Global Market Highlight
DJIA strengthened by +0.37% on Thursday (02/09) followed by S&P 500 (+0.28%) and Nasdaq (+0.14%). The Wall Street closing was higher as the released data of the US economy and the strengthening in commodity prices. Subsequently there are some improvements in the US macro indicator such as the US unemployment rate dropped to 5.2% in August-21 (vs 5.4% in July-21), followed by Non-manufacturing business activity or services is likely to have expanded by 62.8 in August-21 (vs 67 in July-21). Today the market will be looking forward to several data releases such as: 1) US Nonfarm Payrolls; 2) US Unemployment Rate; 3) Germany Markit Composite PMI Final.
Domestic Update
• Indonesia Financial Services Authority (OJK) finally announced that loan restructurization will be extended to March-23. MNCS Comment: This countercyclical policy measure is aimed to maintain economic recovery momentum by supporting both debtors and the banking system. As of July-21 banking sector NPL stood at 3.35% vs (3.06% in Dec-20). The NPL figure was still manageable despite rising. However risks for banks are : 1) Delta variant widespread and recent Mu variant that could potentially increase the likelihood of 3rd wave outbreak & prolonged social restriction; 2) further deterioration in banking asset quality due to downgraded assets to NPL. To remain prudent banks still need to consider their allowance for impairment and losses.
• Furthermore, there was an addition of 430 new Covid-19 cases in Jakarta yesterday.
Company News
1. HOKI IJ recorded IDR429.75 billion revenue in 1H21 dropped by -43.14% YoY (vs IDR755.78 billion in 1H20). COGS decreased from IDR669.59 billion in 1H20 to IDR369.99 billion in 1H21. HOKI recorded IDR7.56 billion net profit in 1H21 declined by -68.47% YoY (vs IDR23.98 billion in 1H20) (Bisnis Indonesia). MNCS Comment: We note that online sales still increased by 10% YoY, while the other performance were slowing down. The pandemic has impacted sales channels in traditional markets and the closure of some modern market channels. Currently HOKI trading at 122.21x/2.76x PE/PBV.
2. TINS IJ targets production of 30,000 tons for FY21E. During the 1H21 period, TINS’s ore production achieved 11,457 tonnes declined by -54% YoY compared to 25,081 tonnes in 1H20 (IQ Plus). MNCS Comment: We hope that TINS can accelerate the production. In 1H21 they only reached 38.19% from the production target. However, we expect the rising commodity price will positively affect the top line performance. Currently TINS trading at 20.34x/2.09x PE/PBV levels.
3. MYOR IJ purchased land assets with affiliated parties in Pasuruan and Balaraja with the aim of building a new factory to increase the production capacity of biscuits and wafers. Total land purchases amounted to IDR368.94 billion (Bisnis Indonesia). MNCS Comment: We believe that the additional production capacity of the biscuit segment is in line with the increasing demand for biscuit products amid the pandemic (+1.58% in FY20). Management targets sales to be at the level of IDR32-37 trillion in FY23F-FY25F. Currently MYOR trading at 26.43x/4.12x PE/PBV levels.
IHSG Updates
JCI slipped by -0.21% to 6,078.23 on Thursday (02/09) followed by net foreign sell reaching IDR91.64 billion. JCI closed at the red zone led by the tech sector declined by -2.03%, followed by the cyclical sector (-1.55%). On the other hand, the transportation sector strengthened by +2.19% followed by the industrial sector (+1.07%). The JCI weakened due to the negative sentiment such as the contraction in the manufacturing sector in China and a slowdown in the expansion of the manufacturing sector in Europe and the US. Another factor is the concern due to the spread of the new Covid-19 variant, the 'Mu' variant. On the other hand, the Rupiah strengthened towards the level of IDR14,273/USD on the spot market. Today's recommendation: ADRO, SRTG, LSIP, AGRS.
Corporate Action
Cum Dividend Date: INKP (IDR50/share), TKIM (IDR25/share), LSIP (IDR20/share)
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