Global Market Highlight
DJIA rose by +0.69% on Friday (27/08) followed by S&P 500 (+0.88%), and Nasdaq (+1.23%) The Wall Street closing was higher after Powell's annual speech at the Jackson Hole central bank symposium. He said that The FED would not be in a rush to raise the interest rates due to the temporary pressures of current inflation. Subsequently, the Delta variant of Covid-19 remains a risk. However, he signaled that the Federal Reserve could start reducing massive bond purchases this year. Today the market will be looking forward to several data releases such as: 1) US Pending Home Sales YoY; 2) Germany Inflation Rate YoY Prel; 3) Eurozone Consumer Confidence Final.
Domestic Update
• After issuing POJK No. 12 & 13 2021 which regulate the establishment of digital banks as well as product and service license, OJK will issue another regulation on Digital Majority Model. Through this additional policy, OJK expects customers to assess how far banks can go digital and which banks are serving the customer better. MNCS Comment: Plan to issue Digital Majority Model regulation is another key step taken by OJK to ensure that the bank's digital innovations are still met with the customer centric value and prudent management. We maintain our Overweight rating on banking sectors due to: 1) clear regulation particularly on digital banks and 2) loosening social restriction in the Greater Jakarta Area. Risks to our call: 1) slower than expected economic recovery; 2) rising NPL due to slower economic growth and 3) slower-than-expected execution on digital initiatives.
• Furthermore, there was an addition of 474 new Covid-19 cases in Jakarta yesterday.
Company News
1. INDF IJ will distribute FY20 cash dividends of IDR278/share or reaching IDR2.44 trillion from FY20 net profit of IDR6.45 trillion (Kontan). MNCS Comment: INDF's payout ratio is 37.83% of the total FY20 net profit, while the total dividend yield offered is 4.33% or greater than the FY19 yield of 4.29%. Currently INDF is trading at 8.23x/1.23x PE/PBV.
2. LPPF IJ recorded IDR3.57 trillion revenue in 1H21 rose by +58.44% YoY (vs IDR2.25 trillion in 1H20). COGS increased from IDR902.97 billion in 1H20 to IDR1.30 trillion in 1H21. LPPF recorded IDR532.48 billion net profit in 1H21 or a significant increase of +248.79% YoY (vs net loss of IDR357.88 billion in 1H20) (Bisnis Indonesia). MNCS Comment: The transformation into a minimal asset model with reduced warehouses and low-performing assets made better performance better. We believe that LPPF will remain the largest omnichannel company supported by a digital initiative strategy and the concept of shop-in-shop partnerships. LPPF is currently trading at 6.34x/4.87x PE/PBV.
3. KRAS IJ recorded USD1.06 billion revenue in 1H21 grew by +90.89% YoY (vs USD552.83 million in 1H20). COGS increased from USD465.89 million in 1H20 to USD926.30 million in 1H21. KRAS recorded USD32.47 million net profit in 1H21 or an increase of +719.96% YoY (vs USD4.51 million in 1H20) (Emitennews). MNCS Comment: We see that the improvement of infrastructure activity has affected KRAS positively. We hope the trends will continue supported by Biden's large infrastructure budget. Currently KRAS is trading at the level of 10.37x/1.20x PE/PBV.
IHSG Updates
JCI slipped by -0.28% to 6,041.57 on Friday (27/08) while net foreign buy reaching IDR467.40 billion. JCI closed lower in almost all sectors, led by the infrastructure sector (-0.96%) followed by the energy sector (-0.76%). On the other hand, the tech sector spiked by +2.58%, followed by the health sector (+0.41%). JCI weakened due to profit taking and the market's tendency to wait and see on the results of the Jackson Hole Symposium regarding the certainty of the tapering off from the US Federal Reserve. On the other hand, the Rupiah closed stagnant at IDR14,418/USD in the spot market. We estimate the JCI will move in the range of 5,980-6,090. Today's recommendation: KAEF, TLKM, MEDC, HOKI.
Corporate Action
Cum Dividend Date: BALI (IDR30/share)
RUPS: PMMP
Public Expose: INDR
Disclaimer On
PT MNC Sekuritas
MNC Financial Center Lt. 14 – 16
Jl. Kebon Sirih No. 21 – 27, Jakarta Pusat 10340
Telp : (021) 2980 3111
Fax : (021) 3983 6899
Call Center : 1500 899
