Global Market Highlight
Dow jones slipped by -0.76% on Tuesday (07/09) followed by S&P 500 (-0.34%), while Nasdaq rose slightly by 0.07%. The Wall Street closing was mixed due to investors worries about the slowing pace of economic recovery with expectations that the Federal Reserve will maintain its accommodative monetary policy. Accommodative central bank policies and reopening optimism have pushed the S&P 500 and Nasdaq to record highs over the past few weeks, but concerns are growing about rising coronavirus infections due to the Delta variant and its impact on the economic recovery. Today the market will be looking forward to several data releases such as: 1) US MBA Mortgage Applications; 2) Canada BoC Interest Rate Decision; 2) Japan GDP Growth Annualized Final.
Domestic Update
• Government successfully raised IDR10 trillion from yesterday's sharia securities auction. Investors' demand for less risky domestic fixed income instruments remained high. The total incoming bids were IDR56.6 trillion. MNCS Comment: We believe the success story was driven by : 1) investors ample liquidity; 2) high demand for fixed income assets amid limited supply of less risky assets in 2H21 as the government followed a front loading strategy; and 3) government cuts on Bond Income Tax for domestic investors to 10% from previously 15%.
• Furthermore, there was an addition of 262 new Covid-19 cases in Jakarta yesterday.
Company News
1. SMBR IJ has realized 28% of its capex or equivalent to IDR23.77 billion of the total capex of IDR84.90 billion. The capex realization used for mining activities, digital marketing development and routine expenses. SMBR has succeeded in obtaining new inventions, namely Grey Acian Mortar Cement, White Acian Mortar Cement, Brick Mortar Cement, Plastering, Ceramic Adhesive Mortar Cement, and lastly, Lightweight Bricks Mortar Cement (Emitennews). MNCS Comment: Along with the recovery of the economy and infrastructure sector, we see this as a possibility to increase the demand for SMBR, especially to support infrastructure development in the company's main areas. Currently SMBR trading at 1,208.18x/1.88x PE/PBV.
2. MIKA IJ improve its services by opening the In Vitro Fertilization (IVF) service, which is the first fertility clinic opened by the company. MIKA is currently transforming into technology, the company will migrate from the old Hospital Information System to SAP. As of 1H21, MIKA has used IDR99 billion of the total realized capital expenditure of IDR350 billion for this year. (Berita Satu). MNCS Comment: MIKA strives to improve its facilities and capacity, in order to become a superior hospital. This is in line with the management's target of adding 2 hospitals with 200 beds every single year until 2024. Currently MIKA is trading at 7.03x/6.04x PE/PBV levels.
3. DSNG IJ targets factory expansion with 60 ton/hour capacity in 1Q22. Meanwhile, the 45 ton per hour capacity plant is expected to be operational in 4Q21. DSNG has budgeted a capex of IDR1 trillion, of which 80% will be used for expansion of factory construction and the rest for regular infrastructure needs. (Bisnis Indonesia). MNCS Comment: We hope the expansion through plant construction will increase DSNG's production in FY22F. Currently DSNG is trading at 13.03x/0.87x PE/PBV levels.
IHSG Updates
JCI weakened by -0.24% to 6,112.40 on Tuesday (07/09) while net foreign buy reaching IDR193.98 billion. JCI closing was lower along with weakness in almost all sectors led by the techno sector (-2.35%), followed by the basic materials sector (-1.82%). On the other hand, the property sector rose by +0.71% followed by the non-cyclical consumer sector (+0.28%). The weakening of JCI was driven by market's profit taking after the strengthening in the previous 2 days due to the extension of PPKM by the government. On the other hand, the Rupiah strengthened towards the level of IDR14,212/USD on the spot market. We estimate the JCI will move in the range of 6,100-6,150. Today's recommendation: BMRI, ICBP, BSDE, ACES.
Corporate Action
Cum Dividend Date: MNCN (IDR8/share), BMAS (IDR7.5/share), KEEN (IDR3.86/share)
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