MNCS Morning Navigator

06 Januari 2023

MNCS Morning Navigator January 6, 2023

Global Market Highlights
DJIA fell -1.02% on Thursday (05/01), followed by the S&P500 (-1.16%) and the Nasdaq (-1.47%). Wall Street corrected as investors grew concerned about a more hawkish stance by the Fed going forward, after the release of still solid employment market data, where the ADP Employment Change Dec-2022 rose 235k, or exceeding the consensus at 150k. Today, the market will be looking toward several data releases such as: 1) US Non Farm Payrolls Dec; 2) US Unemployment Rate Dec; 3) US ISM Non-Manufacturing PMI Dec.

Domestic Update
The Ministry of Energy and Mineral Resources began implementing B35 Biodiesel on February 1, 2023. MNCS Comment: We see an increase in the Biodiesel formula from B30 to B35 in line with the estimated need for Biodiesel which is estimated to increase 3.0% YoY to 37.6 million KL in FY23E, thus contributing to an increase in demand Domestic biodiesel and CPO.

Company News
1. DRMA IJ targets revenue and net profit growth of +20%/+10% YoY in FY23E, respectively (Kontan). MNCS Comment: This target will be supported by: 1) capex allocation of IDR500 billion; 2) potential capacity increase following TCH acquisition. The company also plans to build an EV ecosystem including manufacturing and charging stations. Furthermore, AISI projects motorcycle sales growth of 5-9% YoY to 5.4/5.6 million units. Currently, DRMA is traded at the level of 8.12x/2.16x PER/PBV.
2. PPRE IJ targets the acquisition of a new contract value in FY23E of IDR6-7 trillion (Kontan). MNCS Comment: Thus, the target for acquiring new contracts grows +2-18% YoY (vs IDR5.9 trillion in FY22). Meanwhile, until 11M22, the company had obtained a new contract value of IDR5 trillion, or the realization reached 84.7% of the target. Currently, PPRE is traded at the level of 11.79x/0.53x PER/PBV.
3. ALDO IJ increased production capacity from 80k tons/year to 220k tons/year in FY23E (Emiten News). MNCS Comment: Through this capacity increase, the company's revenue has the potential to grow to IDR3.79 trillion in FY23E (vs IDR1.46 trillion according to guidance in FY22E). The increase in demand for recycled brown paper packaging products in FY23E along with sustainable e-commerce growth might potentially be the positive catalyst for the company. Currently, ALDO is traded at the level of 13.13x/1.40x PER/PBV.

IHSG Updates
JCI weakened -2.34% to 6,653.84 on Thursday (05/01), followed by net foreign sell which reached IDR806.91 billion. The majority of sectors experienced weakening and weighed on the index, led by the energy sector (-5.48%) and followed by the technology sector (-2.83%). On the other hand, the sector that experienced strengthening was the health sector (+0.45%). The index weakened amid the strengthening of Wall Street and Asian Exchanges. We see that investors tend to rebalance to the bond market with the more attractive yields, in which foreign investors recorded a net buy of IDR2.55 trillion in early Jan-2023 while the stock market net sold IDR877.81 billion as of January 4, 2023. On the other hand, the Rupiah exchange rate closed lower at the level of IDR15,608/USD. We estimate that the JCI will move in the price range of 6,500-6,730. Today's recommendation: BBCA, CARE, ICBP, DOID.

Corporate Actions
IPO: SOUL (IDR110/share), BEER (IDR220/share), ELIT (IDR120/share)

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