MNCS Morning Navigator

23 September 2022

MNCS Morning Navigator September 23, 2022

Global Market Highlights
DJIA weakened by -0.35% on Thursday (22/09), followed by the S&P500 (-0.84%) and the Nasdaq (-1.37%). Wall Street continued its correction as US T-note 10Y yields continued their gain of +16.4 bps to 3.69%. In addition, investors were also watching the release of data on initial jobless claims per 17-Sep'22 which rose to 213,000 (vs 208,000 in the previous). Today, the market will be looking toward several data releases such as: 1) US S&P Global Composite PMI Flash Sep; 2) US S&P Global Manufacturing PMI Flash Sep; 3) UK S&P Global/CIPS Manufacturing PMI Flash Sep.

Domestic Update
Bank Indonesia (BI) estimates that headline and core inflation will rise to >6% & 4.6% by the end of the year due to the increase in subsidized fuel prices and the impact is expected to last for 3 months. MNCS Comment: BI's forecast is in line with our estimation so that going forward, BI will still raise the benchmark interest rate by at least another 75 bps to 5.00%.
Furthermore, the national Covid-19 daily rate had increased by 2,162 active cases (22/09).

Company News
1. ASII IJ reported that the realization of capex in 1H22 was IDR7.6 trillion. The majority of capex is used for the mining and heavy equipment division (Emiten News). MNCS Comment: The realized capex increased by +111.11% YoY from 1H21 to IDR3.6 trillion. The increase was in line with the increase in the allocation target from FY21 of IDR12 trillion to IDR25-26 trillion in FY22E. ASII is currently traded at the level of 7.99x/1.58x PER/PBV.
2. ERAA IJ planned to form a Joint Venture (JV) with Blackhawk Network Pte Ltd. through its entity, namely PT Prakarsa Prima Sentosa. The business model for the JV will be in the form of gift cards and digital commerce (Emiten News). MNCS Comment: Management explained that the domestic gift card market in FY26F was valued at USD2.42 billion. It is hoped that through the formation of the JV, it will further add to the expansion of ERAA's portfolio and can encourage the company's performance in the future. Currently, ERAA is traded at the level of 7.17x/1.16x PER/PBV.
3. RALS IJ will conduct a buyback with a tactical fund allocation of IDR 200 billion, after obtaining approval from the EGMS on 29-Aug'22. The buyback period lasted for 18 months (Emiten News). MNCS Comment: The company's cash is still ample in doing buybacks, where in 1H22 it was recorded at IDR1.69 trillion (vs IDR1.58 trillion in FY21). In addition, we see that the buyback is also carried out after the company's performance has gradually recovered following the post-pandemic, where in 1H22 the company managed to record revenue growth and net profit of +8.11% YoY/+107.53% YoY respectively. Currently, RALS is traded at the level of 7.26/1.13 PER/PBV.

IHSG Updates
JCI rose by +0.43% to 7,218.91 on Thursday (22/09), followed by net foreign buy which reached Rp835.25 billion. The majority of sectors experienced strengthening and boosted the index rate, led by the energy sector (+2.21%) followed by the raw materials sector (+1.12%). On the other hand, the weakening sectors were led by the technology sector (-0.45%) followed by the health sector (-0.45%). The index managed to outperform the Asian markets and Wall Street. We see that market participants tended to respond positively to Bank Indonesia's move to increase the benchmark interest rate (BI7DRR) in Sep-22 by +50 bps or higher than the consensus, to curb the rising inflation and maintain Rupiah exchange rate stabilization. On the other hand, the Rupiah exchange rate closed lower at IDR15,018/USD. We estimate that the JCI will move in the price range of 7,140-7,250 pending the release of M2 Money Supply YoY Aug data. Today's recommendation: ADRO, BBRI, ESSA, MTDL.

Corporate Actions
Cum Dividend: SMMT (IDR60/share)
Public Expose: PNGO

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