Global Market Highlights
DJIA rose +0.78% on Tuesday (01/01) followed by S&P 500 (+0.69%) and Nasdaq (+0.75%). Value stocks including energy, industrials and materials underpinned the broader market, with energy leading the way, supported by a jump in shares of energy giant Exxon Mobil. Meanwhile, on the economic front, US manufacturing activity slowed, but by less than expected. ISM manufacturing data for January showed a decline to 57.6, and deeper dive into the data pointing to easing supply chain problems, though at a modest pace. A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12% of the US economy. Today, the market will be looking toward several data releases such as: 1) US MBA Mortgage Applications; 2) US ADP Employment Change; 3) Eurozone Core Inflation Rate YoY Flash.
Domestic Update
• Bank Indonesia and People's Bank of China agreed to continue the Bilateral Currency Swap Agreement (BCSA) and allowed the exchange between the two central banks up to CNY250 billion or equivalent to IDR550 trillion. MNCS Comment: This policy is part of promoting bilateral trade and direct investment in local currency between two countries to maintain currency stability.
• Furthermore, the second dose of vaccination rate nationally has reached 61.7% or equivalent to 128.40 million people.
Company News
1. SSMS IJ has budgeted IDR600 billion of capital expenditure (capex) in FY22E, up +9.09% YoY (vs. IDR550 billion in FY21). Capex is sourced from the company's internal funds and will be allocated for planting and non planting (Bisnis Indonesia). MNCS Comment: We see that with the increased capex, the company aims to be more expansive, where in FY22E SSMS targets its production to increase by 6% - 8% YoY. In addition, the company's optimism was also supported by a significant increase in net profit of +286.38% in 3Q21 to IDR1.03 trillion. SSMS is trading at the level of 6.98x/1.71x PER/PBV.
2. TAPG IJ assesses that the DMO policy is able to maintain the CPO price stability and will not significantly affect the company's performance. TAPG is optimistic that its production of fresh fruit bunches will rise +18% in FY22E (Bisnis Indonesia). MNCS Comment: We view that the company has the potential to increase revenue this year in line with the increasing demand of CPO and company’s plan to increase its CPO mill capacity to 980,000 in FY22E. TAPG is trading at the level of 14.51/1.96x PER/PBV.
3. BRIS IJ recorded a positive performance in FY21 with a net profit of IDR3.03 trillion, up +38.45% YoY (vs IDR2.19 trillion in FY20). Profit sharing rights owned by the banks grew +12.61% YoY to IDR13.43 trillion (Emiten News). MNCS Comment: We see that the good performance in FY21 caused economic recovery and the prospect of the sharia banking business might be a positive catalyst for the company in FY22E. BRIS is trading at the level of 21.11/2.63x PER/PBV.
IHSG Updates
JCI fell -0.22% to 6,631.15 on Monday (31/01) followed by net foreign sell which reached IDR107.64 billion. Although 6 of the 11 sectors were recorded to be increasing, the weakened finance sector (-0.42%) and property sector (-0.30%) dragged the index down. On the other hand, the sector leading the index strengthening was the cyclical sector (+1.84%) followed by the basic material sector (+1.70%). The weakening of the index was also driven by the investors’ action of taking profit on the strengthening of the banking sector with big caps after the release of the FY21 financial reports that was recorded with positive performance and exceeded the investors’ expectations. The investors were also monitoring the increasing trend of the COVID-19 where upto (30/01), there was a reported increase to +12,422 cases followed by the increasing Bed Occupancy Rate (BOR) per (30/01) to 56% and BOR of ICU to 19%. This certainly concerned the investors and hindered the economic recovery process in 1Q22. On the other hand, the Rupiah weakened at IDR14,383/USD level. We estimate that the JCI will move in the range of 6,570-6,650 while waiting for the release of YoY inflation data. Today’s recommendation: MDKA, BRMS, MIKA, BRPT.
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