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MNCS Morning Navigator

14 Oktober 2021

MNCS Morning Navigator October 14, 2021

Global Market Highlights

DJIA was flat by -0.00% on Wednesday (13/10) while S&P 500 rose by +0.30% followed by Nasdaq (+0.73%). Wall Street closed mostly higher as investors focus on an imminent end to ultra-loose the US monetary policy as a vote of confidence in the economy. Subsequently, the market is waiting for the 3Q21 earnings reports release. However, the released data of the US Inflation Rate rose to 5.4% from the previous at 5.3% level on August-21. On the other hand, Germany released its Inflation Rate YoY Final data which rose to 4.1% in September-21 from the previous at 3.9% level on August-21. Today the market will be looking forward to several data releases such as: 1) US Continuing Jobless Claims; 2) China Inflation Rate YoY; 3) Japan Industrial Production YoY Final.

Domestic Update
• Bank Indonesia (BI) reported a domestic Prompt Manufacturing Index (PMI) in 3Q21 contracted and slipped below the 50-point threshold of expansion to 48.75%. The PMI-BI figure was lower than the previous quarter reading at 51.45% and the central bank forecast at 49.89%. MNCS Comment: The contraction in 3Q21 was driven by the implementation of emergency PPKM that limited economic activities. However, we expect with the gradual reopening and improving public health conditions, Indonesia's manufacturing activities will likely rebound in 4Q21 along with other macro indicators such as consumer confidence as well as public mobility.
• Furthermore, there was an addition of 278 new Covid-19 cases in Jakarta yesterday.

Company News
1. TPIA IJ through its subsidiary PT Chandra Asri Perkasa (CAP2) has signed a memorandum of understanding (MoU) with Aramco Trading Company (ATC), to take advantage of ATC’s potential opportunity to supply raw materials to support CAP2’s operations. The presence of CAP2 succeeded in increasing production capacity from 4.2 million tons to more than 8 million tons per year (Emitennews). MNCS Comment: We see the collaboration and addition of TPIA’s production capacity can accomplish the market needs in the growing petrochemical industry, on the other hand, this collaboration can potentially improve TPIA’s performance in the future. TPIA is currently trading at level 26.00x/4.59x PER/PBV.
2. ADHI IJ recorded a significant new contract growth by +82.25% YoY to IDR11.3 trillion in 9M21 (vs IDR6.2 trillion in 9M20). The contract value includes the construction business line by 74.6%, energy by 17%, property by 8%, and the rest from other business lines (Kontan). MNCS Comment: We see an increase in ADHI’s new contracts driven by the relaxation of PPKM policy. On the other hand, ADHI targets the new contract value growth by 20%-25% YoY for FY21E. Currently, ADHI is participating in tenders for infrastructure projects, trains, building and others. ADHI is trading at the level of 247.25x/0.74x PER/PBV.
3. UNTR IJ managed to record the accomplishment of overburden removal or stripping of 558.4 million bmc exceeding 50% of expectations up to 8M21. Until FY21E, UNTR targets stripping of around 840 million bcm (vs 810 million bcm in FY20) (Marketbisnis). MNCS Comment: We assess that the increase in operational performance was driven by increased economic activity, Along with the energy crisis that occurred in China, India, and Europe, it potentially pushes UNTR’s performance up to FY21E. Currently, UNTR is trading at level 10.83x/1.51x PER/PBV.


IHSG Updates
JCI rose by +0.78% to 6,536.90 on Wednesday (13/10) followed by net foreign buy reaching IDR1.21 trillion. JCI closing was mixed along with almost all sectors led by the industrial sector (+2.26%), followed by the non-cyclical consumer sector (+1.75%). On the other hand, the transportation sector fell by -1.68%, followed by the energy sector (-1.25%). The strengthening of the JCI was driven by the large number of foreign investors entering big cap stocks. Meanwhile, negative sentiment came from the IMF, which cut its global economic growth outlook by 0.1% compared to its projection in July at 5.9% level. Domestically, Indonesia Prompt Manufacturing Index (PMI-BI) decreased at 48.75% due to the implementation of the Emergency PPKM. On the other hand, the Rupiah was stagnant at IDR14,218 level in the spot market. We estimate the JCI will move in the range of 6,480-6,600. Today's recommendations: WIIM, SMGR, MLPL, JSMR.

Corporate Action
Cum Dividend Date: ASGR (IDR7/share), VICI (IDR3.5/share)
RUPS: PURE

Disclaimer On

WIIM SMGR MLPL JSMR TPIA ADHI UNTR

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