MNCS Morning Navigator

30 November 2021

MNCS Morning Navigator November 30, 2021

Global Market Highlights

DJIA grew by +0.68% on Monday (29/11) followed by S&P 500 (+1.32%) and Nasdaq (+1.88%). Wall Street ended higher as investors were hopeful after Joe Biden reassured that the Omicron coronavirus variant would not lead to lockdowns. Meanwhile, Germany’s Inflation Rate Prel hits 29-year high which grew by +5.2% YoY in November-21 due to the high energy costs and supply bottlenecks. In addition, Japan’s Retail Sales went up +0.9% YoY in October-21 due to the boost of rising petroleum product prices. Today, the market will be looking toward several data releases such as: 1) US CB Consumer Confidence; 2) Germany Unemployment Change; 3) China NBS Manufacturing PMI.

Domestic Update
• Government plans to increase revenue collection particularly from excise tax with the target of IDR193 trillion in 2022. This revenue collection is 11.56% higher from the 2021 target of IDR173 trillion. MNCS Comment: We expect the government to continue increasing tobacco excise tax rate for 2022. In our view, this will lead to higher cigarette retail price and higher CPI. On the other side, aggressive excise tax rate will only burden major producers' margins and drag down cigarette manufacturers' share price further.
• Furthermore, the second dose of vaccination rate nationally has reached 45.4% or equivalent to 94.46 million people.

Company News
1. WSKT IJ obtained a new contract for the construction of Bayang Nyalo mini-hydro power plant (PLTM) with a capacity of 2x3 megawatts in Pesisir Selatan Regency, West Sumatra worth IDR128 billion. The PLTM development plan will be completed within the next 22 months (Emitennews). MNCS Comment: We see the contract has the potential to increase WSKT revenue in the future where the source of funding for the development will be acquired by monthly payment according to work progress. In addition, the construction of the PLTM utilizing renewable energy is expected to contribute to energy savings and reduce fuel consumption which has an impact on air pollution. WSKT is trading at the level of 32.83x/1.40x PER/PBV.
2. LPKR IJ recorded marketing sales of IDR4.4 trillion up to 10M21. This value has exceeded the marketing sales targets in FY21E which was recently revised up by IDR4.2 trillion (vs IDR3.5 trillion). With this result, LPKR once again raised its marketing sales target to IDR4.7 trillion for FY21E and IDR5.2 trillion for FY22E (Business Indonesia). MNCS Comment: The improved performance of LPKR was driven by the growth of the property and healthcare business. Property revenue increased by +47.19% YoY to IDR1.94 trillion in 9M21. On the other hand, healthcare revenue was recorded at IDR3.81 trillion in 9M21 or rose by +20.03% YoY (vs IDR3.18 trillion in 9M20). We see the extension of 0% down payment of mortgage for up to FY22E is projected to increase LPKR’s sales in the future. Currently, LPKR is trading at level 0.58x PBV.
3. BRMS IJ recorded USD8.24 million revenue in 9M21 increased by +97.10% YoY (vs USD4.18 million in 9M20). COGS increased from USD1.11 million in 9M20 to USD2.58 million in 9M21. BRMS recorded USD6.89 million net profit in 9M21 or rose by +184.34% YoY (vs net profit of USD2.42 million in 9M20) (Business Indonesia). MNCS Comment: The significant increase in top line and bottom line was contributed by gold sales to PT Bhumi Satu Inti reaching USD5.21 million in 9M21 or increased by +338.21% YoY (vs USD1.20 million in 9M20). On the one hand, the company managed to record another income of USD30 million in 9M21, which was obtained from debt write-offs, inventory valuation, and settlement of receivable installments. BRMS trading at the level of 88.15x/0.87x PER/PBV.

IHSG Updates
JCI strengthened by +0.71% to 6,608.29 on Monday (29/11) followed by net foreign sell reaching IDR1.18 trillion. JCI closed higher, led by the infrastructure sector (+1.59%), followed by the transportation sector (+1.20%). On the other hand, the cyclical consumer sector weakened by -0.96%, followed by the non-cyclical consumer sector (-0.53%). The strengthening of the JCI was driven by rising telecommunication stocks and the strengthening of European stocks. Even though negative sentiments still come from the latest Covid-19 variant, namely Omicron, where WHO states it is more contagious than other variants, it has become the variant of concern. On the other hand, the Rupiah weakened at IDR14,323 level in the spot market. We estimate the JCI will move in the range of 6,530-6,650 while waiting for the released data of Motorbike sales YoY. Today's recommendations: BNBA, BMHS, ADRO, ELSA.

Corporate Action
Cum dividend date: TSPC (IDR20/share), BRAM (IDR200/share)
Cum right issue date: BBSI (IDR3,510/share)

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