MNCS Morning Navigator

22 November 2021

MNCS Morning Navigator November 22, 2021

Global Market Highlights

DJIA fell by -0.75% on Friday (19/11) followed by S&P 500 (-0.14%), meanwhile Nasdaq rose +0.40%. Wall Street ended mixed as new Covid-19 restrictions in Europe clouded the prospects for the global economic recovery. Japan's Inflation Rate fell to 0.1% YoY in October-21 from the previous month at 0.2% YoY despite the surging inflation that is happening in the US and Europe. In addition, UK Retail Sales went up by 0.8% MoM which is 0.3% higher than expected as people started to shop early for the upcoming holidays. Today the market will be looking toward several data releases such as: 1) US Existing Home Sales MoM; 2) US Chicago Fed National Activity Index; 3) Eurozone Consumer Confidence Flash.

Domestic Update
• Indonesia government bond market recorded a net outflows equivalent to IDR19.57 trillion during 1-15 Nov-21 as foreign holdings dropped to IDR925.92 trillion or equivalent to 20.71% from total tradable Indo GB. MNCS Comment: Despite the outflows, Indo GB yields remained at multi-year low driven by : 1) stable Rupiah; 2) anticipated Fed's tapering; 3) rising banks holdings of Indo GB and 4) low risk of perception. After the cancellation of government bond issuance in the rest of 2021 and investors' liquidity that stayed ample, we expect a low yield environment to persist until the end of this year.
• Furthermore, the second dose of vaccination rate nationally has reached 42.7% or equivalent to 88.82 million people.

Company News
1. PTBA IJ targets production in FY21E at 30 million tons level (vs 25.1 million tons in FY20), until 10M21 coal production PTBA reached 25.7 million tons or rose by +12.23% MoM (vs 22.9 million tons in 9M21). The company’s target production for FY22E has reached 37 million tons. (Kontan). MNCS Comment: We see the increase in production is supported by the increase in coal production from existing mines. For FY21E, the company is optimistic that the coal business prospect is still promising and achieves the target with infrastructures that have been prepared. Until November 2021, The ASP has increased +33% MoM to USD215.01/ton (vs USD161.63/ ton in October 2021). PTBA is trading at the level of 4.75x/1.45x PER/PBV.
2. IPCM IJ recorded IDR600.01 billion net revenue in 9M21 increased by +17.61% YoY (vs IDR510.15 billion in 9M20). COGS increased from IDR346.27 billion in 9M20 to IDR395.48 billion in 9M21. IPCM recorded IDR90.55 million net profit in 9M21 or rose by +29.82% YoY (vs net profit of IDR69.75 billion in 9M20) (Bisnis Indonesia). MNCS Comment: We see that the increase in IPCM’s performance was driven by economic activity which began to recover, as well as, improved flow of goods. It was seen that the company’s revenue grew in tugboat services by +35% YoY to IDR527.41 billion. Until FY21E, the company is optimistic that future performance will be even better driven by several corporate actions and cooperation with various parties to expand the market. Currently, IPCM is trading at level 14.45x/1.55x PER/PBV.
3. CPRO IJ recorded IDR6 trillion net sales in 9M21 increased by +7.14% YoY (vs IDR5.60 trillion in 9M20). COGS increased from IDR4.60 trillion in 9M20 to IDR4.85 trillion in 9M21. CPRO recorded IDR2.12 trillion net profit (vs net loss of IDR68.59 billion in 9M20) (Bisnis Indonesia). MNCS Comment: We see the increase in CPRO’s performance was driven by the gain in the settlement of bonds worth IDR1.77 trillion. As of 9M21, the company had absorbed capex of IDR140 Billion or 75% of the FY21E target. CPRO is optimistic that sales will increase to IDR8 trillion in FY21E. CPRO trading at the level of 2.66x/2.66x PER/PBV.

IHSG Updates
JCI rose by +1.26% to 6,720.26 on Friday (19/11) followed by net foreign sell reaching IDR141.22 billion. JCI closed higher in almost all sectors, led by the transportation sector (+3.22%), followed by the energy sector (+2.41%). On the other hand, the industrial sector weakened by -0.20%, followed by the health sector (-0.14%). The strengthening of the JCI was driven by investor appreciation for the release of several Indonesian economic data which showed good results, in which the trade balance of Indonesia's goods was declared a surplus, driven by significant growth in Indonesia's exports. The increase in exports was in line with the increase in prices of main export commodities such as coal and CPO. On the other hand, Rupiah weakened at IDR14,238 level in the spot market. We estimate the JCI will move in the range of 6,621-6,730 while waiting for the released data of loan growth YoY. Today's recommendations: INCO, INDY, ASII, BBCA.

Corporate Action
Cum dividend date: POWR (IDR20.72/share), SPTO (IDR25/share)
Cum right issue date: BCIC (IDR330/share)

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