MNCS Morning Navigator

23 Mei 2023

MNCS Morning Navigator May 23, 2023

Global Market Highlights
DJIA fell -0.42% on Monday (22/05), while the S&P500 (+0.02%) and Nasdaq (+0.50%). Wall Street closed mixed as investors wait and see on developments in the hampered debt-ceiling discussion. Today, the market will be looking toward several data releases such as: 1) US S&P Global Composite PMI Flash May; 2) US Building Permits Final Apr; 3) UK S&P Global/CIPS Manufacturing PMI Flash May.

Domestic Update
Corporate financing needs slowed in Apr-2023 as indicated by the Weighted Net Balance (WNB) of 19.8% (vs 24% in Mar-2023), followed by a slowdown in requests for financing from households and new credit distribution by banks. MNCS Comment: The slowdown in demand and lending was accompanied by a decrease in seasonal operational activities at a time when domestic and export demand was still restrained, but lending distribution is expected to grow in 2Q23 with an WNB of 97.5% (vs 55.9% in 1Q23).

Company News
1. ASII IJ recorded capex realization up to 1Q23 reaching IDR7 trillion, where the largest realization was in the heavy equipment group (Kontan). MNCS Comment: Thus, realized capex in 1Q23 reached 29.2% of the IDR24 trillion capex target in FY23E. Meanwhile, the largest realization was in the heavy equipment group post due to the increase in Komatsu heavy equipment sales target which reached 6k units (+5.3% YoY). Currently, ASII is traded at the level of 7.66x/1.34x PER/PBV.
2. AALI IJ is preparing a strategy in the midst of declining CPO prices through sales at the best prices in the domestic and export markets (Kontan). MNCS Comment: The decline in CPO prices -16.6% YTD certainly weighed on the performance of CPO issuers which were affected from the high-base last year, along with weak yield productivity. We expect the planned implementation of the domestic CPO exchange system to keep price fluctuations in the future. Apart from that, we also see increased productivity through enhanced replanting as a cushion. Currently, AALI is traded at the level of 15.85x/0.65x PER/PBV.
3. CPIN IJ targets +5% YoY revenue growth with flat net profit in FY23E (Investor ID). MNCS Comment: We view the flat net profit target as input costs are still high, especially for corn. In addition, it is expected that ahead of the election period in 4Q23 it is expected to drive an increase in volume in line with increased consumption which can offset the decline in performance in 1Q23. Currently, CPIN is traded at the level of 86.33x/3.13x PER/PBV.

IHSG Updates
JCI strengthened +0.43% to 6,729.65 on Monday (22/05), followed by net foreign buys reaching IDR181.39 billion. The majority of sectors experienced strengthening and drove the index rate, led by the energy sector (+0.99%) followed by the transportation sector (+0.70%). On the other hand, sectors that experienced weakness were led by the technology sector (-0.94%) followed by the infrastructure sector (-0.48%). The index rallied along with the majority of Asian bourses, where markets are watching the PBOC maintain its 5Y and 1Y lending rates. Apart from that, Joe Biden's statement regarding US-China relations which will improve in the future is also a positive catalyst. The rupiah closed higher at IDR14,890/USD. We estimate that the JCI will move in the price range of 6,696-6,772. Today's recommendation: AKRA, BBTN, CPIN, RALS.

Corporate Actions
Cum Stock Split: TUGU (1:2)
Cum Dividend: TBLA (IDR20/share), BUDI (IDR8/share)

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