BGD) obtained a property contract worth IDR1.3 trillion for 3,000 housing units and infrastructure projects (Bisnis Indonesia). MNCS Comment: We see that BGD has the potential to contribute on increasing the company's profits, supported by the integration between BGD construction projects and building materials produced by BEBS. BEBS is trading at the level of 395.96x/62.08x PER/PBV.
3. PWON IJ targets marketing sales growth of +28.57% YoY to IDR1.8 trillion in FY22E (vs realization of IDR1.4 trillion in FY21). The company plans to launch Pakuwon Bekasi in 2Q22 and Pakuwon Mall Surabaya in 4Q22. The landed house segment in Surabaya is projected to be the largest revenue contributor (Kontan). MNCS Comment: We see that the company might maintain its positive performance after recording a revenue increase of +24.34% YoY in 9M21, supported by the economic recovery and the extension of DTP VAT until June 2022. PWON is trading at the level of 22.81x/1.43x PER/PBV.

IHSG Updates
JCI rose +0.53% to 6,626.87 on Thursday (20/01) followed by net foreign sell which reached Rp82.30 billion. The sector leading the index movement was the energy sector (+2.39%) followed by the raw materials sector (+1.72%). On the other hand, the transportation sector weakened -0.83% followed by the industrial sector (-0.71%). Positive catalysts for the index came from Bank Indonesia (BI) which maintained the BI-7DRR benchmark interest rate at 3.5%, lending facility 4.25% and deposit facility 2.75%. This decision was directed to maintain inflation, exchange rate stability and support economic recovery amid global sentiment. BI is also preparing anticipatory steps if the Fed's interest rate is raised, namely by creating attractive yields on SBN to minimize the risk of outflow. On the other hand, Rupiah closed lower at IDR14,338/USD level. We estimate that the JCI will move in the range of 6,534-6,660. Today's recommendations: AGRO, IMAS, PTPP, TINS.

Corporate Action
RUPS: CMNT

Disclaimer On

AGRO IMAS PTPP TINS KRAS BEBS PWON

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