Global Market Highlights
DJIA weakened -0.68% on Friday (18/02), followed by S&P 500 (-0.72%) and Nasdaq (-1.23%). Wall Street was pressured by the increasing escalation of Russian-Ukrainian geopolitical tensions, where it is estimated that Russia will continue to increase the number of troops to 190,000 and is ready to carry out an invasion. The negative sentiment was exacerbated by the hawkish tone of the Fed which allowed it to raise interest rates on Mar-22 and start the reduction of the Fed's balance sheet at several FOMC meetings after that. In addition, the release of Conference Board Leading Economic Index data for Jan-22 minus -0.3% MoM (vs +0.2% on consensus/+0.7% in Dec-21) made market players pessimistic about the economic situation. Today, the market will be looking toward several data releases such as: 1) US Fed Bowman Speech; 2) Germany Markit Composite PMI Flash; 3) China House Price Index YoY.
Domestic Update
• During the period of February 14-17 Indonesia recorded a foreign inflows amounting to IDR10.81tn including IDR7.82 tn in the equity market and IDR2.99 tn in government bonds according to Bank Indonesia. MNCS Comment: Foreign inflows continued despite the Fed tightening agenda which we believe to reflect investors confidence in Indonesia on the back of a more resilient economy and attractive financial asset valuation.
• Furthermore, the second dose of vaccination rate nationally has reached 67.3% or equivalent to 140.18 million people.
Company News
1. TLKM IJ targets 5% - 6% YoY of revenue growth in FY22E. Maintaining profitability is considered as an important indicator in maintaining the company's benchmark globally (Emiten News). MNCS Comment: We see that the company is optimistic that it might maintain its performance by maintaining its EBITDA margin at around 50%. Besides, the company is currently focusing on developing digital infrastructure, especially data centers, which has the potential to grow in the future. TLKM is trading at the level of 17.32x/4.16x PER/PBV.
2. ADHI IJ plans to conduct a right issue in 2Q22 as a follow up from the government's capital injection. If the company maintains 51% of government ownership, the company will gain IDR3.86 trillion of funds, including funds from National Equity Participation (Bisnis Indonesia). MNCS Comment: The proceeds from the right issue will be used to maximize internal cash in completing large toll road projects and pay off bonds. Therefore, the company is expected to maximize its performance in FY22E. ADHI is trading at the level of 0.60xPBV.
3. BANK IJ cooperates with Evermos start up to provide facilities for resellers in conducting financial transactions and develop MSME partners to expand their business (Emiten News). MNCS Comment: We see that through this collaboration, the company will be able to expand its ecosystem by reaching more individuals through Evermos MSME partners. BANK is trading at the level of 27.30xPBV.
IHSG Updates
JCI rose +0.84% to 6,892.82 on Friday (18/02), followed by net foreign buys which reached IDR799.28 billion. The majority of sectors were positive, led by the infrastructure sector (+2.37%) followed by the technology sector (+1.90%). On the other hand, the transportation sector weakened -1.04% followed by the health sector (-0.15%). JCI appreciated following the positive news that came from Indonesia's Balance of Payments (BOP) in FY21 which recorded a surplus of USD13.5 billion (vs surplus of USD2.6 billion in FY20). This has also boosted foreign optimism for the domestic economy, which is indicated by the inflow that still exists. Positive news also came from the Covid-19 development situation where the addition of positive cases began to slope, recorded on (20/02) of 48,484 cases, a decrease when compared to the previous day (19/02) which reached 59,383 cases. On the other hand, the Rupiah weakened at IDR14,328/USD level. We estimate that the JCI will move in the range of 6,820-6,930. Today’s recommendation: TOWR, ELSA, PWON, ERAA.
Corporate Action
Cum Right Issue Date: ESIP (IDR89/share)
RUPS: CASH, DSSA
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