MNCS Morning Navigator

06 Juni 2023

MNCS Morning Navigator June 6, 2023

Global Market Highlights
DJIA fell -0.59% on Monday (05/06), followed by the S&P500 (-0.20%) and the Nasdaq (-0.09%). Wall Street continued to weaken as investors paid attention to the release of the ISM services PMI data in May-2023 which contracted to its lowest level in 5 months at 50.3 (vs 52.2 on consensus), raising concerns about the outlook for the economy going forward. Today, the market will be looking toward several data releases such as: 1) UK S&P Global/CIPS Construction PMI May; 2) Germany HCOB Construction PMI May; 3) Germany Factory Orders MoM Apr.

Domestic Update
BPS reported the food group to be the main contributor to May-2023 inflation which slumped to 4% YoY below consensus’ estimates. MNCS Comments: Volatile food inflation rose to 0.49% MtM (vs 0.29% in April-2023) from increases in the prices of shallots, broiler chicken meat and eggs. The decline in core inflation (0.06% MtM vs 2.5% MtM in April-2023) is in accordance with the normalization of demand after the Idul Fitri HBKN and the slacking global commodity prices.

Company News
1. MDKA IJ recorded a decrease in net profit -95.5% YoY to USD3.1 million in 1Q23 (vs USD69.7 million in 1Q22) (Emiten News). MNCS Comment: Significant decrease in net profit amid increase in revenue +74.0% YoY, caused by increase in processing costs which boosted COGS +135.8% YoY. In addition, financial costs increased 7 times, which also hindered profitability. Currently, MDKA is traded at the level of 4.85x PBV.
2. AUTO IJ realized the capex allocation in 1Q23 reached IDR133 billion. The allocation is aimed at providing EV charging infrastructure facilities through Astra Otopower (Market Bisnis). MNCS Comment: Thus, realization up to 1Q23 reached 26.6% of management's target of IDR500 billion. Even though the contribution of EV sales is still relatively low, we still look positively at the company's business initiatives to boost its supporting facilities, which will be followed by future demand for units. Currently, AUTO is traded at the level of 5.87x/0.82x PER/PBV.
3. EXCL IJ has allocated capex of IDR1.4 trillion (+14% YoY) until 1Q23, the majority of which was used for an additional 11k BTS (Investor ID). MNCS Comment: Thus, realized capex until 1Q23 reached 17.5% of the IDR8 trillion target in FY23E. We assess that a significant addition of BTS units, especially on 4G networks (+12.5% YoY) can result in a capable network quality, and has the potential to increase the personnel's ARPU in the future. Currently, EXCL is traded at the level of 32.43x/1.01x PER/PBV.

IHSG Updates
JCI closed flat +0.00% to 6,633.44 on Monday (05/06), followed by net foreign buy of IDR721.27 billion. The majority of sectors experienced strengthening and drove the index rate, led by the industrial sector (+2.53%) followed by the energy sector (+2.35%). On the other hand, the sector that led to the decline was the technology sector (-4.70%) followed by the cyclical sector (-0.40%). Investors were watching the release of May-2023 inflation data of +4.00% YoY, or lower than the consensus estimate and being the lowest inflation rate since Jun-2022. The rupiah closed higher at IDR14,890/USD. We estimate that the JCI will move in the price range of 6,584-6,687. Today's recommendation: HRUM, MDKA, PGAS, SMGR.

Corporate Actions
Cum Dividend: SILO (IDR19.67/share), PBSA (IDR40/share), OMED (IDR3.17/share)

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