Global Market Highlights
DJIA strengthened by +0.64% on Monday (19/09), followed by the S&P500 (+0.69%) and the Nasdaq (+0.76%). Wall Street rebounded amidst the release of the NAHB Housing Market Index data on Sep-22 which contracted to a 9-month low of 46 points (vs 47 points on consensus). Today, the market will be looking toward several data releases such as: 1) US Building Permits Mom Aug; 2) US Housing Starts Mom Aug; 3) Germany PPI YoY Aug.
Domestic Update
• Bank Indonesia is projected to raise the BI7DRR benchmark interest rate by 25 bps in Sep-22. MNCS Comment: This is done to maintain the stability of IDR against USD which is already close to IDR15,000 and also to keep spreads with FFR attractive. Furthermore, the potential for increased inflation due to the increase in subsidized fuel prices will also be the driver of the increase in the benchmark interest rate.
• Furthermore, the national Covid-19 daily rate had increased by 1,620 active cases (19/09).
Company News
1. SIDO IJ targeted double-digit growths of revenue and net profit in FY22E, supported by a capex allocation of IDR200 billion (Emiten news). MNCS Comment: SIDO experienced a decline in performance in 1H22 where revenue and net profit contracted -2.58% YoY/-11.24% YoY, in line with the decline in sales volume triggered by rising inflation. We project that the inflation rate up to FY22E can reach ~6% YoY in line with the increase in subsidized fuel prices, so we tend to be pessimistic about the target. We project FY22E revenue and net profit of -13.2% YoY/-28.2% YoY. Currently, SIDO is traded at the level of 25.08x/6.90x PER/PBV.
2. TINS IJ targeted the operation of Smelter Ausmelt Furnace in Nov-22, with an investment value of USD80 million and a capacity of 40 thousand tons of crude tin per year (Emiten News). MNCS Comment: With a projected efficiency of 25-30%, it is hoped that the operation of the smelter can boost the company's performance, especially on the bottom-line. In 1H22, the company's net profit increased +300.67% YoY, while NPM grew to 14.47% (vs 4.60% in 1H21). Currently, TINS is traded at the level of 4.89x/1.50x PER/PBV.
3. WSKT IJ reported the contract value that was successfully obtained related to the construction of IKN (State Capital City) reaching IDR2.2 trillion (Kontan). MNCS Comment: WSKT itself holds 41.51% of the contract value of the total IKN phase 1 basic infrastructure development budget of IDR5.3 trillion. It is hoped that the company's expansion in winning the IKN project tender and the rights issue in 4Q22 will be a turnaround for the company's performance. Currently, WSKT is traded at the level of 1.48x PBV.
IHSG Updates
JCI rose by +0.37% to 7,195.49 on Monday (19/09), followed by net foreign buy which reached IDR109.14 billion. A number of sectors experienced strengthening and boosted the index rate, led by the health sector (+1.22%) followed by the cyclical sector (+0.57%). On the other hand, the sectors that experienced weakening were the transportation sector (-1.86%) followed by the energy sector (-1.83%). The index managed to outperform other Asian bourses. We see that investors tend to be optimistic ahead of the release of China's lending rates, which are expected to remain dovish, thus supporting global economic growth. On the other hand, the Rupiah exchange rate closed lower at IDR14,978/USD. We estimate that the JCI will move in the price range of 7,140-7,250. Today's recommendation: ASII, DOID, HRUM, LPPF.
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