MNCS Morning Navigator

27 Juli 2021

MNCS Morning Navigator July 27, 2021

Global Market Highlight

DJIA rose by +0.24% on Monday (26/07) followed by S&P 500 (+0.24%), and Nasdaq (+0.03%). Large cap tech stocks were mostly positive as investors piled into the sector, which has gained about 14% since its May slump, ahead of quarterly results due this week. On the other hand, the broader market was lifted by a climb in energy stocks as oil prices recovered some losses from the lows of the day. The market will look forward to several data releases today, such as: 1) US Durable Goods Orders MoM; 2) US CB Consumer Confidence; 3) China Industrial Profits (YTD) YoY.

Domestic Update
• According to Bank Indonesia (BI), domestic money supply (M2) rose 11.4% YoY to IDR7,119.6tn in June-21 or higher than previous month which recorded an increase of 8.1% YoY. MNCS Comment: Higher M2 was attributable to increase in its components both M1 and quasi money. M1 grew 17.0% YoY in June-21 (vs +12.6% YoY in May-21). Meanwhile quasi money increased by 9.6% YoY (vs +6.8% YoY in May-21). Based on the affecting factors, the rise on M2 in June-21 was Net Foreign Assets (NFA) and loan disbursement which grew 11.5% YoY and 0.4% YoY respectively. Loan growth eventually flipped out from contractionary zone that lasted since Sep-20. Although liquidity in the economy remained ample, however we see that money velocity stayed low, let alone with stricter social & healthcare measures that is extended to Aug-21. Therefore we believe inflationary pressure to steadily low particularly in 3Q21.
• Furthermore, there was an addition of 2,662 new Covid-19 cases in Jakarta yesterday.

Company News
1. UNTR IJ recorded sales of 1,361 komatsu units in 1H21 increased +59.55% YoY (vs 853 units in 1H20). Sales of heavy equipment as much as 46% for the mining sector, 29% for construction, 15% for forestry, and 10% for agro (Bisnis Indonesia). MNCS Comment: We see that heavy equipment sales has shown recovery. We also expect the mining segment to be improve as coal prices have reached an all-time high level. Currently UNTR is trading at 10.09x/1.18x PE/PBV levels.
2. AKRA IJ recorded IDR10.70 trillion revenue in 1H21 increased by +7.04% YoY (vs IDR10.01 trillion in 1H20). COGS also increased from IDR8.98 trillion in 1H20 to IDR9.16 trillion in 1H21. AKRA recorded IDR550 billion net income in 1H21 up by +28% YoY (vs IDR432 billion in 1H20) (Kontan). MNCS Comment: Net profit was observed to be slightly above our estimate which reflected 52% of the FY21E estimate. We believe that AKRA's performance will remain solid, supported by the development of JIIPE and efficiency in opex. Currently AKRA is trading at 12.80x/1.56x PE/PBV levels.
3. ARTO IJ recorded net interest income of IDR139.08 billion in 1H21 or up +422% YoY (vs IDR26.61 billion in 1H20). Operating expenses increased from IDR79.53 billion in 1H20 to IDR203.36 billion in 1H21. ARTO recorded a net loss of IDR47.52 billion in 1H21, better than a net loss of IDR50.91 billion in 1H20. (CNBC Indonesia). MNCS Comment: We believe that the solid result is driven by a greater loans through various partnerships. ARTO's performance will start to be positive in FY22E supported by the contribution of the GoTo ecosystem, in our view. Currently ARTO is trading at 28.72x PBV levels.

IHSG Updates
JCI slightly rose by +0.08% to 6,106.39 on Monday (26/07) while net foreign sell reaching IDR242.15 billion. JCI closing was higher along with several sectors led by the transport sector +2.68% followed by infrastructure (+2.24%). On the other hand, the industrial sector weakened by -1.54%, followed by property (-0.62%). JCI strengthened as the government easing public activities even though the PPKM Level 4 status still extended. Market react positively due to the new rule of PPKM darurat stage 4 and optimistic that Covid-19 will be controlled. Meanwhile the Rupiah exchange rate was strengthening at Rp14,483. We estimate the JCI will move in the range of 6,050-6,150 while waiting for inflation rate YoY. Today's recommendation: BRIS, FREN, DSNG, PTPP.

Corporate Action
IPO : UVCR (IDR100/share)

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