Global Market Highlights
DJIA weakened -0.53% on Friday (04/03), followed by S&P 500 (-0.79%) and Nasdaq (-1.66%). Wall Street was pressured as the Russia-Ukraine geopolitical crisis worsened after Russian troops launched an attack on the Zaporizhzhia nuclear power plant in Ukraine, sparking fears among market participants of radiation leaks from the attack. As a result of these events, investors tend to ignore the positive news coming from the US labor market where non-farm payroll slips at 678K in Feb-22 (vs 481K in Jan-22) and exceeded consensus at 400K . Also in the same period, the unemployment rate decreased to 3.8% (vs. 3.9% by consensus). Today, the market will be looking toward several data releases such as: 1) UK BBA Mortgage Rate; 2) Germany Retail Sales YoY; 3) Japan Foreign Exchange Reserves.
Domestic Update
• Bank Indonesia (BI) issued PBI No. 24/5/PBI/2022 regulating incentives for Banks that provide funds for certain and inclusive economic activities and this provision is effective from 1 March 2022. MNCS Comment: The incentive provided is in the form of easing the fulfillment of the Statutory Reserves in rupiah which must be met on average. We view that BI's policy shows one of the central bank's efforts to continue to support growth in order to strengthen Indonesia's economic recovery.
• Furthermore, the second dose of vaccination rate nationally has reached 70.9% or equivalent to 147.74 million people.
Company News
1. ADRO IJ recorded total revenue of USD3.99 million in FY21, up +58% YoY along with the 70% increase in average selling price (ASP). Net profit was recorded at USD933.49 million or up +535% YoY FY21 (vs USD146.93 million in FY20) (IQ Plus). MNCS Comment: We see that the company has the potential to maintain its performance this year due to the coal prices that remain strong amid the limited coal supply. ADRO is trading at the level of 7.31x/1.65x PER/PBV.
2. LPPF IJ recorded a revenue growth of +15% YoY to IDR5.6 trillion in FY21. Meanwhile, net profit was recorded at IDR913 billion in FY21 (vs net loss of IDR873 billion in FY20) along with the relaxation of PPKM in 4Q21 (IQ Plus). MNCS Comment: We see that with the national economic recovery, and the company's expansion plan to open a minimum of 10 new outlets in FY22E, might potentially increase the company's revenue and performance in this year. LPPF is trading at the level of 15.68x/14.23x PER/PBV.
3. PPRE IJ obtained new contracts worth IDR333.5 billion at the beginning of the year, up +54% YoY (vs IDR153.5 billion in FY21). This additional new contract was gained from the mining development of the Teluk Weda nickel mining project and structural works on several building projects (Bisnis Indonesia). MNCS Comment: We see that with this positive achievement, the company is optimistic that it might achieve its target in FY22E to obtain a +10% YoY increase in new contracts with mining services as the main contributor. This is also supported by demand and nickel prices that have the potential to increase in the future. PPRE is trading at the level of 21.72x/0.74x PER/PBV.
IHSG Updates
JCI rose +0.87% to 6,928.33 on Friday (04/03), followed by net foreign buys which reached IDR2.40 billion. A number of sectors supported the index's strengthening, led by the energy sector (+6.88%) followed by the industrial sector (+2.49%). On the other hand, the sectors that led the decline were the transportation sector (-1.31%) followed by the non-cyclical sector (-1.03%). The index's performance managed to outperform other Asian markets that moved into the red zone, the index appreciated thanks to the positive catalyst of rising commodity prices which had a positive impact on energy stocks. Foreign investors are recorded as still doing net buy consistently with a relatively large value. Market participants seem to be optimistic about the Indonesian economy, which still has the potential to grow, taking advantage of the upward trend in commodity prices. From the Covid-19 pandemic situation, it was recorded that the addition of positive cases of Covid-19 decreased on (06/03) to 24,867 cases. On the other hand, the Rupiah weakened at IDR14,388/USD level. We estimate that the JCI will move in the range of 6,900-7,010. Today’s recommendation: ERAA, IRRA, TOBA, TBIG.
Corporate Action
RUPS: AMIN, CPRI
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