MNCS Morning Navigator

24 November 2021

MNCS Morning Navigator November 24, 2021

Global Market Highlights

DJIA rose by +0.55% on Tuesday (23/11) followed by S&P 500 (+0.17%), meanwhile Nasdaq fell by -0.50%. Wall Street ended mixed as investors expected interest rate hikes in 2022 after Federal Reserve Chairman Jerome Powell was nominated for a second term. The US Flash Markit Composite PMI went down to 56.5 in November-21 from previously at 57.6 due to labor shortages and raw material delays. Meanwhile, Eurozone Flash Markit Composite PMI rose for the first time in four months to 55.8 in November-21 from previously at 54.2 supported by stronger expansion of business activities. Today, the market will be looking toward several data releases such as: 1) US Durable Goods Orders MoM; 2) US Core PCE Price Index YoY; 3) US Michigan Consumer Sentiment Final.

Domestic Update
• Global Credit Rating Agency (CRA) Fitch Ratings has affirmed Indonesia's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB' with a Stable Outlook. MNCS Comment: Recent affirmation of investment grade rating and stable outlook from Fitch Ratings is expected to boost investors appetite to invest in Indonesia, both through portfolio assets or direct investment. We noted that improving economic outlook in 4Q21 and going forwards is a contributing factor behind rating affirmation.
• Furthermore, the second dose of vaccination rate nationally has reached 43.2% or equivalent to 89.89 million people.

Company News
1. KRAS IJ will conduct a right issue with a target of USD200 million or around IDR3 trillion in 2Q22 or 3Q22. KRAS targets future sales growth to increase by +26% YoY in FY22E or IDR35.28 trillion (vs IDR28 trillion in FY21E) (Market Business). MNCS Comment: We see that this right issue is planned to improve the capital structure and debt restructuring of USD500 million in FY22E. On the other hand, the company's optimism in FY22E was driven by the recovery in demand due to the controlled Covid-19 cases in Indonesia in 3Q21, it reflected by the release of the company's 9M21 performance which recorded a net profit of USD59.72 million (vs net loss of USD27.39 million in 9M20). KRAS is trading at the level of 8.82x/1.22x PER/PBV.
2. TSPC IJ will distribute an interim dividend of IDR20/share or IDR90.20 billion for the 2021 book year period. The cum dividend date is on November 30, 2021 (CNBC Indonesia). MNCS Comment: The payout ratio stood at 22.03% from the 1H21 profit of IDR409.38 billion. Dividend yield reached 1.33%. Currently, TSPC is trading at level 9.30x/1.07x PER/PBV.
3. WSKT IJ through its subsidiary, PT Waskita Toll Road (WTR) has a buyback action of PT Kresna Kusuma Dyandra Marga (KKDM) shares with a transaction value of IDR47.39 billion (IQPlus). MNCS Comment: This action will increase WTR's share ownership in KKDM from 69.70% to 71.80% shares or Rp1.83 trillion. KKDM is a subsidiary of WTR which is the concession holder of the Bekasi-Cawang-Kampung Melayu (Becakayu) toll road. However, these actions will not be consolidated in WTR and the company's financial statements in the future. WSKT trading at the level of 33.44x/1.43x PER/PBV.

IHSG Updates
JCI weakened by -0.68% to 6,677.88 on Tuesday (23/11) followed by net foreign buy reaching IDR94.05 billion. JCI closed lower in almost all sectors, led by the transportation sector (-2.02%), followed by the financial sector (-1.75%). On the other hand, the energy sector strengthened by +0.89%, followed by the infrastructure sector (+0.47%). The weakening of the JCI was driven by the profit-taking of a number of investors and the weakening of the majority on Asian stock index. Meanwhile, the release of data on Indonesia's money supply showed a growth of +10.4% YoY in October-21 (vs +8.2% YoY in September-21). On the other hand, the Rupiah weakened towards the level of IDR14,258 in the spot market. We estimate the JCI will move in the range of 6,621-6,750. Today's recommendations: FREN, BRPT, PTPP, BMRI.

Corporate Action
Cum dividend date: GEMS (IDR145.28/share), CSRA (IDR25/share)

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