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MNCS Morning Navigator

19 Oktober 2021

MNCS Morning Navigator October 19, 2021

Global Market Highlights

DJIA fell slightly by -0.10% on Monday (18/10), while S&P 500 increased +0.34% followed by Nasdaq (+0.84%). Wall Street closed mixed due to investors appearing optimistic about the third-quarter earnings season while the market eyes on the inflation risks. The US Industrial Production fell more than expected by -1.3% in September-21 from the previous at -0.1% level weighed down by supply chain issues. On the other hand, China GDP Growth Rate YoY stood at 4.9% in 3Q21 from the previous at 7.9% last year as industrial activity grew less than expected by 3.1% YoY. Today the market will be looking forward to several data releases such as: 1) US Building Permits MoM (SEP); 2) US Fed Daly Speech; 3) China FDI (YTD) YoY.

Domestic Update
• Bank Indonesia (BI) will announce September-21 policy rates today. BI is expected to keep interest rates unchanged with BI-7 Day Reverse Repo at 3.50%; Lending Facility at 4.25% and Deposit Facility at 2.75%. MNCS Comment: We agree with the consensus estimate. In order to keep the economy afloat amid a more hawkish tone from the global central bank, maintaining policy rate steady would be the central bank's choice. We believe with the current level of policy rate could anchor inflation expectation and keep rupiah stable in line with its fundamental value.
• Furthermore, there was an addition of 107 new Covid-19 cases in Jakarta yesterday.

Company News
1. SIDO IJ recorded a positive performance in 3Q21. Revenue increased by +23% YoY to IDR2.78 trillion in 9M21 (vs IDR2.26 trillion in 9M20). Net Profit reached IDR865.5 billion in 9M21 or an increase of +35% YoY (vs IDR640.81 billion in 9M20). (Market Bisnis). MNCS Comment: We believe that the improvement in SIDO’s performance is driven by public awareness of the necessity to keep maintaining health and is projected to continue to grow along with increasing consumer demand in the future. The company projected net profit will soar by more than 25% for FY21E SIDO is currently trading at level 20.67x/7.78x PER/PBV.
2. ARNA IJ posted net sales of IDR1.88 trillion in 9M21 an increase of +16.77% YoY (vs IDR1.61 trillion in 9M20). The growth in sales prompted ARNA’s net profit to rise to IDR347.44 billion in 9M21 or +57.01% (vs IDR221.5 billion in 9M20) (iqplus). MNCS Comment: We assess that a significant increase in profit was obtained by cost efficiency and increased sales due to the PPnBM property incentive, thereby increasing sales of ceramics. ARNA is trading at the level of 12.71x/4.33x PER/PBV.
3. PPRE IJ obtained a contract that exceeded 130% of the target of IDR4.7 trillion in 9M21. New contract achievement grew +147% YoY from new contract price up to 9M20 of IDR1.9 trillion. The contract value includes the mining service business line by 49.5%, civil work by 43.6% and the rest from other business lines by 6.9% (Trenasia). MNCS Comment: We see the new contract effort, confirming the company’s efforts and success in providing mining services and improving PPRE’s positioning as a mining service contractor. Currently, PPRE is trading at level 32.18x/1.05x PER/PBV.

IHSG Updates
JCI strengthened by +0.38% to 6,658.77 on Monday (18/10) followed by net foreign buy reaching IDR1.02 trillion. JCI closed higher in almost all sectors, led by the transportation sector (+1.80%), followed by the industrial sector (+1.45%). On the other hand, the non-cyclical consumer sector weakened by -0.14%, followed by the energy sector (-0.12%). The strengthening of the JCI was driven by market optimism regarding the progress in handling Covid-19 cases in Indonesia, which continued to improve, where Covid-19 cases were recorded below 1,000 in the last 2 days. Another sentiment came from India which reduced CPO import duties from 24.75% to 8.25%, import duties for processed products were also lowered to 19.25% from 35.75%. On the other hand, the Rupiah weakened at IDR14,110 level in the spot market while waiting for the Interest Rate Decision. Today's recommendations: PTBA, TKIM, INDF, IMJS.

Corporate Action
RUPS: UNSP, FIMP, TGKA

Disclaimer On

PTBA TKIM INDF IMJS SIDO ARNA PPRE

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