MNCS Morning Navigator

12 September 2022

MNCS Morning Navigator September 12, 2022

Global Market Highlights
DJIA strengthened by +1.19% on Friday (09/09), followed by S&P500 (+1.53%) and Nasdaq (+2.11%), Wall Street solidly continuing its gains amid the hawkish Fed comments hinting at rate hikes interest rate +75 bps at FOMC Sep-22. Market players also watched China's Aug-22 inflation rate which grew below consensus to +2.5% YoY (vs 2.8% YoY on consensus). Today, the market will be looking toward several data releases such as: 1) UK GDP 3-Month Avg Jul; 2) UK GDP YoY Jul; 3) UK Balance of Trade Jul.

Domestic Update
• Bank Indonesia (BI) noted that Indonesia's retail sales grew +6.2% YoY in Jul-22, higher than +4.1% YoY in Jun-22. MNCS Comment: Retail sales growth was driven by fuel sales growth (+67.2% YoY) and clothing (+59.4% YoY). Retail sales are expected to still expand positively by +5.4% YoY. However, we view retail sales growth will be overshadowed by expectations of rising prices and inflation in line with the government's adjustment in subsidized fuel prices in August-September 2022.
• Furthermore, the national Covid-19 daily rate had increased by 1,939 active cases (11/09).

Company News
1. INDY IJ targets its non-coal business revenue to 50% in FY25F, where it will be achieved through the company's 3 businesses, namely: 1) mining; 2) electric vehicles; 3) solar power plant (Emiten News). MNCS Comment: In 1H22, INDY's non-coal sales business namely Energy Services, logistics, green business and digital venture segments contributed 7.95% to the total revenue and grew by +41.05% YoY. We view the efforts to accelerate the non-coal business positively along with the increasing awareness of zero carbon emissions, which potentially support INDY's business in the future. INDY is currently traded at the level of 2.73x/1.12x PER/PBV.
2. TOWR IJ targets its revenue growth in FY22E to IDR10.5 trillion, an increase of +22.09% YoY (vs IDR8.6 trillion in FY21). Meanwhile, EBITDA is projected to increase +21.62% YoY to IDR9 trillion, where one of the targets will be achieved through efficiency and working capital management (Emiten News). MNCS Comment: In 1H22, the company recorded revenue of IDR5.32 trillion or reaching 50.63% of the FY22E target realization. We are optimistic that the company can achieve this target, supported by 29,263 towers (+35.63% YoY) and 54,716 number of tenants (+36.25% YoY). Currently, TOWR is traded at the level of 18.78x/4.92x PER/PBV.
3. BUMI IJ targets its coal production in FY22E to 78-83 million tons, higher than FY21 production of 78 million tons (Business Market). MNCS Comment: Coal production in 1H22 reached 34.5 million tons, or down -13.97% YoY. We see that the production target will be challenging, considering the realization in 1H22 of 42-44% and the potential for increased rainfall approaching the end of the year. However, we believe that BUMI's performance will remain solid, supported by high global coal prices. BUMI is currently traded at the level of 5.39x PER.

IHSG Updates
JCI strengthened by +0.15% to 7,242.66 on Friday (09/09), followed by net foreign buy which reached IDR995.73 billion. A number of sectors experienced strengthening and boosted the index rate, led by the health sector (+0.87%) followed by the property sector (+0.29%). On the other hand, the weakening sectors were led by the transportation sector (-0.51%) followed by the cyclical sector (-0.43%). The index's gain was in line with Wall Street and Asian bourses. In addition to the positive catalyst from the Jul-22 retail sales data, the index's strengthening was also supported by the continuing inflows. On the other hand, the Rupiah exchange rate closed higher at IDR14,830/USD. We estimate that the JCI will move in the 7,200-7,280 price range. Today's recommendation: BEST, DEWA, HRUM, TOWR.

Corporate Actions
Public Expose: ADRO, AKRA, HEAL

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