MNCS Morning Navigator

11 November 2021

MNCS Morning Navigator November 11, 2021

Global Market Highlights

DJIA slipped by -0.66% on Wednesday (10/11), followed by S&P 500 (-0.82%) and Nasdaq (-1.66%). Wall Street fell sharply as surging consumer prices curbed investor risk appetite and stoked inflation worries. The US Inflation Rate reached its highest in 30 years, having jumped to 6.2% YoY on October-21 from the previous year at 5.4% YoY due to surging costs for food, gas and housing. On the other hand China’s inflation rate grew by 1.5% YoY on October-21 from the previous at 0.7% YoY on September-21 due to rising energy bills and food supply chain disruptions causing higher prices. Today the market will be looking forward to several data releases such as: 1) US Monthly Budget Statement; 2) UK GDP Growth Rate YoY Prel; 3) Eurozone ECB Macroeconomic Projections.

Domestic Update
• Indonesia's banking industry continued to strengthen in 9M21. As of Sep-21 domestic banks loan disbursement rose by +2.21% YoY; TPF grew by +7.69% YoY and NPL fell to 3.22% (vs 3.35% in Aug-21). MNCS Comment: We expect this positive trend to continue in 4Q21. Credit is expected to continue growing while asset quality improves at the same time. Worth noted that demand for credit started rising along with the further decline in interest rates across loan types. However lowering CoF should boost banks' NIM. Given the positive outlook in the 4Q21, we overweight the banking sector.
• Furthermore, the second dose of vaccination rate nationally reached 38.6% or equivalent to 80.41 million people.

Company News
1. INTP IJ recorded IDR10.61 trillion revenue in 9M21 grew by +4.53% YoY (vs IDR10.15 trillion in 9M20). COGS increased from IDR6.71 trillion in 9M20 to IDR7.02 trillion in 9M21. INTP recorded IDR1.21 trillion net profit in 9M21, or rose by +8.19% YoY (vs net profit of IDR1.12 trillion in 9M20) (Kontan). MNCS Comment: The increase in INTP’s top line mainly contributed by cement sales to third parties of IDR9.66 trillion in 9M21 or up +3.62% YoY (vs IDR9.33 trillion in 9M20). We see the growth in cement sales driven by an increase in property demand, especially in real estate which was affected by the 0% DP policy until the end of FY22E. INTP is trading at the level of 26.68x/2.14x PER/PBV.
2. CTRA IJ recorded IDR5 trillion marketing sales for up to 9M21. The value increased by +31.58% YoY (vs IDR3.8 trillion in 9M20). The largest contributor came from residential sales of IDR4.05 trillion or 81% from the total marketing sales for up to 9M21 (Kontan). MNCS Comment: We see CTRA's marketing sales have the potential to increase and meet the FY21E target of IDR6 trillion, driven by the 100% DTP VAT stimulus from the government until the end of FY21E and the determination of low bank loan interest rates which is extended until the end of F22E. Currently, CTRA is trading at level 21.40x/1.31xPER/PBV.
3. DSNG IJ recorded IDR5.05 trillion revenue in 9M21 increased by +15.30% YoY (vs IDR4.38 trillion in 9M20). COGS increased from IDR3.39 trillion in 9M20 to IDR3.75 trillion in 9M21. DSNG recorded IDR415.88 billion net profit in 9M21 or rose by +153.94% YoY (vs net profit of IDR163.77 billion in 9M20) (Kontan). MNCS Comment: The performance recorded positively was driven by the increase in CPO prices, where the company’s ASP CPO reached IDR8.67 million/ton in 9M21 (vs IDR7.70 million/ton in 9M20). On the one hand, the main contributor of DSNG’s top line was obtained by palm oil sales recorded at IDR4.09 trillion in 9M21 or grew by +11.6% YoY (vs IDR3.67 trillion in 9M20). DSNG is trading at the level of 10.99x/0.95x PER/PBV.

IHSG Updates
JCI strengthened by +0.20% to 6,683.15 on Wednesday (10/11) followed by net foreign buy reaching IDR286.50 billion. JCI closed higher, led by the industrial sector (+1.42%), followed by the tech sector (+0.71%). On the other hand, the non-cyclical consumer sector weakened by -0.54%, followed by the property sector (-0.49%). The strengthening of the JCI was driven by market optimism related to improved performance of several companies in the 3Q21 financial report release season in the last few weeks. In the midst of negative sentiment from the release of US wholesales price index data which booked a significant increase by +8.6% YoY or equals to the highest in the last 11 years. On the other hand, the Rupiah weakened at IDR14,253 level in the spot market. We estimate the JCI will move in the range of 6,650-6,690. Today's recommendations: ASII, MEDC, WSBP, WMUU.

Corporate Action
Cum dividend date: PNGO (IDR50/share)

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