MNCS Morning Navigator 10 June 2021
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10 Jun 2021
Global Market Highlight
DJIA weakened -0.44% on Wednesday (09/06) followed by S&P 500 -0.18% and Nasdaq -0.09%. Even though Wall Street closed lower, President Joe Biden's stimulus efforts boosted the appeal of technology stocks as inflation pressures ease. On the other hand, market still awaits inflation data for clues as to when the US Federal Reserve might tighten its dovish monetary policy. The market will look forward to several data releases today, such as: 1) US Core Inflation Rate; 2) Eurozone ECB Interest Rate Decision; 3) China New Yuan Loans.
Domestic Update
• Indonesia’s consumer confidence index rose 2.9 points to 104.4 in May from 101.5 in the previous month. 4/6 sub-indices strengthened were current economic conditions (+6.5 points), current income (+6.9 points), job availability compared to six months ago (+9.4 points) and job availability expectations (+2.4 points). Meanwhile two sub-indices weakened for income expectations & economic outlook. Both sub-indices decreased 1.7 & 0.5 points respectively. MNCS Comment: May’s index was the highest reading since March 2020 as consumer turned to be slightly optimistic indicating a positive sign of economic recovery. A positive sentiment is expected to be translated into higher spending that will boost domestic consumption. In addition to low base effect, we see that Indonesia’s Q221 GDP will be in a positive territory marking the end of one year full economic recession.  
• Bank Indonesia (BI) will release April 2021 retail sales data today at 10:00 AM. Consensus estimate for April data remains down 10% YoY after experiencing a 14.6% YoY contraction in the previous month. MNCS Comment: Retail sales in Indonesia continuously improve since February 2021 although remain in a contractionary zone. We expect retail sales will be better in May on the back of Lebaran momentum and transfer of THR to civil servants & private employee. During the pandemic Indonesia’s consumers have shifted to online shopping, a much saver way to shop due to minimum direct contact.
• Indonesian government plans to rise a tax on several goods and services that previously exempted from VAT including food staples. MNCS Comment: We understand that Indonesian government wants to improve fiscal outlook in 2022, seeking a non-debt financing by rising tax revenues ranging from hiking tobacco excise tax, and  planned hikes in loss booking corporate income tax, carbon tax to VAT. In our view, rising VAT would have an inflationary effect. However we are cautious that this policy if enacted will be counterproductive for output growth next year as some food staples such as rice and cigarettes are sensitive to under poverty line societies. We believe fiscal consolidation is needed in the right momentum.
• Furthermore, there was an addition of 1,371 new Covid-19 cases in Jakarta yesterday.
Company News
1. PTPP IJ posted revenue of IDR2.84 trillion in 1Q21, down -16.71% YoY (vs IDR3.41 trillion in 1Q20). However, PTPP's COGS also fell from IDR3.07 trillion in 1Q20 to IDR2.43 billion in 1Q21. PTPP posted a net profit of IDR38.26 billion in 1Q21 which increased by +76.39% YoY (vs IDR21.69 billion in 1Q20) (IQ PLUS). MNCS Comment: Even though revenue decreased, efficiency and suppression of several accounts resulted in an increase in PTPP's profit. Currently management is trying to increase the tender to add new contacts in FY21E. PTPP is trading at 53.21x/0.64x PE/PBV.
2. PPRE IJ will distribute FY20 cash dividends of around IDR1.15/share or reach IDR11.7 billion from the total FY20 net profit of IDR58.6 billion (Kontan). MNCS Comment: PPRE's dividend distribution ratio is 20% of FY20 net profit, while the dividend yield offered is 0.63%, this value is down compared to FY19 yield of 3.55%. PPRE is currently trading at 27.27x/0.85x PE/PBV.
3. ACES IJ will distribute FY20 cash dividends of around IDR32.15/share or reaching IDR549.89 billion of the total FY20 net profit of IDR733.19 billion (Kontan). MNCS Comment: ACES dividend distribution ratio is 75% of FY20 net profit, while the dividend yield offered is 2.27%, this value is higher than FY19 yield of 1.13%. Currently ACES is trading at 33.10x/4.66x PE/PBV levels.
IHSG Updates
JCI rose by +0.80% to 6,047.48 on Wednesday (09/06) followed by net foreign buy reaching IDR229.00 billion. JCI rose as most sectors strengthened, led by transport (+4.77%), technology (+3.96%), and basic industry (+1.99%). On the other hand, health and infrastructure fell. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,255. We estimate JCI will move the range of 6.000-6.100 while waiting for Retail Sales data release. Today's recommendation: KLBF, PGAS, WTON, PTPP.
Corporate Action
Cum Dividend Date: PLIN (IDR86/share), HEAL (IDR25/share)
Right Issue: ASSA (IDR1200/share)
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