MNCS Morning Navigator 01 September 2020

Global Market Highlight

DJIA slipped by -0.78% on Monday (31/08) followed by the various movements from S&P 500 (-0.22%) and Nasdaq (+0.68%). The decision by the central bank to hold low interest rates does not seem able to generate optimism for investors, as indicated by the prevalence of profit taking. In addition, market players are still waiting for the release of economic data and speeches from the Fed. Moreover, the market will look forward to several data releases today, such as: 1) US PMI Markit Manufacturing; 2) China Caixin Manufacturing PMI; 3) Eurozone Core Inflation Rate.

Domestic Updates

Economic liquidity or money supply in the broad sense (M2) increased in July 2020, recording at IDR6,567 trillion, an increase of 10.5% YoY, higher than the previous month’s growth of 8.2% YoY. A component that causes the increase in M2 is the growth in M1, growing at 13.1% YoY in July 2020, higher than the June 2020 growth of 8.2% YoY, thanks to the increase in demand deposits in Rupiah and a stronger Indonesian currency. Another factor that increased M2 is the increase in net foreign assets, increasing by 17.6% YoY in July 2020, higher than the 12.1% YoY increase in June 2020. 

Company News

1. WSKT IJ posted revenue of IDR8.04 trillion in 1H20, down by -45.68% YoY. Unfortunately, net profit also dropped to a net loss of IDR1.09 trillion. The company said that the construction service segment is still the most significant source of revenue, reaching IDR7.36 trillion. However, due to PSBB, several construction projects were put to a stop temporarily. Now that restriction has been eased, projects almost returned to the level of 100% in June. Also, the company will reduce capital expenditure by -45% from the initial IDR19 trillion target to ensure that the company can still have liquidity (Market Bisnis). MNCS Comment: We consider that the strategy to reduce capital expenditures is one way to maintain the company's cash flow, this is because Covid-19 has an impact on the payments that WSKT will receive. WSKT is currently traded at 0.59x PBV.
2. BMRI IJ reported that it had completed its share buyback action at IDR150.89 billion, even though it announced that it will buy back a total of IDR2 trillion.  The company purchased a total of 25.40 million shares. Management said that there was no impact on any operational activities, law, financial conditions, or business continuity (Emitennews). MNCS Comment: We note that buyback strategy will help to maintain its liquidity as BMRI already grew by 60% from the lowest level this year. BMRI is currently traded at 13.49x/1.55x PE/PBV.
3. DLTA IJ will distribute dividends at a total of IDR312.26 billion, or IDR390 per share from the FY19 net profit. The dividend will be divided into two parts. First, a regular cash dividend of IDR30 per share, which is a total of IDR24.02 billion. Second, a special cash dividend of IDR360 per share or IDR288.24 billion in total. In total, the dividend yield is 8.57%. The recording date will be 7 September 2020, and the dividend will be paid on 25 September, 2020 (Kontan). MNCS Comment: DLTA has always been distributing dividends in the last eleven years although the yield last year is higher at 10% or equals to IDR478/share. However net profit decline by -5.88% YoY in FY19 making the yield fell slightly. DLTA is currently traded at 54.83x/3.06x PE/PBV.

IHSG Updates

JCI dropped by -2.02% to 5,238.49 on Monday (31/08) followed by net foreign sell reaching IDR1.92 trillion. Stocks continued to drop led by miscellaneous industry ad finance sector due to the increasing Covid-19 cases followed by a statement from the Ministry that Indonesia will enter the brink of an economic recession next month, while stressing that the economic crisis is not happening. Subsequently, Bank Indonesia sees that global financial market uncertainty is still high in 3Q20 whereas investors should be cautious. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,562. We estimate JCI will move in the range of 5,220-5,280 while waiting for PMI Markit Manufacturing and inflation rate data release. Today's recommendation: HMSP, TOWR, MEDC, BJBR.

Corporate Action

Cum Dividend Date: INCI

RUPS: BPFI, BJBR

Disclaimer On

HMSP, TOWR, MEDC, BJBR, BMRI, DLTA, WSKT