MNCS Morning Navigator 01 October 2020

Global Market Highlight

DJIA rose by +1.20% on Wednesday (30/09) followed by S&P 500 (+0.83%) and Nasdaq (+0.74%). The gain was driven by the release of monthly employment data where there were additional jobs for 749,000 people in September. This was better than the previous month and above the expectations of economists in a Dow Jones survey which estimated only 600,000 people.  Meanwhile, a fiscal stimulus will soon be signed at the congress and the good news of the pharmaceutical company Regeneron, has brought a little fresh air to the market. The company announced that its drug, REGN-COV2, could reduce the virality level of Covid-19 and improve the condition. Moreover, the market will look forward to several data releases today, such as: 1) US PCE Price Index; 2) US Markit Manufacturing PMI; 3) Eurozone Unemployment Rate.

Domestic Updates

• BI and the People's Bank of China reached mutual agreement on the use of local currencies for trade and direct investment settlement, which includes: 1) promotion of the direct exchange rate quotation; 2) interbank trading between the Chinese Yuan and the Indonesian Rupiah. This collaboration marks a key milestone in strengthening bilateral financial cooperation between China and Indonesia. The authorities believe that it will positively contribute to encourage the use of local currencies for settlement of trade and direct investment between the two countries.
• BI has release money supply in a broad sense (M2) was recorded at IDR6,726.1 trillion in August, an increase of 13.3% YoY higher than the growth in the previous month of 10.5% YoY. This increase was due to M1 growth of 19.3% YoY, higher than the growth in July 2020 of 13.1% YoY, driven by an increase in Rupiah demand deposits. In addition, quasi money growth increased, from 9.7% YoY in the previous month to 11.5% YoY in August 2020. However, securities other than stocks contracted by 18.7% YoY in August 2020 after growing by 4.9% YoY in the previous month.

Company News

1.       PTBA IJ recorded a decline in revenue by 15.09% YoY to IDR9.01 trillion in 1H20. recorded a decline in income of 15.09% YoY from IDR10.6 trillion in 1H19 to only IDR9.01 trillion in 1H20. As a result, net profit dropped by 35.85% YoY to IDR1.28 trillion in the 1H20. From the operational side, PTBA has produced 11.9 million tons of coal and transported 11.7 million tons of coal. Meanwhile, this year PTBA has cut its production volume by the end of this year to 25.1 million tons from 30.3 million tons previously (Market Bisnis). MNCS Comment: We see that PTBA's performance tumbled due to several cause, such as: 1) The drop on referred coal price due to the thinning demand during the pandemic; 2) The decrease on production due to a limitation on activities. PTBA is currently traded at 8.80x/1.44x PE/PBV.
2.       ASII IJ will distribute interim dividends amounting to IDR1.09 trillion. Dividend per share stood at IDR27 with a yield of 0.60%. Cum date will be at 06 October 2020 while Payment date will be at 27 October 2020 (Kontan). MNCS Comment: ASII's interim dividend dropped almost half compared to the last dividend interim which reached IDR57 per share in October 2019. Though ASII's net income rose by 43.20% YoY in the 2Q20. ASII might want to reserve cash during the uncertain season while the final dividend will be decided next year.ASII is currently traded at 7.93x/1.18x PE/PBV.
3.       AISA IJ posted a revenue of IDR596.96 billion in the 1H20 which slipped by 3.27% YoY. AISA's profit was hampered by the large operating expenses which amounted to IDR180.94 billion. Thus, AISA record a net loss of IDR33.93 billion though it shrank by 44.5% YoY compared to IDR61.17 billion in 1H19 (Kontan). MNCS Comment: After being released of suspension AISA returns to roam the market though we see that the company has not yet implement efficiency strategy as their expense increase while their top line decrease. But at least the net loss recorded were smaller.

IHSG Updates

JCI dropped by -0.19% to 4,870.04 on Wednesday (30/09) followed by net foreign sell reaching IDR481.83 billion. Index movement was flat due to lack of sentiment in the domestic market while the Regional Asia Indices were closed indifferently. The drop was led by miscellaneous, infrastructure and finance sector while basic industries, agriculture and trade sector increase. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,880 following the news on local currencies usage on trade transaction between Indonesia and China.We estimate JCI will move in the range of 4,820 – 4,950 while waiting for Inflation rate and PMI Markit Manufacturing data release. Today's recommendation: 

Disclaimer On

GGRM, PTBA, LSIP, ANTM, PTBA, ASII, AISA