Global Market Highlights
DJIA slipped by -1.47% on Thursday (10/02), followed by the S&P 500 (-1.81%) and the Nasdaq (-2.10%). Wall Street ended sharply lower on Thursday after US consumer prices data came in higher than expected at 7.5% YoY in Jan-22, exceeding economists' estimates of 7.3% and marking the biggest annual increase in inflation in 40 years. Subsequently, a statement from the Federal Reserve raised fears that the US central bank will hike rates aggressively to fight inflation, thus becoming a negative catalyst for Wall Street. Today, the market will be looking toward several data releases such as: 1) US Michigan Consumer Sentiment Prel; 2) Germany Inflation Rate YoY Final ; 3) UK GDP YoY.
Domestic Update
• Moody's has affirmed Indonesia's sovereign credit rating at Baa2 with stable outlook as announced on Feb 10, 2022. MNCS Comment: The key contributing factors to this rating affirmation include macroeconomic resilience and sound macro-policy. We believe that this will be a positive catalyst to attract capital inflow. As of Feb 8, 2022, BI reported that there is an inflow of USD1.1 billion which reflects Indonesia to still become an attractive destination for investment amid Fed's policy normalization that historically triggered massive outflows from EM countries.
• Furthermore, the second dose of vaccination rate nationally has reached 64% or equivalent to 133.23 million people.
Company News
1. UNVR IJ recorded IDR5.76 trillion of net profit in FY21, drop -19.6% YoY (vs IDR7.16 trillion in FY20). The decrease in net profit was in line with the decline in net sales of IDR39.5 trillion in FY21, or down -7.97% YoY (CNBC Indonesia). MNCS Comment: We see the decrease in the sales is caused by lower people's purchasing power amid the Covid-19 pandemic. With the recovery of the economy this year, the company is optimistic that it might improve its performance. UNVR is trading at the level of 26.37x/35.14x PER/PBV.
2. INCO IJ has produced 65,388 metric tons of nickel in matte in FY21, down -9.48% YoY. However, this realization was above the target set at 64,000 metric tons (Kontan). MNCS Comment: This year the company targets the same total nickel production to be around 64,000 tons. We see that after the rebuild of furnace 4 construction project is completed on May 22, the company's total nickel production has the potential to increase in FY22. INCO is trading at the level of 20.33x/1.58x PER/PBV.
3. MIKA IJ plans to buyback shares for the fourth stage with a maximum amount of IDR500 billion for a total of 200 million shares. By 10 Feb-22, the company had realized a buyback of IDR179.34 billion or 79.95 million shares (Bisnis Indonesia). MNCS Comment: The company expects this action to have no significant impact on revenue considering the buyback was financed by internal cash. This buyback is expected to maintain the stability of the company's share price in the market. MIKA trading at the level of 27.35x/6.25x PER/PBV.
IHSG Updates
JCI weakened -0.16% to 6,823.64 on Thursday (10/02), followed by net foreign buys which reached Rp1.73 trillion. The sectors that led the index's decline were the technology sector (-1.69%) and the energy sector (-1.43%). On the other hand, the sectors that experienced strengthening were led by the raw materials sector (+1.78%) followed by the transportation sector (+1.41%). The index's movement direction was opposite to other Asian indices which strengthened, including the Nikkei (+0.42%), Hang Seng (+0.38%), and SSE (+0.17%). The index's weakness was relatively limited as large-cap stocks weakened which weighed on the index and indicated profit-taking, while foreign investors remained optimistic as reflected by high and consistent inflows over the last few trading days. External sentiment on coal commodity prices pressured energy stocks as the Chinese government warned miners not to increase prices and efforts to ensure supplies remain sufficient. From the development of the Covid-19 situation, it was recorded that until (10/02) there were additional positive cases reaching +40,618. On the other hand, the Rupiah strengthened at IDR14,343/USD level. We estimate that the JCI will move in the range of 6,780-6,850 while waiting for the consumer confidence to be released. Today’s recommendation: DOID, CENT, WIFI, MIKA.
Corporate Action
Cum Right Issue Date: AMAR (IDR173/share)
RUPS: AGRS, MSIN
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