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MNCS Morning Navigator

06 September 2022

MNCS Morning Navigator September 6, 2022

Global Market Highlights
Wall Street closed commemorating Labor Day on Monday (05/09). Market participants will be watching the release of the ISM Non-manufacturing PMI on Aug-22 where the consensus estimates that it will slow down to 55.1 points (vs 56.7 points on Jul-22). Meanwhile, European markets closed corrected as: 1) potential energy crisis due to disruption of natural gas supply from Russia; 2) Aug-22 S&P Global Services PMI data which was corrected to a contraction level of 49.8 points from 50.2 points. Today, the market will be looking toward several data releases such as: 1) US ISM Non-Manufacturing PMI Aug; 2) US S&P Global Composite PMI Final Aug; 3) UK S&P Global/CIPS Construction PMI Aug.

Domestic Update
• The government plans to conduct an auction of 6 series SBSN with an indicative target of IDR9 trillio on Tuesday (06/09). MNCS Comment: We think investors will tend to wait and see as UST yields rise and IDR weakens recently. We expect potentially lower incoming bids value from the previous auction this time.
• Furthermore, the national Covid-19 daily rate had increased by 2,340 active cases (05/09).

Company News
1. SMGR IJ recorded a -2.08% YoY decline in revenue in 1H22 to IDR15.88 trillion (vs IDR16.21 trillion in 1H21). Meanwhile, net profit increased +4.36% YoY to IDR828.76 billion (vs IDR794.12 billion in 1H21) (Kontan). MNCS Comment: The decline in revenue was in line with the decline in sales of the Clinker segment (-34.07% YoY) which contributed to 8.03% of the company's total revenue in 1H21. Meanwhile, the increase in net profit was supported by an increase in other operating income by +724.67% YoY and a decrease in financial expenses by -23.90% YoY. SMGR is currently traded at the level of 23.35x/1.06x PER/PBV.
2. ELSA IJ reported that the realization of the on-hand consolidation work contract has reached 80% of the FY22E target. On the other hand, the company targeted revenue and net profit in FY22E to reach IDR8 trillion/IDR200 billion (Emiten News). MNCS Comment: We are optimistic that ELSA can achieve this target, supported by an increase in the oil lifting target in FY23F by 660 bpd (FY22E outlook of 625-630 bpd), as well as recovering oil demand following the post-pandemic. In 1Q22, ELSA's revenue and net profit rose by +34,43% YoY/+4,562.97% YoY, respectively. Currently, ELSA is traded at the level of 7.99x/0.62x PER/PBV.
3. ENRG IJ posted a +38.41% YoY revenue growth in 1H22 to USD230.19 million (vs USD166.31 million in 1H21). Meanwhile, net profit increased by +101.04% YoY to USD25.84 million (vs USD12.85 million in 1H21) (Emiten News). MNCS Comment: Revenue growth was supported by higher sales in the natural gas segment (+31.71% YoY) and crude oil (+69.07% YoY). The increase in net profit was in line with the reduced penalty burden -86.83% YoY which led to an increase in profit before tax +42.51% YoY. ENRG is currently traded at the level of 8.84x/0.83x PER/PBV.

IHSG Updates
JCI rose by +0.76% to 7,231.88 on Monday (05/09), followed by net foreign buy which reached IDR1.51 trillion. A number of sectors experienced strengthening and boosted the index rate, led by the energy sector (+3.83%) followed by the industrial sector (+1.81%). On the other hand, the sectors that experienced weakness were led by the transportation sector (-1.80%) followed by the health sector (-1.16%). We see that, apart from the strengthening of global coal prices, market players have already priced-in to the increase in subsidized fuel prices and anticipated the rate of inflation rising in the future. On the other hand, the Rupiah exchange rate closed lower at IDR14,903/USD. We estimate that the JCI will move in the price range of 7,200-7,250. Today's recommendation: BBNI, BIRD, TINS, TOBA.

Corporate Actions
Cum Dividend: SMSM (IDR25/share)
Public Expose: BNLI

Disclaimer On

SMGR ELSA ENRG BBNI BIRD TINS TOBA SMSM BNLI

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