Global Market Highlights
DJIA weakened by -0.67% on Wednesday (13/07), followed by S&P 500 (-0.45%) and Nasdaq (-0.15%). Wall Street is under pressure with the release of Jun-22 inflation data at +9.1% YoY or exceeding the consensus at +8.8% YoY. Investors were concerned that the inflation trend has not slowed down, which could trigger more aggressive monetary tightening by the Fed. Today, the market will be looking toward several data releases such as: 1) US PPI MoM; 2) US Continuing Jobless Claims; 3) Japan Industrial Production YoY Final.
Domestic Update
• Indonesia's CPO price dropped significantly at the farm level as the country experienced an oversupply of stocks reaching 8 million tons (vs 3.5-4 million tons under normal conditions). MNCS Comment: The increase in domestic stock is caused by the government's export ban. To reduce the risk of downward pressure on prices, the government lifted the exports ban and accelerated the implementation of the B35 program by the end of Jul-22 and B40 by the end of Dec-22. However, we expect that FFB prices at the farm level are potentially to remain low in the near term driven by high stock level (2x normal level).
• Furthermore, the national Covid-19 daily rate had increased by 3,822 active cases (13/07).
Company News
1. PTPP IJ achieved a new contract value of IDR10.93 trillion in 1H22, or grew 27.90% YoY. The 1H22 contract value portfolio profile consists of: 1) 75% BUMN; 2) 24% Government; 3) 1% private (Emiten News). MNCS Comment: The realization of new contracts up to 1H21 had reached 35.25% of the company's target in FY22E of IDR31.0 trillion. Meanwhile, the new contract value target for FY22E increased by +45.29% YoY from the FY21 realization of IDR21.34 trillion. Currently PTPP is traded at 48.96x/0.51x PER/PBV.
2. UNTR IJ would conduct a buyback with an allocation of funds of up to IDR5 trillion with duration from 13-Jul 22 to 12-Oct 22 (Kontan). MNCS Comment: With a maximum share purchase of 20% of the paid-in capital, the outstanding shares were recorded to be 2.98 billion shares and EPS would increase from IDR1,158 to IDR1,193. Currently, UNTR is traded at 6.10x/1.43x PER/PBV.
3. GOOD IJ estimated that the profitability margin in 2Q22 would increase as the product selling price adjusts. Meanwhile, sales price adjustments were made for biscuits, snacks, confectionery and dairy products (Market Bisnis). MNCS Comment: We consider that the adjustment of the selling price of products made before the Eid momentum is the right thing as people's purchasing power is still maintained after the post-pandemic. Moreover, price-adjusted products tend to experience an increase in demand ahead of the festive season, which is expected to boost margin recovery in 2Q22/1H22. In 1Q22, GPM and NPM fell to 24.73% and 3.35% (vs 29.99% and 5.40% in 1Q21). Currently, GOOD is traded at 52.47x/7.82x PER/PBV.
IHSG Updates
JCI weakened by -1.15% to 6,640.99 on Wednesday (13/07), followed by net foreign sell which reached IDR880.09 billion. Almost all sectors weakened and weighed on the index, led by the technology sector (-1.77%) followed by the cyclical sector (-1.31%). On the other hand, the only sector that experienced strengthening was the raw materials sector (+0.06%). The index was corrected amid the release of Jun-22 car sales data which grew +8.9% YoY (vs -9.77% YoY in May-22). Investors' concerns about rising US inflation in June-22 pushed the sell off and weighed on the index's performance. On the other hand, the Rupiah exchange rate closed lower at IDR14,988/USD. We estimate that the JCI will move in the price range of 6,600-6,700. Today's recommendation: ASRI, BBYB, BRPT, TBIG.
Corporate Action
Cum Stocksplit: MLIA (1:5)
RUPS: DMMX, YELO
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