Global Market Highlight
DJIA fell by -0.86% on Friday (16/07) followed by S&P 500 (-0.75%), and Nasdaq (-0.80%). Wall Street closing was lower as investors worried about the surge in Covid-19 cases as the spread of the Delta variant spreads. Last Thursday, Los Angeles County said it would reimpose the mask requirement this weekend. On Friday, public health officials said US coronavirus cases increased 70% from the previous week, with the mortality rate increased 26%. The market will look forward to several data releases today, such as: 1) US NAHB Housing Market Index; 2) UK BoE Haskel Speech; 3) Germany Bundesbank Monthly Report.
Domestic Update
• In response to the extension of Emergency Public Activities Restriction (PPKM Darurat) up until the end of July-21, government decided to increase Economic Recovery Program (PEN) budget from IDR699.43 tn to IDR744.75 tn or increasing IDR55.2 tn this year. The budget increase will be focused on the social safety net budget (+IDR33.98 tn) and healthcare budget (+IDR21 tn). MNCS comment: We see this budget increase is aimed to soften the blow of stricter pandemic measures to the economy. Due to potential prolonged public activities restriction, we revised down our FY21 GDP projection to 3.76% YoY from 4.01-4.18% YoY previously.
• Furthermore, there was an addition of 10,168 new Covid-19 cases in Jakarta yesterday.
Company News
1. PGAS IJ plans to supply natural gas and its supporting infrastructure in the Kendal Industrial Estate while waiting for the Cirebon-Semarang transmission pipeline to be built by the Government. PGN will provide gas supply and supporting infrastructure in KI Kendal with gas needs of around 37 BBTUD and KIT Batang around 10 BBTUD (Emitennews). MNCS Comment: It needs more assessment, as we know that the economic movements are still slowing down, but in the long term it potentially becomes PGAS’s new revenue driven. Currently PGAS is trading at 6.82x/0.74x PE/PBV levels.
2. AKRA IJ with PT Freeport Indonesia and PT Chiyoda International Indonesia officially signed an engineering, procurement and construction (EPC) contract worth USD2.7 billion. This contract was carried out in the context of the construction of a copper smelter plant and a precious metal refinery at JIIPE (Kontan). MNCS Comment: We believe the smelter plant will make a significant contribution to JIIPE's recurring income. Rental income will be generated from 103ha of land for the smelter and 40-50ha for the laydown area. Currently AKRA is trading at 10.98x/1.48x PE/PBV levels.
3. BEKS IJ plans to develop digital services in collaboration with Amazon.com's subsidiary, Amazon Web Services (AWS). BEKS's captive market coming from the civil servant segment (ASN). BEKS will also plan to reach out other potential strategic on several industries in Banten. (CNBC Indonesia). MNCS Comment: Cooperation with AWS is one of the company's strategies in strengthening digital infrastructure in 2H21E. BEKS will also focus on digital development aimed at the consumer, commercial and MSME segments. We see that this is one of the reason that BEKS rose by +8.14% in last Friday's trading. Currently BEKS is trading at 2.72x PBV levels.
IHSG Updates
JCI rose by +0.43% to 6,072.51 on Friday (16/07) followed by net foreign buy reaching IDR74.52 billion. JCI closing was higher along with most sectors led by energy (+1.55%), followed by industrial (+1.00%). On the other hand, the techno sector slipped by -0.46% followed by cyclical (-0.33%). JCI strengthened due to macroeconomic sentiment factors, Indonesia's external debt to GDP ratio fell to 37.6% (vs37.9% May-21). Bank Indonesia recorded Indonesia's External Debt on May-21 at USD415 bn (+3.1% YoY; -0.6%MoM). Meanwhile the Rupiah exchange rate was weakening at IDR14,498. We estimate the JCI will move in the range of 6,000-6,100 while waiting for the interest rate decision. Today's recommendation: BBTN, MEDC, SSIA, ICBP.
Corporate Action
RUPS : MLPL, SSIA, KIOS
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