MNCS Morning Navigator

04 Juli 2022

MNCS Morning Navigator July 4, 2022

Global Market Highlights
DJIA strengthened by +1.05% on Friday (01/07), followed by the S&P 500 (+1.06%) and the Nasdaq (+0.90%). Wall Street strengthened amid the release of ISM Manufacturing PMI data for Jun-22 which fell to a level of 53 (vs 56.1 in May-22) and construction spending on May-22 which fell -0.1% MoM. The weakening of US 10Y T-note yield to 2.88% was the driving force for Wall Street. Today, the market will be looking toward several data releases such as: 1) Germany Balance of Trade; 2) Germany Exports MoM s.a; 3) Germany Imports MoM s.a.

Domestic Update
Jun-22 inflation rose +0.61% MoM/+4.35% YoY to be the highest pace in 5 years. MNCS Comment: One of the biggest contributors to inflation was a volatile price increase of 0.44%, while we estimate the factor that caused an increase in inflation from Jul-22 was an increase in electricity rates for 5 customer groups with 3,500VA and above (R2 and R3). and government and non-subsidized groups (P1-P3).
Furthermore, the national Covid-19 daily rate had increased by 1,614 active cases (03/07).

Company News
1. WIIM IJ would distribute cash dividends of IDR45.35 billion or equivalent to IDR21.6 per share with cum date for the regular market and negotiations on 5-Jul 22 (Kontan). MNCS Comment: Thus, WIIM offers a dividend yield of 4.37% and payout ratio of 25.67% of FY21 net profit of IDR176.67 billion (+2.56% YoY). WIIM is currently traded at 6.88x/0.77x PER/PBV.
2. ADHI IJ reported that the realization of new contract value in 5M22 was IDR9.9 trillion, increased +98% YoY from 5M21 of IDR5 trillion with the portion of the contract portfolio from the Government was 18%, BUMN and BUMD were 6%, while the rest coming from the private sector or others including investment projects were 76% (Kontan). MNCS Comment: With the new contract value growth target reaching 15% of the realization of the new FY21 contract value of IDR15.2 trillion, the new contract value acquisition target for FY22E is IDR17.5 trillion, while the realization up to 5M22 reached 56.64%. ADHI is currently traded at 77.44x/0.46x PER/PBV.
3. INDY IJ planned to increase the volume of coal production by monitoring developments in terms of demand. The coal production target in FY22E is 34 million tons, while the realization in 1Q22 was 7.7 million tons, lower from 9.1 million tons in the previous period. However, revenue in 1Q22 was able to grow +58.2Y YoY (Kontan). MNCS Comment: The realized coal production in 1Q22 was 22.65%. By increasing production volume amidst the still high global coal price of >USD380/ton, it certainly has the potential to boost the company's performance in FY22E. INDY is currently traded at 2.66x/0.94x PER/PBV.

IHSG Updates
JCI weakened by -1.70% to 6,794.33 on Friday (01/07), followed by net foreign sell which reached IDR63.05 billion. All sectors weakened and weighed on the index, led by the transportation sector (-4.31%) followed by the industrial sector (-3.02%). The index's decline was in line with other Asian bourses. Investors were also watching the release of the Jun-22 inflation rate data of +0.61% MoM/+4.35% YoY or exceeding the consensus of +0.44% MoM/+4.17% YoY. On the other hand, the Rupiah exchange rate closed lower at IDR14,938/USD. We estimate that the JCI will move in the price range of 6,735-6,845. Today's recommendation: BBNI, SMGR, ITMG, KLBF.

Corporate Action
Cum Dividend: INDR (IDR940/share), KMTR (IDR4.96/share)
Cum Rights: MGNA (IDR50/share)

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