MNCS Morning Navigator

13 September 2021

MNCS Morning Navigator September 13, 2021

Global Market Highlight

DJIA weakened by -0.78% on Friday (10/09) followed by S&P 500 (-0.77%), and Nasdaq (-0.87%). The Wall Street closed at the red zone as investors digested indications of increased inflation and concerns about the Delta variant's impact on the economic recovery. Investors are also uncertain about when the Federal Reserve may begin reducing massive measures enacted last year to shield the economy from the pandemic. Today the market will be looking forward to several data releases such as: 1) US Consumer Inflation Expectations; 2) China FDI (YTD) YoY; 3) Japan PPI YoY.

Domestic Update
• Last week the domestic financial market saw a capital inflow both to the equity & government bonds market. The net foreign buy value in stock market recorded at IDR1tn, while foreign ownership of tradable government securities increased by IDR4.75tn at the same time. MNCS Comment: The inflows have successfully strengthened IDR performance against USD. Combined with low risk premium as indicated by 5 year CDS drove benchmark Indo GB yield to remain at 6.0-6.2% despite the potential tapering later this year. However, a stretched equity valuation that has been noticed by market participants in DM particularly U.S. is exposing risk of correction and outflows from the domestic financial market.
• Furthermore, there was an addition of 306 new Covid-19 cases in Jakarta yesterday.

Company News
1. RALS IJ revised their revenue target to 10% YoY in FY21E from 15% YoY. Currently, RALS' main income is still driven from offline sales of department store and supermarket products. RALS’s revenue target contribution from e-commerce reached 2% from the company's total revenue in FY21 (Kontan). MNCS Comment: We believe the revisions made by management are in line with the tightening of PPKM in 3Q21. RALS strives to not close the outlets in 2H21 and collaborates with various e-commerce platforms to maximize online services. Currently RALS is trading at 16.35x/1.24x PE/PBV.
2. WEGE IJ get a new contract worth IDR1.63 trillion until August-21. This value is equivalent to 38% of the FY21E target of IDR4.22 trillion. 44% of 34 WEGE’s new projects until August-21 were obtained from modular, WEGE plans to increase the production capacity of Modular from 40 modular/day to 60-80 modular/day. This modular development is carried out to support its core business in building construction (Kontan). MNCS Comment: The cyclical of new contracts for new construction companies will be optimal in 3Q-4Q. WEGE is still working to hit the target in FY21E. Currently WEGE is trading at 8.96x/0.81x PE/PBV levels.
3. CTRA IJ posted marketing sales of IDR3.56 trillion in 1H21 or 61% of the FY21E target of IDR5.87 trillion. Marketing sales increased by +77% YoY which came from sales of houses and land of IDR2.81 trillion, shop houses of IDR302 billion, apartments of IDR412 billion and offices of IDR40 billion (IQ Plus). MNCS Comment: Shophouses and residential areas are the drivers of CTRA's marketing sales growth in 1H21. Several clusters will be launched by CTRA in 2H21, which is expected to support CTRA's performance in FY21E. Currently CTRA is trading at 18.71x/1.14x PE/PBV levels.

IHSG Updates
JCI strengthened by +0.44% to 6,094.87 on Friday (10/09) followed by net foreign buy reaching IDR257.28 billion. JCI strengthened in almost all sectors led by the basic industry (+1.82%) followed by the transport sector (+0.99%). On the other hand, the property by -0.80% followed by the infrastructure sector (-0.80%). JCI closed at the green zone due to the improvement in macro economics such as the surplus on the trade balance and lower daily case of Covid outbreak. On the other hand, the Rupiah strengthened at IDR14,203/USD level on the spot market. We estimate the JCI will move in the range of 5,938-6,150. Today's recommendation: ANTM, MAPI, CTRA, IMJS.

Corporate Action
Public Expose: ABBA, MARI

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