MNCS Morning Navigator

23 Juni 2022

MNCS Morning Navigator June 23, 2022

Global Market Highlights
DJIA weakened by -0.15% on Wednesday (22/06), followed by S&P500 (-0.13%) and Nasdaq (-0.13%). Wall Street's weakening occurred amid the decline in the yield of US T-note 10Y to the level of 3.12%. Despite the Fed's testimony that the US economy is strong in the face of the Fed's monetary tightening, as well as an unnecessary increase in the benchmark interest rate of +100 bps, investors are still worried about the potential for a recession that threatens and weighs on Wall Street's performance. Today, the market will be looking toward several data releases such as: 1) US Fed Chair Powell Testimony; 2) UK S&P Global/CIPS Manufacturing PMI Flash; 3) Germany S&P Global Manufacturing PMI Flash.

Domestic Update
Consensus estimates that BI will hold the benchmark 7-day reverse repo rate at 3.5% in the Jun-22 meeting. MNCS Comment: The benchmark interest rate may be held back in line with the manageable inflation rate and BI's guidance. We estimate that BI will start to raise its benchmark interest rate in 2H22.
Furthermore, the national Covid-19 daily rate had increased by 1,985 active cases (22/06).

Company News
1. INTP IJ recorded cement sales of 1 million tons in the period May-22, while sales volume up to 5M22 decreased by -3.22% YoY to 6 million tons of cement (vs 6.2 million tons in 5M21) (Kontan). MNCS Comment: This decrease was influenced by the adjustment of the selling price to offset the increasing production costs in line with the high price of coal. However, we hope that the company can increase the use of alternative fuels so that it can save on production costs. Currently, INTP is trading at 46.76x/1.66x PER/PBV.
2. INDY IJ established PT Mitra Motor Group (MMG) through its subsidiary which aims to support the company's electric car business plan in the future, while previously the company has also established a subholding Ilectra Motor Group (IMG) which is engaged in the development and expansion of the electric vehicle business. (investor id). MNCS Comment: We view positively the company's efforts to continue to increase business diversification towards a green industry, so as to maintain the company's sustainability. INDY is currently trading at 3.16x/1.12x PER/PBV.
3. HRTA IJ posted revenue in 1Q22 of IDR1.38 trillion or grew 32.78% YoY (vs IDR1.04 trillion in 1Q21), while the company's net profit grew +19.28% YoY to IDR50.68 billion (vs Rp42.49 billion in 1Q21) (IQ plus). MNCS Comment: The increase in revenue was in line with the growth of all segments of the company's revenue, especially wholesalers which grew +32.70% YoY and contributed 89.81%. Although the increase in gross profit (+39.67% YoY) boosted GPM to 11.16%, the company's OPM and NPM fell to 8.62% and 3.68% respectively (vs 8.97% and 4, 10% in 1Q21). Currently, HRTA is trading at 4.82x/0.63x PER/PBV.

IHSG Updates
JCI weakened by -0.85% to 6,984.31 on Wednesday (22/06), followed by net foreign sell which reached IDR139.13 billion. Almost all sectors weakened and weighed on the index, led by the raw materials sector (-1.71%) followed by the financial sector (-1.455%). On the other hand, the sector that experienced strengthening was the cyclical sector (+0.55%). The weakening of the index was in line with Asian markets with the investors did wait and see ahead on the decision of the meeting of the board of governors (RDG) of Bank Indonesia to discuss the determination of the benchmark interest rate (BI7DRR) which is expected to remain constant. On the other hand, the Rupiah exchange rate closed lower at IDR14,868/USD. We estimate that the JCI will move in the price range of 6,850-7,000 pending the release of Interest Rate Decision, Deposit Facility Rate JUN, Lending Facility Rate JUN and Loan Growth YoY MAY data. Today's recommendation: ADRO, BMRI, HMSP, UNTR.

Corporate Action
Cum Dividend: UNVR (IDR84/share), KOBX (IDR9/share), SAMF (IDR16.7/share)

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