MNCS Morning Navigator

15 Juli 2021

MNCS Morning Navigator July 15, 2021

Global Market Highlight
DJIA rose by +0.13% on Wednesday (14/07) followed by S&P 500 (+0.12%), while Nasdaq fell by -0.22%. Wall Street closing was mixed as Jerome Powell state that The Fed currently focus on increasing employment growth. Previously, investors worried about the possibility of a hawkish move by the Federal Reserve due to rising inflation above the consensus. The market will look forward to several data releases today, such as: 1) US Fed Chair Powell Testimony; 2) UK Employment Change; 3) China GDP Growth Rate YoY.


Domestic Update
Bank Indonesia pointed to a faster business expansion in the 2Q21. BI Prompt Manufacturing Index soared to 51.45% in the 2Q21 from 50,01% in the 1Q21. Consistent with increasing business activity, production capacity utilization soared to 75.33% from 73.38% in the same period accompanied by improving corporate financial conditions and access to credit. MNCS comment: We foresee a slower business activity ahead particularly in 3Q21 due to a tighter public activity restriction. This policy will also have a negative impact on Indonesia manufacturing sectors that contribute >20% GDP. Demand & production volume are under the threat risking Indonesia economic recovery momentum.
Furthermore, there was an addition of 12,667 new Covid-19 cases in Jakarta yesterday.


Company News
1. ASII IJ recorded total car sales reaching 209,815 units in 1H21, up +50.40% YoY (vs 139,505 units in 1H20). Meanwhile, sales in Jun-21 increased +742% YoY from 4,856 units in Jun-20 to 40,910 units. Toyota car sales are still the biggest contribution with 57% or 23,387 units followed by Daihatsu with 15,481 units and Isuzu 2,017 units (Bisnis Indonesia). MNCS Comment: We see the relaxation of PPnBM will still increase domestic car sales this year, but along with the increase in Covid-19 cases in Indonesia and the implementation of emergency PPKM, it will slightly restrain the growth rate, which we estimate will not reach the pre-pandemic level of 1 million units in FY21E. Currently KAEF is trading at 12.84x/1.19x PE/PBV levels.

2. BRMS IJ has spent USD1.56 million to carry out exploration activities in 2Q21. With drilling in Blocks I - VI Central Sulawesi and there are additional 11 drill holes with a depth of 1,291 meters. Furthermore, BRMS plans to continue drilling activities at Hill Reef 1 of PT CPM's gold mine project, Block 1 Poboya. The cost for this exploration is USD517 thousand (Emitennews). MNCS Comment: BRMS is currently focus on the gold-metal construction project to support revenue in the future, we hope it would increase BRMS' future revenue. We see that the funding came from FY21E capex. Currently INDY is trading at 77.77x/0.67x PE/PBV levels.

3. HERO IJ established PT Distribution Mebel Nusantara (DMN) as a new subsidiary. HERO controls 99.99% of the total issued and paid-up capital of IDR11 billion. It will be engaged in the trading business (Bisnis Indonesia). MNCS Comment: HERO planned closure of its Giant outlets and will focus on expanding the furniture segment in response to higher market demand. The higher demand on furniture business, especially during the pandemix, is an opportunity to grab new market demand on homestyle needs. Currently HERO is trading at 3.66x PBV levels.


IHSG Updates

JCI fell by -0.55% to 5,979.22 on Wednesday (14/07) while net foreign buy reaching IDR179.37 billion. JCI closing was lower along with most sector led by industrial (-2.47%), followed by Property (-1.52%). On the other hand, the technology sector rose by +1.33% followed by transport (0.89%). JCI fell due to there is potential for a tapering policy by US inflation rate was reported to have shot up 5.4% YoY with core inflation of 4.5%. The number is much higher than consensus. Meanwhile the Rupiah exchange rate was weakening at IDR14,480. We estimate the JCI will move in the range of 5,950-6,040 while waiting for balance of trade. Today's recommendation: AGII, ADRO, WIKA, MYOR.


Corporate Action
Cum Dividend Date : HOKI (IDR1/share)


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