Global Market Highlight
DJIA strengthened by +0.68% on Wednesday (15/09) followed by S&P 500 (+0.85%), and Nasdaq (+0.82%). Wall Street was closed at the green zone boosted by US core inflation data which slowed to 0.1% MoM in Aug-21 (vs 0.3% in July-21). On the other hand, rising crude prices boosted energy shares. We see that the sharp jump in oil prices comes just days after OPEC+ increased production by 400,000 barrels per day. Today the market will be looking forward to several data releases such as: 1) US Retail Sales MoM; 2) Eurozone Balance of Trade; 3) China FDI (YTD) YoY.
Domestic Update
• Indonesia's external debt position stood at USD415.7 billion on July-21 according to Bank Indonesia (BI). The external debt grew by 1.7% YoY or lower than 2% YoY in the previous month. MNCS Comment: Such development was driven by the government slowing growth of the external debts. The government's external debt was recorded at USD205.9 billion on July-21 due to the declining position of domestic Government Securities (SBN) and net payments of bilateral loans. Indonesia's external debt was at around 36.6% GDP in July-21, lower than 37.5% GDP in the previous month. In addition, the structure of Indonesia's external debt remained dominated by long-term maturity debt with an 88.3% share of total external debt. The figures seemed manageable but challenges to stay longer on how the government can bring down the budget deficit to below 3% in 2023 through fiscal consolidation and reducing debt financing dependency.
• Furthermore, there was an addition of 305 new Covid-19 cases in Jakarta yesterday.
Company News
1. ASII IJ targets the number of users of its digital wallet product, AstraPay, to reach 15 million users by FY24E. Until now, the number of registered users is 2.3 million users. Through AstraPay, ASII focuses on mobility transportation and daily payments (Bisnis Indonesia). MNCS Comment: We see this is ASII's strategy to complement the digitalization of the enterprise ecosystem, including the possibility to launch a digital bank. Through the AstraPay digital wallet, the company is expected to be able to increase customer journey and customer loyalty. Currently ASII is trading at 12.38x/1.35x PE/PBV levels.
2. MIKA IJ plans to carry out the second phase of share buyback for the period from September 15, 2021 to December 14, 2021, with a maximum of IDR200 billion or equivalent to 80 million shares. MIKA limits the buyback price to a maximum of IDR2,500/share and this action will be funded by MIKA’s internal cash (Emitennews). MNCS Comment: We see that MIKA has sufficient working capital and cash reserves, the buyback will be carried out using internal cash and does not require additional financing. Thus the company's income will not be significantly affected. Currently MIKA is trading at 28.11x/6.22x PE/PBV levels.
3. KIOS IJ plans to conduct a right issue of up to 358.61 million shares with a nominal value of IDR100/share and an exercise price of IDR700/share, subsequently, KIOS will get funds of IDR251.03 billion from this corporate action (IQ Plus). MNCS Comment: We see this is a KIOS strategy to encourage business growth, especially in trading, warehousing and telecommunications business activities. This action is expected to have a positive effect on the company's financial condition. KIOS is currently trading at 271.17x/13.43x PE/PBV.
IHSG Updates
JCI weakened by -0.31% to 6110.23 on Wednesday (15/09) while net foreign buy reaching IDR222.21 billion. JCI closed lower in almost all sectors, led by the industrial sector (-0.90%), followed by the basic industry (-0.76%). On the other hand, the energy sector rose by +0.85%, followed by the tech sector (+0.64%). The drop on JCI was in line with the weakening on the other regional markets. Meanwhile, the release of trade balance data for August-21 recorded an increase in export by +64.1% YoY, and import data of +55.26% YoY. The actual value of trade balance is USD4.74 billion or two times higher than consensus. On the other hand, the Rupiah strengthened at IDR14,243 level on the spot market. We estimate the JCI will move in the range of 6,020-6,150. Today's recommendation: FREN, ACES, AGRO, MEDC.
Corporate Action
Public Expose: ARKA, BBSS
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