MNCS Morning Navigator

05 Oktober 2021

MNCS Morning Navigator October 05, 2021

Global Market Highlights

DJIA weakened by -0.94% on Monday (04/10) followed by S&P 500 (-1.30%) and Nasdaq (-2.14%). Wall Street ended lower as the rising of the US treasury yield and the government sets to maintain tariffs on China imports. The increase of consumer spending, factory activity, and inflation have risen concerns that The Fed will tighten the monetary policy earlier than expected. The US Government released data on Factory Orders on August-21 which grew to 1.2% MoM (vs 0.7% MoM on July-21). Meanwhile, Canada Building Permits fell by -2,1% MoM on August-21 (vs -4.1% MoM on July-21), driven by the decline of residential construction intentions. Today the market will be looking forward to several data releases such as: 1) Canada Balance of Trade; 2) US Balance of Trade; 3) Germany Markit Composite PMI Final.

Domestic Update
• The government will conduct a Sovereign Sharia Securities (SBSN) or Sukuk Negara Auction on Tuesday, October 5, 2021 with the indicative target set at IDR5 trillion. MNCS Comment: The indicative target set for today's auction is lower than in the previous auction on the back of the positive trend in government revenues. As of August 31, total government revenue has reached IDR1,177.6 trillion or 13.9% higher than the same period last year. Furthermore, the total government securities issuance as of September 29 reached IDR1,053tn with the composition of 71.2% GDS and 28.8% Sovereign Sharia Securities (Sukuk).
• Furthermore, there was an addition of 149 new Covid-19 cases in Jakarta yesterday.

Company News
1. ADRO IJ recorded export sales of coal grew by +21.88% YoY to USD1.17 billion in 1H21, while domestic sales amounted to USD304.59 million or up to +7.8% YoY (Kontan). MNCS Comment: We see the growth of ADRO's export sales supported by an increase in China's coal demand, where China recorded an export rose by 20% YoY, along with energy crisis in several countries and the increase in global gas prices potentially increasing demand and coal prices up to FY21E. ADRO is trading at level 12.07x/1.08x PER/PBV.
2. PTBA IJ targets an increase in export sales volume by 47% from the previous 46% in FY20. The composition of FY20 sales volume was dominated by the domestic market share of 54% or 14.13 million tons and exports 46% or 11.98 million tons. As of 1H21 the company has obtained sales from China to IDR1.85 trillion in 1H21 or up to +1.217% YoY (vs IDR14.16 billion in 1H20) (Emitennews). MNC Commnet: We see the increase in the company's target in FY21E is quite resilient in the midst of increasing global demand and the scarcity of coal energy, especially in China and India. Currently, PTBA is trading at level 9.36x/1.92x PER/PBV.
3. WOOD IJ targets sales growth to increase by 50% YoY to IDR4.45 trillion in 2021 (vs IDR3.71 trillion in 2020). The strengthening of sales orders for 8 months was in line with the company's target of reaching IDR4.25 trillion. Net profit was recorded at IDR219.3 billion in 1H21, rose by +95.2% YoY (vs IDR114.5 billion in 1H20) (Market Bisnis). MNCS Comment: We see the sales target in FY21E can potentially be achieved given the high demand increase from the furniture segment and building component, the US market is still the largest contributor, driven by several other regions along with the economic recovery. Currently WOOD is trading at the level of 9.86x/1.33x PER/PBV.

IHSG Updates
JCI rose by +1.83% to 6,342,69 on Monday (04/10) followed by net foreign buy reaching IDR1.99 trillion. JCI closed higher in almost all sectors, led by the property sector (+3.85%), followed by the energy sector (+3.82%). On the other hand, the tech sector weakened by -0.51%, followed by the transportation sector (-0.39%). The JCI strengthened by the upward trend in commodity prices, especially coal over the past few days. Indonesia is the world's largest exporter of coal and CPO commodities, therefore price increases have a positive impact on the national economy and the stability of the Rupiah. On the other hand, the Rupiah strengthened at IDR14,267 level on the spot market. We estimate the JCI will move in the range of 6,260-6,360. Today's recommendations: AISA, EXCL, ASRI, ELSA.

Corporate Action
Cum date dividend: MBAP

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