Global Market Highlight
US indices closed on Monday (05/07) in celebration of US Independence Day. While, global crude oil prices rose as the OPEC+ meeting has not yet reached an agreement to increase production by 2 million barrels per day. From the US Department of Labor released PCE core inflation in May grew +3.4% YoY, the growth is the highest since 1992. The market will look forward to several data releases today, such as: 1) US ISM Non-Manufacturing PMI; 2) Germany ZEW Economic Sentiment Index; 3) EuroZone ZEW Economic Sentiment Index
Domestic Update
• Indonesia reported a state budget deficit of 1.72% GDP or IDR283.2 trillion in the 1H21. The state income reached IDR886.9 trillion (50.9% target) and total government spending was IDR1,170.1 trillion (42.5% target). MNCS comment: We expect state spending continues to be intensified in response to Covid-19 cases spike recently. Under the Economic Recovery Program (PEN), the government allocates nearly IDR40 trillion to cushion the economic impact of stricter social restriction by disbursing healthcare support and social assistance. Rising Covid-19 cases will also derail fiscal outlook and challenge consolidation agenda. FY21 budget deficit is expected to be more than 5%.
• Furthermore, there was an addition of 10,903 new Covid-19 cases in Jakarta yesterday.
Company News
1. ACES IJ prepared an online distribution strategy in the midst of implementing emergency PPKM through several platforms such as ruparupa.com, Ace online, tokopedia and shopee. ACES is still targeting the opening of 8 new stores in FY21E (Kontan). MNCS Comment: We see that the online distribution strategy is the right strategy amidst the temporary closure of outlets during an emergency PPKM. However, SSSG still has the potential to be under pressure in 3Q21. Capex was only budgeted at IDR100 billion in FY21E or lower than last year's IDR250 billion in the midst of low community mobility. Currently ACES is trading at 37.66x/4.54x PE/PBV levels.
2. IPCC IJ posted revenue of IDR119.92 billion in 1Q21, down -3.24% YoY (vs IDR123.93 billion in 1Q20). However, COGS increased from IDR68.79 billion in 1Q20 to IDR77.03 billion in 1Q21. IPCC posted a net profit of IDR17.89 billion in 1Q21 which was down -12.30% YoY (vs IDR20.40 billion in 1Q20) (Bisnis Indonesia). MNCS Comment: The non-optimal sales of imports and exports of vehicles and heavy equipment have led to the IPCC's low income. In addition, IPCC is still trying to reduce costs to get efficiency in FY21. Currently IPCC is trading at 0.99x PBV levels.
3. GJTL IJ posted revenue of IDR3.92 trillion in 1Q21, up +3.16% YoY (vs IDR3.79 trillion in 1Q20). COGS also increased from IDR3.02 trillion in 1Q20 to IDR3.16 trillion in 1Q21. GJTL posted a net profit of IDR114.19 billion in 1Q21 which increased (vs net loss of IDR 539.57 billion in 1Q20) (Kontan). MNCS Comment: Other than the increase revenue, GJTL also reduced their general and admin fee as well as finance cost. But what really support the bottom line is a significant reduction on forex loss. Currently GJTL is trading at 5.91x/0.38x PE/PBV levels.
IHSG Updates
JCI fell by -0.29% to 6,005.61 on Monday (05/07) followed by net foreign sell reaching IDR326.30 billion. JCI closing was lower along with various sectors, as the non-cyclical sector weakened by -2.16%, followed by energy (-0.98%). On the other hand, the health sector strengthened by +2.05% followed by transport (+1,35%). The market tends to be less reactive with the implementation of PPKM, it has anticipated with price in some time in advance, the tightening that occurs in Emergency PPKM is still fairly normal because it is not fully locked down. Meanwhile the Rupiah exchange rate was weakening at IDR14,532. We estimate the JCI will move in the range of 5,950-6,070 while waiting for foreign exchange reserves data MoM release. Today's recommendation: SSMS, MAPI, INAF, PNLF.
Corporate Action
Cum Dividend Date: AMAG (IDR50/share), IMAS (IDR25/share)
IPO: BMHS (IDR340/share)
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