MNCS Morning Navigator

25 November 2021

MNCS Morning Navigator November 25, 2021

Global Market Highlights

DJIA fell slightly by -0.03% on Wednesday (24/11), meanwhile S&P 500 rose by +0.23% followed by Nasdaq (+0.44%). Wall Street ended mixed as the Fed stated that they would speed up the elimination of its bond-buying program and raise interest rates sooner than expected if inflation remains high. The US Final Michigan Consumer Sentiment came in at 67.4 in November-21 from previous at 71.7 in October-21 due to surging inflation affecting household budgets and national economy. In addition, the US Durable Goods Order fell slightly to -0.5% MoM from previous at -0.4% MoM due to weak non-defense aircraft orders. Today, the market will be looking toward several data releases such as: 1) Germany Final GDP Growth Rate YoY; 2) Germany GfK Consumer Confidence; 3) Japan Final Coincident Index.

Domestic Update
• After cutting 150 bps in benchmark policy rate for 6x in 2020, BI will continue its accommodative policy mainly through 1) low interest rates policy; 2) IDR stabilization and 3) liquidity injection. Monetary tightening is likely when the central bank sees inflation start to pick up according to the Bank Indonesia Annual Meeting yesterday (11/24). MNCS Comment: Inflation is likely to pick up in 2022 on the back of : 1) rising oil price along with improvement in mobility and economic activity as well as 2) rising VAT by 1pp to 11% starting in Apr-22. Given the potential rise in domestic inflation and more aggressive monetary policy normalization by the Fed in 2022, we see that BI has room to raise its benchmark policy rate by 50 bps next year.
• Furthermore, the second dose of vaccination rate nationally has reached 43.5% or equivalent to 90.52 million people.

Company News
1. TLKM IJ recorded IDR106.04 trillion net sales in 9M21 increased by +6.11% YoY (vs IDR99.94 trillion in 9M20). Operation, maintenance, and telecommunication service expenses increased from IDR25.09 trillion in 9M20 to IDR26.97 trillion in 9M21. TLKM recorded IDR18.87 trillion net profit or rose by +13.15% YoY (vs net profit of IDR16.68 billion in 9M20) (CNBC Indonesia). MNCS Comment: We see an increase in top line and bottom line was driven by an increase from data, internet and technology services as the largest contribution recorded at IDR60.24 trillion in 9M21 or grew by +6.71% YoY (IDR56.45 trillion in 9M20), followed by an increase in revenue from Indihome services was IDR19.64 trillion or rose +21.84% YoY. The company’s positive performance was obtained by the transformation by TLKM in strengthening the company’s capabilities, as well as the increase from data and internet usage during the tightening PPKM policy in July and August. TLKM is trading at the level of 14.96x/3.59xPER/PBV.
2. SAMF IJ has signed a construction contract with PT Rexline Engineering Indonesia (PT REI) to increase the production capacity from 600,000 tons/year to 700,000 tons/year located in Mojokerto, East Java. SAMF estimated the production line supporting facilities will operate at the end of 1H22E (Kontan). MNCS Comment: The increase in demand CPO has the potential to increase the demand for fertilizer, where around 90% of SAMF fertilizer is absorbed for oil palm plantations. We see that capacity production is building in anticipation of an increase in fertilizer demand in the future. Currently, SAMF is trading at level 51.65x/8.56x PER/PBV.
3. MTDL IJ will manage to stock split with a 1:5 ratio where the EGMS will be held on December 16, 2021, with the new nominal trading expected to take effect in January 2022 (Emitennews). MNCS Comment: We assess that MTDL action has the potential to boost the company’s liquidity and growth in the Indonesian stock market where the investor will be able to buy MTDL shares at a more affordable price thus attracting investors. MTDL trading at the level of 20.07x/3.62x PER/PBV.

IHSG Updates
JCI strengthened by +0.08% to 6,683.28 on Wednesday (24/11) followed by net foreign buy reaching IDR420.25 billion. JCI closed higher, led by the energy sector (+0.88%), followed by the infrastructure sector (+0.33%). On the other hand, the technology sector weakened by -1.43%, followed by the health sector (-0.69%). The strengthening of the JCI was driven by the sentiment of rising commodity prices, such as oil and coal, which rebounded successfully. On the other hand, the Rupiah flat IDR14,258 level in the spot market. We estimate the JCI will move in the range of 6,621-6,750 while waiting for the release data of Motorbike sales YoY. Today's recommendations: IRRA, MAPI, JSMR, WIKA.

Corporate Action
Cum dividend date: MCOL (Rp211/share)
IPO: BINO (IDR138/share), DEPO (IDR483/share)

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