Global Market Highlight
DJIA rose by +1.00% on Wednesday (22/09) followed by S&P 500 (+0.95%), and Nasdaq (+1.02%). Wall Street ended higher as investors mostly took in stride the latest signals from the Federal Reserve after the FOMC meeting to begin cutting its USD120 billion monthly bond purchases that could get underway in November, and end in mid-2022. The Federal Open Market Committee left its benchmark rate unchanged. Today the market will be looking forward to several data releases such as: 1) US Markit Manufacturing PMI Flash; 2) Germany Markit Composite PMI Flash; 3) UK BoE Interest Rate Decision.
Domestic Update
• Indonesia money supply (M2) grew by 6.9% YoY to IDR7,199tn in August-21 or lower than previous month growth of 8.9% YoY. MNCS Comment: M1 grew at 9.8% YoY while quasy money rose by 5.9% YoY last month. Factors affecting M2 growth were Indonesia net foreign asset and loan disbursement. We believe that ample liquidity in the economy would not be translated into a higher output and inflation if public activity restrictions remain in place.
• Furthermore, there was an addition of 227 new Covid-19 cases in Jakarta yesterday.
Company News
1. WIKA IJ revised the new contract target to IDR35 trillion for FY21E from the previous IDR40.12 trillion. Until 1H21 WIKA has obtained a contract of IDR10.5 trillion. Currently, WIKA is still on tender which has a value of IDR25 trillion (Bisnis Indonesia). MNCS Comment: We see that along with the sloping Covid-19 case, there is the potential for new projects to emerge, WIKA's performance is expected to improve better. Currently WIKA is trading at 58.87x/0.71x PE/PBV levels.
2. MTDL IJ invested USD500,000 in Sayurbox or around IDR7 billion. This investment objective is the company's grand strategy to be fully involved in digital transformation in Indonesia (Kontan). MNCS Comment: We see that MTDL continues to develop digital business based, Sayurbox has a large and growing customer base and potentially becomes a prospective investment opportunity for MTDL. Currently MTDL is trading at 14.21x/2.77x PE/PBV levels.
3. KRAS IJ with Pohang Steel and Iron Company (Posco) from South Korea will realize a new investment of USD3.7 billion in FY22E. Where USD700 million to produce derivatives hot rolled coil (HRC). The remaining USD3 billion will be used to add steel production facilities in the upstream industry. On the other hand, the new Hot Strip Mill 2 factory in Cilegon owned by KRAS has been inaugurated by President Joko Widodo, the factory's production capacity is 1.5 million tons per year, this factory will increase the total production capacity to 3.9 million tons per year (Bisnis Indonesia). MNCS Comment: We see that the construction of the KRAS plant has good potential, driven by domestic steel consumption with a 40% increase in steel demand in the last 5 years. The existence of the factory is expected to be able to suppress imports and save the country's foreign exchange up to IDR29 trillion. KRAS is currently trading at 10.57x/1.22x PE/PBV.
IHSG Updates
JCI strengthened by +0.78% to 6,108.26 on Wednesday (22/09) followed by net foreign buy reaching IDR506.05 billion. JCI closed higher in almost all sectors, led by the transportation sector (+2.24%), followed by the energy sector (+1.29%). On the other hand, the tech sector weakened by -1.69%. JCI ended higher due to the decision of Bank Indonesia to keep the interest rate at 3.5% level as an effort to maintain exchange rate stability and the financial system, as well as to encourage economic growth. Subsequently, investor optimism was boosted by the statement of the Governor of Bank Indonesia that the impact of tapering on Indonesia's economy is not as severe as in the previous period due to Indonesia's stronger economic fundamentals this year. On the other hand, the Rupiah weakened at IDR14,242 level. We estimate the JCI will move in the range of 6,070-6,150. Today's recommendation: BBNI, INDF, AALI, BRPT.
Corporate Action
RUPS: BBCA, MOLI
Disclaimer On
