Global Market Highlights
DJIA weakened by -0.30% on Thursday (20/10), followed by the S&P500 (-0.80%) and the Nasdaq (-0.61%). Wall Street continued its correction, as the yield on the US T-note 10Y rose to 4.22%. In addition, investors were also watching the release of existing home sales Sep-22 data which fell to 4.71 million (vs 4.78 million in Aug-22) as well as CB Leading Index Sep-22 data which contracted -0.4% MoM, or above consensus expectations of -0.3% MoM. Today, the market will be looking toward several data releases such as: 1) US Fed Williams Speech; 2) UK Public Sector Net Borrowing Sep; 3) UK Retail Sales YoY Sep.
Domestic Update
• BI increased its BI7DRRR by +50 bps to 4.75%, followed by Lending Facility to 5.50% and Deposit Facility to 4.00%. MNCS Comment: The increase in interest rates acts as a front loading, pre-emptive, and forward-looking measure to anchor inflation back to the target (3±1%) and strengthen exchange rate stability.
• Furthermore, the national Covid-19 daily rate had increased by 2,307 active cases (20/10).
Company News
1. BBCA IJ posted a consolidated net profit in 9M22 of IDR28.95 trillion, or grew by +24.81% YoY (vs IDR23.20 trillion in 9M21) (Investor ID). MNCS Comment: We see that the increase in net profit was supported by: 1) an increase in net interest income (bank only) by +9.3% YoY; 2) decrease in provision by -48.8% YoY; 3) Consolidated credit growth by +12.6% YoY. Meanwhile, NPL fell to 2.2% (vs 2.4% in 9M21). Currently, BBCA is traded at 5.16x PBV.
2. PTPP IJ reported the achievement of new contract values of IDR16.5 trillion up to 9M22. The company's portfolio consisted of: 1) 30% government; 2) 65% BUMN; 3) 5% private (Investor ID). MNCS Comment: Thus, the new contract value grew by +19.14% YoY (vsIDRp13.85 trillion in 9M21). Meanwhile, with the target value of new contracts in FY22E reaching IDR30.01 trillion, the realization up to 9M22 was recorded at 53.22%. Currently, PTPP is traded at the level of 30.48x/0.48x PER/PBV.
3. TINS IJ is currently building the Top Submerge Lance (TSL) Ausmelt Furnace smelter in Bangka Belitung. The smelter can process low grade tin ore starting from 40%. Meanwhile, the production capacity reaches 40,000 tons of crude tin per year or 35,000 metric tons of ingots per year (IQ Plus). MNCS Comment: The investment value for the construction of a semelter reaches IDR1.2 trillion. Meanwhile, progress until Aug-22 reached 97.33%. The company's tin resources and reserves in FY21 were recorded at 919.09 thousand tons/300 thousand tons, respectively. It is hoped that the completion of the smelter construction will encourage the company's future performance. Currently, TINS is traded at the level of 4.80x/1.47x PER/PBV.
IHSG Updates
JCI rose by +1.75% to 6,980.65 on Thursday (20/10), followed by net foreign buy which reached IDR874.15 billion. All sectors strengthened and pushed up the index, led by the energy sector (+2.84%) and followed by the non-cyclical sector (+2.50%). The index rose amid weakening Wall Street and Asian markets. We see that investors responded positively to BI's announcement regarding the benchmark interest rate (BI7DRRR) which increased 50 bps to 4.75%. This increase is expected to suppress the inflation rate amid rising prices of basic commodities, maintain stability in the value of the rupiah, and restrain the outflow of foreign investors. In addition, the Sep-22 loan growth announcement of 11% YoY (vs 10.6% YoY in Aug-22) also indicates a strong economic recovery amidst the increase in the benchmark interest rate. On the other hand, the Rupiah exchange rate closed lower at Rp15,573/USD. We estimate that the JCI will move in the price range of 6,900-7,000 pending the release of M2 Money Supply YoY Sep and Foreign Direct Investment YoY Q3 data. Today's recommendation: BBRI, DOID, LPPF, TLKM.
Corporate Actions
Cum Dividend: EAST (IDR1.64/share)
RUPS: OASA, PTIS
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