Global Market Highlights
DJIA strengthened by +0.23% on Wednesday (06/07), followed by S&P 500 (+0.36%) and Nasdaq (+0.35%). Wall Street strengthened amid the release of Jun-22 ISM Non-Manufacturing PMI which slightly decreased to a level of 55.3 points (vs 55.9 points previously), May-22 JOLTs Job Openings fell to 11.25 million (vs 11.68 million in the previous period), but exceeded consensus at 11 million. Today, the market will be looking toward several data releases such as: 1) US Balance of Trade; 2) US Exports; 3) US Imports.
Domestic Update
• BI will release data on foreign exchange reserves for Jun-22 today, which is estimated to decrease from May-22 to USD135.6 billion. MNCS Comment: The potential decline in foreign exchange reserves tends to be influenced by the slowdown in exports in May-22, which fell -21.29% MoM in line with the ban on CPO exports, the weakening of the rupiah (IDR14,997/USD as of 6-Jul), and ongoing outflows.
• Furthermore, the national Covid-19 daily rate had increased by 2,743 active cases (06/07).
Company News
1. EXCL IJ planned to conduct a right issue by issuing 2.75 billion new shares with a nominal value of IDR100 per share, while the purpose of the issuance of this new share was to strengthen the capital structure and business development (Kontan). MNCS Comment: The total outstanding share of the company would increase to 13.47 billion shares. Assuming the share price of IDR2,240, the company had the potential to obtain funds of IDR4.93 trillion from the issuance of the right issue. Currently, EXCL is traded at 43.18x/1.19x PER/PBV.
2. INCO IJ targeted a 3x production capacity increase in the next 3 years, which would be supported by the development of new area facilities, namely in Central Sulawesi (+73,000 MT/year), Pomala (+120,000 MT/year), and South Sulawesi (+60,000 MT/year) (Kontan). MNCS Comment: In FY21, the company's nickel production reached 65,388 MT or decreased by -9.48% YoY. It is hoped that this additional capacity would encourage the company's better performance, in line with the increase in the EV industry in the future. Currently, INCO is traded at 11.33x/1.62x PER/PBV levels.
3. BUMI IJ reported an estimated coal production and sales volume of 35-36 million tons by 1H22, while the company targeted coal production in FY22E to reach 79-83 million tons (Kontan). MNCS Comment: With this estimate, the realization of production up to 1H22 would reach 42%-45%. This would be supported by the Kaltim Prima Coal (KPC) and Arutmin Indonesia mines. BUMI is currently traded at 3.20x/-1.26x PER/PBV levels.
IHSG Updates
JCI weakened by -0.85% to 6,646.41 on Wednesday (06/07), followed by net foreign sell which reached IDR305.75 billion. The majority of sectors weakened and weighed on the index, led by the industrial sector (-2.26%) followed by the energy sector (-2.00%). On the other hand, the strengthening sectors were led by the non-cyclical sector (+0.78%) followed by the health sector (+0.52%). The index's decline was in line with other Asian bourses. Investors tended to wait and see ahead of the release of Indonesia's foreign exchange reserve data. Furthermore, investors were also worried as the Chinese government conducts mass testing of Covid-19, and speculated that the lockdown would be implemented again if the addition of positive cases of Covid-19 increases again. On the other hand, the Rupiah exchange rate closed lower at IDR14,997/USD. We estimate that the JCI will move in the price range of 6,600-6,730 pending the release of Foreign Exchange Reserves JUN data and G20 Foreign Minister Meeting. Today's recommendation: ADRO, BBRI, MTEL, UNVR.
Corporate Action
Cum Dividend: SMDR (IDR50/share), BFIN (IDR10/share), KEEN (IDR5.46/share)
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