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MNCS Morning Navigator

09 September 2022

MNCS Morning Navigator September 9, 2022

Global Market Highlights
DJIA rose by +0.61% on Thursday (08/09), followed by S&P500 (+0.66%) and Nasdaq (+0.60%), Wall Street continued its gains, supported by: 1) lower inflation expectations to 2.41% or lowest in 6 weeks; 2) initial claims as of 3-Sep'22 which fell to 222,000 (vs 240,000 at convention). Today, the market will be looking toward several data releases such as: 1) US Wholesale Inventories MoM Jul; 2) US Fed Evans Speech; 3) France Industrial Production MoM Jul.

Domestic Update
• Bank Indonesia (BI) noted that consumer optimism for the economy increased as reflected in the Consumer Confidence Index (CCI) which increased 1.5 points MoM to 124.7 in August-22. MNCS Comment: The increase in consumer optimism in August 2022 was driven by increased consumer confidence in current economic conditions and expectations for the future economy in line with: 1) the downward trend in Covid-19 cases; 2) continuous improvement in public mobility and 3) availability of credit.
• Furthermore, the national Covid-19 daily rate had increased by 3,138 active cases (08/09).

Company News
1. UNTR IJ targets Komatsu heavy equipment sales in FY22E to 5,000 units, in line with the still high global coal price (Business Market). MNCS Comment: The company's heavy equipment sales target increased from the initial estimate of 3,700 units and 4,800 units. Meanwhile, up to 7M22, heavy equipment sales increased +117.33% YoY to 3,399 units (vs 1,564 units in 7M21). We are optimistic about the company's target, supported by a capex allocation of USD750-800 million (vs USD190 million in FY21). Currently, UNTR is traded at the level of 6.19x/1.65x PER/PBV.
2. ERAA IJ will conduct a buyback of a maximum of 3 billion shares with an allocation of funds reaching IDR300 billion starting from September 8, 2022 to December 7, 2022. Previously, on 22-Aug'22, the company had completed the buyback with a total absorbed share of 71,695,900 shares worth IDR35.5 billion (Emiten News). MNCS Comment: In 1H22, the company recorded cash and cash equivalents of IDR851.95 billion, which was ample in carrying out a buyback action. We see that the buyback action is in line with maintaining stock price fluctuations in line with YTD -21.00% performance. In addition, the increase in treasury shares will maintain the company's earnings in line with the potential for the company's business expansion. Currently, ERAA is traded at the level of 7.45x/1.20x PER/PBV.
3. DOID IJ extended the buyback period for 3 months, starting from September 8, 2022 to December 7, 2022 (Kontan). MNCS Comment: The remaining buyback allocation is USD12.85 million and the remaining shares that can be bought back are 1.12 billion shares. With this buyback, the shares will become treasury shares that can be used by the company to obtain additional earnings from the dividends. Currently, DOID is traded at the level of 21.18x/0.98x PER/PBV.

IHSG Updates
JCI strengthened +0.63% to 7,232.02 on Thursday (08/09), followed by net foreign buy which reached IDR1.00 trillion. A number of sectors experienced strengthening and boosted the index rate, led by the raw materials sector (+1.99%) followed by the technology sector (+1.73%). On the other hand, the weakening sectors were led by the energy sector (-1.32%) followed by the non-cyclical sector (-0.84%). The index managed to rebound, supported by positive catalysts from the release of Consumer Confidence Index (IKK) data on Aug-22 of 124.7 points, up from Jul-22 of 123.2, reflecting consumer confidence in the current economic conditions and relatively positive future expectations. On the other hand, the Rupiah exchange rate closed higher at Rp14,898/USD. We estimate that the JCI will move in the price range of 7,200-7,280 pending the release of Retail Sales YoY Jul data. Today's recommendation: BBRI, EXCL, INDF, LPPF.

Corporate Actions
Cum Dividend: GEMS (IDR505.75/share)
RUPS: MITI, MTWI

Disclaimer On

UNTR ERAA DOID BBRI EXCL INDF LPPF GEMS MITI MTWI

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