MNCS Morning Navigator

14 Juli 2021

MNCS Morning Navigator July 14, 2021

Global Market Highlight
DJIA slipped by -0.31% on Tuesday (13/07) followed by S&P 500 (-0.35%), and Nasdaq (-0.38%). Wall Street closed lower as inflation grew above the consensus of 0.9% MoM, equivalent to 5.4% YoY. On the other hand, investors are still waiting for a view from Jerome Powell regarding inflation growth. The market will look forward to several data releases today, such as: 1) US PPI MoM; 2) Canada BoC Interest Rate Decision; 3) UK Inflation Rate YoY.


Domestic Update
Government has conducted auction for Sovereign Sharia Securities on Tuesday July 13, 2021, for series SPNS14012022 (new issuance), PBS027 (reopening), PBS017 (reopening), PBS029 (reopening), PBS004 (reopening) and PBS028 (reopening). Total incoming bids were IDR51.1 tn and total amount awarded for 6 series were IDR12.5 trillion. MNCS comment: We see that investors' appetite for fixed income instruments issued by the central government remained high. Yesterday's incoming bids were higher than in previous auction on June 29, 2021 that were only IDR48.7 tn despite the amount rewarded stayed the same. Shifting towards less risky assets was driven by surging Covid-19 infection nationwide that forced the government to impose stricter public activity restriction.
Furthermore, there was an addition of 12,182 new Covid-19 cases in Jakarta yesterday.


Company News
1. KAEF IJ plans to conduct a rights issue in the issuance of Mandatory Convertible Bonds (OWK) to a maximum of 2.78 billion series B shares with a nominal value of IDR100. The OWK is offered through a Limited Public Offering (PUT) mechanism. The funds are planned to be used for payment of the company's maturing loans, working capital, and digital transformation so that the processes from upstream to downstream, from factories, distribution, and pharmaceutical retail will all be connected in the Information technology system (Kontan). MNCS Comment: We see that the rights issue carried the cash flow position strengthened, which was still at a negative level of IDR510 billion in 1Q21 and became a source of funding for digital transformation. Currently KAEF is developing digital marketing by launching the Kimia Farma Mobile application as a strategy to save operational costs. Currently KAEF is trading at 264.94x/2.61x PE/PBV levels.

2. IPCC IJ recorded the number of loading and unloading of imported trucks/buses rose by +46.01% YoY in 1H21 to 768 units, with the largest being the Volvo brand of 280 units. From the export side, loading and unloading trucks/buses in 1H21 fell to 2,120 units or -1.85% YoY (vs. 2,160 units in 1H20). Meanwhile, imports of heavy equipment were recorded at 1,934 units, up by +10.39% YoY and on the export side there was a significant increase of +87.92% YoY to 1,291 units (Bisnis Indonesia). MNCS Comment: The increase of IPCC’s imports is due to the recovery of several industries and the need for logistics distribution in Indonesia. Currently IPCC is trading at 13.85x/0.97x PE/PBV levels.

3. MDLN IJ recorded total revenue of IDR196.94 billion in 1Q21 or up by +76.11% YoY (vs IDR111.83 billion in 1Q20). The increase in revenue occurred in the residential and shophouse segments to IDR119.08 billion, followed by land sales to IDR38.67 billion. COGS increased from IDR49.16 billion in 1Q20 to IDR86.66 billion in 1Q21. MDLN recorded a net loss of IDR289.39 billion in 1Q21, an improvement (vs a net loss of IDR159.10 billion in 1Q20) (Emitennews). MNCS Comment: Residential sales and incentives are still the driving force for growing marketing sales in 1H21. Currently MDLN is trading at 0.16x PBV. levels.


IHSG Updates
JCI fell by -1.10% to 6,012.03 on Tuesday (13/07) while net foreign buy reaching IDR211.47 billion. JCI closing was lower along with most sector led by technology (-2.60%), followed by infrastructure (-2.43%). On the other hand, the transport sector rose by +0.86%. In our point of view, JCI fell due to market concerns after the daily new cases of Covid-19 broke the psychological level of 40,000, bringing the total cases to 2.5 million people. And also, The government stated that the emergency PPKM could be extended for up to 6 weeks. This triggered negative sentiment for the domestic financial market. Meanwhile the Rupiah exchange rate was strengthening at IDR14,464. We estimate the JCI will move in the range of 5,960-6,040 while waiting for balance of trade. Today's recommendation: TAPG, MIKA, LPPF, INDY.


Corporate Action
Public Expose: PADI


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