MNCS Morning Navigator

23 November 2021

MNCS Morning Navigator November 23, 2021

Global Market Highlights

DJIA rose by +0.05% on Monday (22/11) while S&P 500 fell by -0.32% followed by Nasdaq (-1.26%). Wall Street ended mixed as President Joe Biden nominated Jerome Powell for the second term as Chairman of the Federal Reserve amidst concerns about rising inflation. Meanwhile, Eurozone’s Flash Consumer Confidence fell to -6.8 in November-21 from previously at -4.8 as consumers are worried about the latest wave of Covid-19 cases and higher inflation, thus weakening consumer spending this quarter. In addition, the US Existing Home Sales unexpectedly rose to +0.8% MoM in October-21, marking the second straight month of growth despite low inventory and rising prices. Today the market will be looking toward several data releases such as: 1) US Markit Manufacturing PMI Flash; 2) Eurozone Markit Composite PMI Flash; 3) Germany Markit Composite PMI Flash.

Domestic Update
• Government successfully issued non-tradable Saving Green Sukuk Retail (ST008) achieving the target of IDR5 trillion before the offering period ended. The total ST008 investors hit 14,337 marking the second largest investors after ST007 with 16,992 investors. MNCS Comment: The retail investors appetite for fixed income instruments remained high as we observed the increase in financial literacy and the needs for asset diversification other than bank's deposits. We expect this trend to continue going forward in 2022 and could support the government agenda in deepening Indonesia government bond market as well as maintaining its stability.
• Furthermore, the second dose of vaccination rate nationally has reached 42.9% or equivalent to 89.27 million people.

Company News
1. UNVR IJ will distribute an interim dividend of IDR66/share or IDR2.51 trillion for the 2021 book year period. The cum dividend date is on November 29, 2021 (CNBC Indonesia). MNCS Comment: The payout ratio stood at 82.30% from the 1H21 profit of IDR3.05 trillion. Dividend yield reached 1.36%. UNVR is trading at the level of 31.63x/34.67x PER/PBV.
2. AGRO IJ posted IDR656.67 billion net interest income (NII) for 9M21 or up +41.84% YoY (vs IDR462.98 billion in 9M20). Credit disbursement was recorded at IDR14.32 trillion or decreased by -28.11% YoY and third party funds decreased to IDR16.86 trillion. AGRO's net loss was recorded at IDR1.83 trillion in 9M21 (vs net profit of IDR25.40 billion in 9M20) (Kontan). MNCS Comment: We see that the bottom line loss was driven by a significant increase in cost of impairment losses on financial assets of IDR2.29 trillion in 9M21 (vs IDR231.96 billion in 9M20) resulted an operating loss of IDR1.85 trillion in 9M21 (vs operating profit of IDR33.64 billion in 9M20). Subsequently, AGRO's plan for a right issue worth IDR1.16 trillion which potentially attract more investors, the funds will be used to strengthen working capital for digital-based credit distribution. Currently, AGRO is trading at level 864.83x/10.45x PER/PBV.
3. WSKT IJ recorded IDR7.13 trillion net revenue in 9M21 or decreased by -39.31% YoY (vs IDR11.74 trillion in 9M20). COGS decreased from IDR10.97 trillion in 9M20 to IDR6.85 trillion in 9M21. WSKT recorded IDR252.71 billion net profit (vs net loss of IDR2.64 trillion in 9M20) (Emitennews). MNCS Comment: We see the decline in WSKT’s revenue was due to the decrease in construction services revenue as the largest contribution worth IDR5.84 trillion or down -45.25% YoY (vs IDR10.67 trillion in 9M20). On the other hand, the significant increase in profit was driven by the gains on asset divestment of IDR2.05 trillion in 9M21. Then, the company managed to make financial and other expenses efficient, which fell -39.80% YoY and -44.50% YoY, respectively. Until 9M21, WSKT’s managed to obtain a new contract value of IDR12.01 trillion or 58.08% of the FY21E target of IDR20.68 trillion. WSKT trading at the level of 33.44x/1.43x PER/PBV.

IHSG Updates
JCI rose by +0.05% to 6,723.39 on Monday (22/11) followed by net foreign sell reaching IDR18.41 billion. JCI closed higher, led by the health sector (+1.35%), followed by the non-cyclical consumer sector (+0.84%). On the other hand, the infrastructure sector weakened by -1.16%, followed by the property sector (-0.83%). The strengthening of the JCI was driven by the controlled daily Covid-19 cases in Indonesia, even as anticipation of the 3rd wave, the Indonesian government imposed PPKM level 3 at the end of December-21. Meanwhile, negative sentiment came from Europe, which recorded a high increase in Covid-19 cases, causing several countries to carry out lockdowns and other decisive actions. On the other hand, Rupiah weakened at IDR14,248 level in the spot market. We estimate the JCI will move in the range of 6,621-6,750. Today's recommendations: ICBP, PGAS, INTP, TINS.

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