Global Market Highlights
DJIA strengthened by +2.68% on Friday (24/06), followed by the S&P 500 (+3.06%) and Nasdaq (+3.34%). Wall Street continued its strengthening along with the reduction in investors’ concerns regarding the potential recession. This was further supported by the release of the latest inflation expectation data (Michigan 5Y Inflation Expectations Final Jun-22) which fell from 3.3% to 3.1%. The positive catalyst also came from the sales data of the new May-22 house which grew to 696,000, exceeding the consensus of 588,000. Today, the market will be looking toward several data releases such as: 1) US Durable Goods Order MoM; 2) US Pending Home Sales YoY; 3) France Unemployment Benefit Claims.
Domestic Update
• Indonesia's International Investment Position recorded a net liability of USD287.1 billion in 1Q22 (vs USD278.9 billion 4Q21). MNCS Comment: The increase was triggered by an increase in the flow of foreign funds, both in the form of direct investment and portfolio capital flows, especially to the stock market, which reflected the optimism of foreign investors towards the domestic economy.
• Furthermore, the national Covid-19 daily rate had increased by 1,726 active cases (26/06).
Company News
1. DSNG IJ realize its allocation capex at 1Q22 of IDR210-240 billion, equivalent to 30% of the target in FY22E of IDR700-800 billion. The budget is intended for maintenance of infrastructure and completion of two oil palm factories (Kontan). MNCS Comment: The construction of the 11th CPO factory was completed on Jan-22 with a capacity of fresh fruit bunches (FFB) reaching 60 tons/hour. Meanwhile, the 12th factory with FFB processing capacity of 45 tons/hour is targeted to be completed by 2Q22. Therefore, the company has the potential to have a FFB processing capacity of up to 675 tons/hour. It is hoped that the addition of capacity can encourage the company's better performance going forward. Currently, DSNG is traded at the level of 6.32x/0.73x PER/PBV.
2. UNTR IJ recorded a positive performance up to 5M22, including: 1) increased coal sales of TTA +10.57% MoM to 1.15 million tons; 2) 23,000 gold GEOs; 3) production of the cover layer or overburden removal amounting to 72.8 million bcm (-1.62% MoM); 4) increased Komatsu heavy equipment sales to 2,400 units (+123% YoY) (Kontan). MNCS Comment: It is hoped that with this positive record, it can encourage a better financial performance in FY22E, along with positive catalysts of commodity boom momentum and potential for coal demand to remain high up to FY22E. Currently, UNTR is traded at the level of 6.32x/1.49x PER/PBV.
3. PNBN IJ will distribute cash dividends for the FY21 fiscal year amounting to IDR481.63 billion after being deducted from treasury shares, equivalent to IDR20 per share (Kontan). MNCS Comment: Thus, PNBN will offer a dividend yield of 1.3%. Previously, the company had never distributed any dividend for 17 years. Currently, PNBN is traded at the level of 0.83x PBV.
IHSG Updates
JCI strengthened by +0.64% to 7,042.94 on Friday (24/06), followed by net foreign sell which reached IDR1.08 trillion. The majority of sectors experienced strengthening and encouraged the index rate, led by the technology sector (+1.88%) followed by the cyclic sector (+1.28%). On the other hand, the sector that experienced the weakening was led by the health sector (-1.35%) followed by the industrial sector (-0.04%). The strengthening of the index was in line with the movements of Wall Street and Asian exchanges. Bank Indonesia's decision to hold the BI7DRR benchmark interest rate at the level of 3.5% was still becoming a positive catalyst for the market. Investors also observed the release of China's current transaction data in 1Q22 which increased its surplus to USD88.9 billion (vs USD70.9 billion in 1Q21). On the other hand, the rupiah exchange rate closed down at the level of IDR14,848/USD. We estimate that the JCI will move in the price range of 7,000-7,080 pending the release of M2 Money Supply YoY MAY data. Today's recommendation: FREN, MPMX, WIRG, UNVR.
Corporate Action
Cum Dividend: TRST (IDR20/share), DPNS (IDR15/share), GGRP (IDR7.43/share)
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