Global Market Highlight
Dow jones slipped by -0.20% on Tuesday (08/09) followed by S&P 500 (-0.13%), and Nasdaq (-0.37%). Wall Street ended lower due to cautious investors following the payrolls data and increased concerns that the Fed could move sooner than expected to scale back massive monetary measures enacted last year to shield the economy from the Covid-19 pandemic, despite the economy slowing. Today the market will be looking forward to several data releases such as: 1) US Initial Jobless Claims; 2) Eurozone ECB Press Conference; 3) China Inflation Rate YoY.
Domestic Update
• According to Bank Indonesia (BI), the Local Currency Settlement (LCS) transaction value with Japan, Malaysia & Thailand has reached USD1.2bn from Jan-Jul 2021 or equivalent to USD177 million per month. MNCS Comment: Indonesia also hit another milestone of bilateral cooperation to also implement LCS with China, country's largest trading partner. We believe with LCS, USD dependency could be reduced, therefore supporting the Rupiah to be stably maintained while promoting trade and investment at the same time
• Furthermore, there was an addition of 428 new Covid-19 cases in Jakarta yesterday.
Company News
1. WIKA IJ recorded IDR12 trillion new contract until August-21 or 29.93% of the company's total target of IDR40.1 trillion. The largest contribution came from infrastructure and building projects of IDR7.5 trillion, industrial projects of IDR2.94 trillion, energy and industrial plants of IDR1.2 trillion, and the rest came from property, which was IDR176 billion (Bisnis Indonesia). MNCS Comment: WIKA still trying to reach a new contract in FY21E by targeting several private projects to maximize their performance. Currently WIKA trading at 57.26x/0.69x PE/PBV.
2. UNTR IJ spent USD73 million capital expenditures up to 1H21 out of a total of USD300 million. A total of USD40 million used by the company to support the operational mining contracting business. UNTR estimates that it will use a larger capex in 2H21 to purchase equipment, develop the company's gold mining infrastructure, and build an improved processing plant and tailings management facility at the Martabe gold mine. UNTR sales target for Komatsu reach 3,000 units and coal sales to reach 8.8 - 9 million tons in FY21E (Bisnis Indonesia). MNCS Comment: UNTR has been utilizing 24.33% of their capex. We believe the coal mine expansion potentially gives additional coal mining revenue. Currently UNTR is trading at 8.63x/1.21x PE/PBV levels.
3. LPKR IJ updated the target marketing sales to IDR4.2 trillion in FY21E previously IDR3.5 trillion. LPKR is optimistic, the demand builds by the easing of PPKM. As of August-21, the property company's marketing sales have exceeded IDR3.1 trillion, supported by the launch of an affordable residential cluster in Lippo Village and the synergy of LPKR’s subsidiaries (Emitennews). MNCS Comment: LPKR successfully selling landed house cendana parc makes the company confident to be able to grab more marketing sales in 1H21. Currently LPKR is trading at 0.59x PBV levels.
IHSG Updates
JCI weakened by -1.41% to 6,026.02 on Wednesday (08/09) followed by net foreign sell reaching IDR544.57 billion. JCI closed in almost all sectors led by the industrial sector (-1.80%) followed by the financial sector (-1.79%). On the other hand, the technology sector strengthened by +0.08%. JCI fell as there is more uncertainty of the situation due to the PPKM extension and the decline in the Consumer Confidence Index in August-21 which dropped to 77.3 (vs. 80.2 on 21 July). On the other hand, the Rupiah weakened towards the level of IDR14,253/USD on the spot market. We estimate the JCI will move in the range of 5,900-6,080 while waiting for Retail Sales yoy data release. Today's recommendation: MLPL, MYOR, PPRE, ITMG.
Corporate Action
IPO: IDEA (IDR140/share)
RUPS: MPPA, WEGE
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