Global Market Highlight
The Wall Street index was temporarily closed on Monday (06/09) commemorating the national labor day. On the other hand, the oil prices fell on Monday after Saudi Arabia's sharp cuts to crude contract prices for Asia revived concerns over the demand outlook. Brent crude futures fell by -39 cents to settle at USD72.22/barrel. While, the US West Texas Intermediate crude was last down -40 cents at USD68.89/barrel. Today the market will be looking forward to several data releases such as: 1) Germany ZEW Economic Sentiment Index; 2) Eurozone GDP Growth Rate QoQ 3rd Est; 3) Eurozone ZEW Economic Sentiment Index.
Domestic Update
• The domestic reference coal price (HBA) soared to USD159.03/ton on Sep-21 or USD19.04/ton higher than previous month according to the Ministry of Energy & Mineral Resources (MEMR). MNCS Comment: The domestic coal price has reached its all time high level in more than a decade. This is in line with the recent movement of global coal prices that surged to an all time high with Newcastle thermal coal price to reach USD180/ton. Major key drivers for global coal price inflation are : 1) China's supply & demand imbalance; 2) Australia-China geopolitical tension and 3) supply chain disruption.
• Furthermore, there was an addition of 217 new Covid-19 cases in Jakarta yesterday.
Company News
1. ACES IJ has opened its sixth new outlet in Sukabumi, taking the total number of outlets owned by the company to 213. The expansion of new outlets is one of the company's strategies to maintain performance in addition to promoting (Bisnis Indonesia). MNCS Comment: We see that the relaxation of PPKM at the end of 3Q21 is expected to increase traffic at ACES outlets. However, the decline in performance in 2Q21 and the implementation of PPKM in 3Q21 potentially reduced ACES's earnings throughout FY21F. Currently ACES trading at 43.35x/4.87x PE/PBV.
2. UNTR IJ plans to expand its business by taking over the coal mine belonging to the Bayan Group owned by Dato' Low Tuck Kwong. The value of 100% of Bayan Group is estimated to be around USD1.6 - USD1.8 billion. Astra Group is reported to have made USD10 million deposit while starting the due diligence process (Bisnis Indonesia). MNCS Comment: We believe this expansion will increase UNTR's revenue from mining segment. As we believe Astra group is seeing opportunity from the hike on coal price. Currently UNTR is trading at 8.98x/1.26x PE/PBV levels.
3. HEAL IJ plans to buyback with a maximum of 25 million shares from September 3, 2021 to October 1, 2021. The value is estimated at IDR30 billion (Kontan). MNCS Comment: Management stated that this corporate action is a strategy to manage company price stability in the market, and this treasury stock is expected to become the company's capital in the future. Currently HEAL is trading at 17.02x/6.38x PE/PBV levels.
IHSG Updates
JCI closing was flat at 6,126.92 level on Monday (06/09) followed by net foreign buy reaching IDR366.90 billion. JCI was flat along with strengthening in several sectors led by the property sector (+1.74%) followed by the industrial sector (+1.39%). On the other hand, the tech sector weakened by -1.25%, followed by the transportation sector (-0.72%). JCI stagnates due to the market waiting for the PPKM announcement. Through a press conference, the government extended the PPKM for Java-Bali region until (13/09) with some easing such as the extension of dine in duration which currently can reach for one hour. On the other hand, the Rupiah strengthened towards the level of IDR14,223/USD in the spot market. We estimate the JCI will move in the range of 6,100-6,150.Today's recommendation: ACST, PGAS, ELSA, WIKA.
Corporate Action
Cum Dividend Date: LPCK (IDR56/share), PMMP (IDR3/share)
Right Issue: BBRI (IDR3,400/share)
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