MNCS Morning Navigator

12 November 2021

MNCS Morning Navigator November 12, 2021

Global Market Highlights

DJIA slipped by -0.44% on Thursday (11/11), meanwhile the S&P 500 rose by +0.06% followed by Nasdaq (+0.52%). Wall Street closed mixed due to a spike of inflation reaching its highest level in decades, and third-quarter earnings are starting to show signs of slowing growth. Meanwhile, Japan PPI Index had its biggest spike in over 40 years, reaching 8% YoY in October-21 from the previous month at 6.4% YoY along with rising crude oil prices as the main factor. On the other hand, UK’s third quarter GDP grew by a slightly weaker than expected 1.3% YoY, lower from 5.5% YoY in the second quarter due to weak consumer spending and supply chain issues. Today the market will be looking forward to several data releases such as: 1) US Michigan Consumer Sentiment Prel; 2) UK BoE Haskel Speech; 3) Eurozone Industrial Production YoY.

Domestic Update
• Indonesia-Japan Local Currency Settlement transaction hit USD109.4 million/month in 2021. The value increased 10x from USD9.8 million/month last year according to BI. MNCS Comment: The significant increase in LCS transactions between Indonesia-Japan is a positive catalyst for rupiah value. Now Indonesia has partnered with China, Malaysia and Thailand to have LCS transactions. With this policy we expect USD dependency can be reduced, therefore rupiah stability can be achieved.
• Furthermore, the second dose of vaccination rate nationally reached 39.0% or equivalent to 81.27 million people.

Company News
1. ITMG IJ recorded USD1.32 billion revenue in 9M21 grew by +51.78% YoY (vs USD871.88 million in 9M20). COGS increased from USD732.05 million in 9M20 to USD792.29 million in 9M21. ITMG recorded USD271.50 million net profit in 9M21, or rose by +579% YoY (vs net profit of USD39.98 million in 9M20) (Market Bisnis). MNCS Comment: The increase in ITMG’s revenue was driven by coal revenues reaching USD1.32 billion in 9M21 or rose by +59% YoY (vs USD828.55 million in 9M20). The performance was in line with the rising coal price and demand amidst the energy crisis in 3Q21. Meanwhile, the significant increase in the bottom line was supported by COGS efficiency. ITMG is trading at the level of 4.71x/1.63x PER/PBV.
2. TINS IJ recorded IDR9.69 trillion revenue in 9M21 decreased by -18.72% YoY (vs IDR11.93 trillion in 9M20). COGS decreased from IDR11.22 trillion in 9M20 to IDR7.70 trillion in 9M21. TINS recorded IDR611.99 billion net profit in 9M21 or rose by +153.94% YoY (vs net loss of IDR255.15 billion in 9M20) (Emitennews). MNCS Comment: Lower topline in line with a lower export sales by -23.49% YoY to IDR8.71 trillion (vs IDR11.38 trillion in 9M20). The significant increase in the bottom line was due to COGS efficiency and a decline in financial expenses (-48.09% YoY). Currently, TINS is trading at level 14.60x/2.13x PER/PBV.
3. MAPI IJ recorded IDR12.08 trillion revenue in 9M21 increased by +18.25% YoY (vs IDR10.21 trillion in 9M20). COGS increased from IDR5.92 trillion in 9M20 to IDR7.06 trillion in 9M21. MAPI recorded IDR83.45 billion net loss in 9M21 (vs net loss of IDR605.33 billion in 9M20) (Emitennews). MNCS Comment: The main contributor of MAPI’s top line was obtained by retail sales recorded at IDR11.09 trillion in 9M21 or grew by +18.43% YoY (vs IDR9.36 trillion in 9M20). The top line improvement has not been able to make a profit in 9M21 as the closure of most MAPI outlets in Indonesia on July-21 due to the implementation of PPKM. MAPI is trading at the level of 2.70x PBV.

IHSG Updates
JCI strengthened by +0.12% to 6,691.34 on Thursday (11/11) followed by net foreign buy reaching IDR245.93 billion. JCI closed higher along with the strengthening in almost all sectors led by the transportation sector (+2.19%), followed by the non-cyclical consumer sector (+1.64%). On the other hand, the tech sector weakened by -1.81%, followed by the infrastructure sector (-0.89%). The strengthening of the JCI tends to be limited by the lack of domestic sentiment. Meanwhile, negative sentiment came from the release of US CPI data which showed an increase in inflation of 6.2% YoY in October-21, raising market expectations that the Fed will accelerate the rate hike. 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 6,650-6,7500. Today's recommendations: HOKI, ERAA, IMJS, INDY.

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