Global Market Highlight

DJIA slipped by (-0.62%) on Thursday (17/06) followed by S&P 500 (-0.04%) while Nasdaq rose by +0.87%. The market was responding  the hawkish Fed view on monetary policy projecting its first post-pandemic interest rate hike in 2023. The market will look forward to several data releases today, such as: 1) UK retail sales YoY; 2) Japan inflation rate YoY; 3) Japan BOJ interest rate decision.

Domestic Update

• Bank Indonesia (BI) as expected kept interest rate unchanged with BI 7 Day Reverse Rate at 3.5%, deposit facility rate 2.75% and lending facility rate 4.25%. MNCS comment: The Fed higher economic projection than March forecast and hawkish tone monetary policy for 2023 indicating that monetary tightening is likely in the next 1-2 years, hence it is justified to keep positive real interest rate at 1.5-2% in order to maintain rupiah stability while at the same time fostering economic growth through monetary dan macroprudential policy mix.
• Indonesia economic output is expected to grow 4.4% this year according to World Bank. The average annual inflation rate will be at 2.3%. Fiscal balance -5.4% GPD, central gov't debt 41.2% GDP and current account balance -1.5% GDP. MNCS Comment: World Bank forecast is inline with our projection. However we see downside risks still outweigh the upsides due to 1) rising covid-19 cases in Indonesia and other Asian countries 2) weaker global growth and 3) tight external finance
• Furthermore, there was an addition of 4,144 new Covid-19 cases in Jakarta yesterday.

Company News

1. BBRI IJ targets a profit increase of up to 18% YoY in FY21E, where the company targets a net profit of IDR20 trillion - IDR22 trillion in FY21E. Annual credit growth will be increased to 7% YoY, and NPL is at 3%. BBRI will focus on credit segments that have the potential to grow, such as the micro segment, including those in agriculture, food, medical devices and medicines (Emiten News). MNCS Comment:  We believe that the management target can be achieved, supported by the improving loan demand, lower cost of funds and synergy with Pegadaian and PNM in Sep-2021 in expanding the ultra-micro segment. BBRI is trading at 18.21x/2.59x PE/PBV.

2. IPCM IJ will distribute a FY20 cash dividend of IDR12.17/share after previously distributing an interim dividend of IDR2/share in Nov-2020. Thus, the total dividends distributed to shareholders from the FY20 financial year amounted to IDR14.17/share or reached IDR64 billion from the total FY20 net profit of IDR80 billion (Kontan). MNCS Comment: IPCM's dividend distribution ratio is 80% of FY20 net profit, while the total dividend yield offered is 5.06% or a decrease compared to FY19 yield of 5.98%. IPCM is currently trading at 18.44x/1.36x PE/PBV levels.

3. CSRA IJ targets revenue growth of IDR700 billion to IDR750 billion in FY21E, while net profit is targeted to reach IDR120 billion to IDR140 billion in FY21E. CSRA will focus on maintaining cash flow, ensuring optimal production costs, maintaining operational performance and increasing production with plans to acquire new land this year (Kontan). MNCS Comment: We see that CSRA is aiming for ~20% YoY growth from revenue and ~40% YoY growth from net income which we think is achievable as this year's CPO price has rose and will affect CSRA's ASP. Currently CSRA is trading at 3.67x/0.99x PE/PBV levels.

IHSG Updates

JCI fell by -0.17% to 6,068.45 on Thursday (17/06) followed by net foreign sell reaching IDR634.11 billion. JCI was weakened along with most sector, led by energy (-1.46%), non-cyclical (-1.08%), and transport (-0.66%). On the other hand, the technology sector managed to strengthen by +2.05%, followed by industrial +0.67%, and finance +0.21%. JCI weakened in tandem with the global market, while the stable interest rate decision is as expected. Meanwhile, the Rupiah exchange rate was weakening at IDR14,355. We estimate the JCI will move in the range of 6,030-6,120 while waiting for loan growth YoY data release. Today's recommendation: BRIS, ADRO, ASII, SSIA.

Corporate Action

RUPS: SMSM, TCID, BBLD

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