Global Market Highlights
DJIA weakened -1.99% on Monday (09/05), followed by S&P 500 (-3.20%) and Nasdaq (-4.29%). Wall Street was significantly corrected, driven by the possibility of stagflation in line with the high inflation rate and the lockdown that occurred in China. Meanwhile, US T-note 10Y yield rose to 3.20% and weighed on Wall Street's performance. Today, the market will be looking toward several data releases such as: 1) US NFIB Business Optimism Index; 2) US Redbook YoY; 3) Germany ZEW Economic Sentiment Index.
Domestic Update
• Indonesia Wholesale Price Index (IHPB) in April-22 posted an increase of +0.97% MoM/+4.22% YoY. MNCS Comment: The highest increase in IHPB was experienced by mining and quarrying posts (+1.44% MoM/+8.58% YoY) in line with the increase in mining commodity prices. We see that future increases in IHPB will be translated into increases in the CPI, which indicates a higher opportunity for higher inflation.
• Furthermore, the second dose of vaccination rate nationally has reached 79.5% or equivalent to 165.64 million people.
Company News
1. INCO IJ posted revenue of USD235.09 million in 1Q22 or up +13.81% YoY (vs. USD206.56 million in 1Q21). Net profit increased by +100.77% YoY to USD67.65 million in 1Q22 (vs. USD33.69 million in 1Q21) (CNBC Indonesia). MNCS Comment: Significant performance growth was driven by efficiency by the company, where COGS was successfully reduced by -8.04% YoY to USD142.36 million. It is expected that INCO's performance can grow in FY22E, along with Tesla's potential agreement to buy nickel from INCO's parent company, Global Vale S.A. Currently, INCO is trading at the level of 18,30x/23,23x PER/PBV.
2. ACES IJ posted revenue of IDR1.59 trillion in 1Q22 or down -3.42% YoY (vs IDR1.65 trillion in 1Q21). Net profit decreased by -5.04% YoY to IDR153.49 billion in 1Q22 (vs IDR161.65 billion in 1Q21) (IQ Plus). MNCS Comment: Home improvement product segment sales are still the main contributor, with a value of IDR867.75 billion in 1Q22 (-2.53% YoY). NPM was maintained at 9.65% in 1Q22 (vs 9.81% in 1Q21). ACES is trading at 27.65x/3.01x PER/PBV.
3. MPPA IJ recorded net sales of IDR1.69 trillion in 1Q22 or up +9.18% YoY (vs IDR1.55 trillion in 1Q21). Net loss recorded an increase to IDR109.16 billion in 1Q22 (vs net loss of IDR83.70 billion in 1Q21) (Bisnis Indonesia). MNCS Comment: The increase in the company's top line was also followed by an increase in COGS and general administrative expenses, which increased by +7.76% YoY and +15.32% YoY, respectively. Currently, MPPA is trading at 5.32x PBV levels.
IHSG Updates
JCI weakened -4.42% to 6,909.75 on Monday (09/05), followed by net foreign sell which reached IDR2.59 trillion. The majority of sectors weakened and weighed on the index's pace, led by the technology sector (-4.98%) followed by the financial sector (-4.44%). On the other hand, the sector that experienced strengthening was led by the transportation sector (+1.80%) followed by the energy sector (+0.23%). After trading reopened, investors began to respond to negative sentiments including: 1) the Fed's benchmark interest rate hike +50 bps; 2) lockdown in China; 3) escalation of the Russian-Ukrainian conflict. Domestically, investors also responded to the release of inflation rate data for Apr-22 (+0.95% MoM/+3.47% YoY) and 1Q22 GDP (-0.96% QoQ/+5.01% YoY). On the other hand, the Rupiah exchange rate closed low at IDR14,558/USD. We estimate that the JCI will move in the price range of 6,840-6,970. Today’s recommendation: CPRO, INCO, ANTM, BRMS.
Corporate Action
Cum Dividend: EXCL (IDR51/share), AVIA (IDR8/share), MTEL (IDR11.57/share)
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