MNCS Morning Navigator

13 September 2023

MNCS Morning Navigator September 13, 2023

Global Market Highlights
The DJIA declined -0.05% on Tuesday (12/09), followed by the S&P500 (-0.57%) and Nasdaq (-1.04%). Wall Street saw a downturn as investors adopted a 'wait and see' approach towards several macroeconomic data points. Additionally, a decline in technology stocks, attributed to negative reports, also weighed down the Wall Street indices. Today, the market will be looking toward several data releases such as: 1) US Core Inflation Rate YoY Aug-2023; 2) US Inflation Rate YoY Aug-2023; 3) UK GDP YoY Jul-2023.

Domestic Update
• The government commenced the second phase of the distribution of its rice reserves in early September. MNCS Comment: We've observed a YTD rice price increase of +11% at the beginning of the third week in September. This surge is primarily due to potential supply disruptions following export bans from India and Myanmar and the effects of El-Nino. We expect this distribution to mitigate the rise in rice prices, especially ahead of the festive season in 4Q23F. This should ensure inflation remains manageable, positively impacting purchasing power.

Company News
1. DRMA IJ is ramping up its expansion for the development of electric vehicle (EV) components and their supportive elements (Kontan). MNCS Comment: We believe the relaxation of the initially targeted 40% TKDN implementation from 2024 to 2026 is a positive catalyst, allowing EV companies more time for comprehensive preparations and to forge strategic partnerships. We're optimistic about the management's growth target of 20% YoY-25% YoY in FY23E being achieved. Currently, DRMA is traded at the level of 9.63x/4.07x PER/PBV.
2. KLBF IJ aims for a revenue of IDR33 trillion in FY23E (Emiten News). MNCS Comment: In 1H23, KLBF reported revenues of IDR15.2 trillion, achieving 46.0% of its FY23E target. We see one catalyst for this revenue being their collaboration with Shanghai Henlius Biotech, Inc. to develop and market injection products in the Middle East and North Africa. Currently, KLBF is traded at the level of 27.90x/4.24x PER/PBV.
3. MEDC IJ in consortium with PacificLight Renewables Pte Ltd and Gallant Venture Ltd, received conditional approval from the Energy Market Authority of Singapore for a 600 MW electricity export (Market Bisnis). MNCS Comment: This aligns with the Singaporean government's goal of importing up to 4 GW of low-carbon electricity by 2035, with 50% of the requirement expected from Indonesia. We view this initiative positively and anticipate it will bolster the company's performance. Currently, MEDC is traded at the level of 7.57x/1.50x PER/PBV.

IHSG Updates
JCI weakened -0.42% to 6,933.97 on Tuesday (12/09), followed by net foreign sell reaching IDR563.76 billion. A number of sectors experienced weakness and weighed on the index, led by the health sector (-0.79%) followed by the financial sector (-0.66%). On the other hand, the sectors that experienced strengthening were led by the raw materials sector (+0.74%) followed by the industrial sector (+0.01%). The index's decline came amid a strengthening Asian market, with investors adopting a 'wait and see' approach ahead of the US inflation data release for Aug-2023. The Rupiah closed lower at IDR15,340/USD. We estimate the IHSG will move within the price range of 6,916-6,941. Today's Recommendations: ELSA, EXCL, MARK, SMRA.

Corporate Actions

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