MNCS Morning Navigator 03 June 2020

Global Market Highlight
DJIA rose by +1.42% on Tuesday (02/06) followed by the increase of S&P 500 (+0.82%) and Nasdaq (+1.25%). These increases were caused by investor’s optimism towards the new normal, although tension is rising in the US as most of the citizens conduct a large demonstration regarding racism following the death of George Floyd last week. Some of these demonstrations turned into a riot and the President has to dispatch military personnel and law enforcement officers to secure the event. The market will look forward to several data releases today, such as: 1) China Caixin Composite PMI per May-2020; 2) US ISM Manufacturing PMI per May-2020; 3) UK Markit PMI per May-2020.

Domestic Updates

1. BPS reported that monthly inflation in May 2020 was only 0.07% MoM, 2.19% YoY, and 0.90% YTD which coincided with the arrival of the Eid al-Fitr celebration. This is much lower than the inflation in June last year, the month during which Eid al-Fitr also took place, which reached 0.55% MoM. We see that this is because the Covid-19 outbreak creates a disruption on domestic consumption, which abruptly halted most businesses and increased layoffs in April-May 2020 so that consumption declined.
2. PMI Index rose slightly from all time lows at 27.5 in April to 28.6 in May. This mark the second lowest ever recorded since the survey began April 2011. Indonesia's manufacturing economy experienced a sharp decline in operating caused by the ongoing preventive measures to limit the spread of the covid-19 disease. Along with the flat inflation, the stagnation on consumption is also reflected in the PMI index which is still low although better than last month as the market expects recovery on the following lockdown easing.

Company News

1. GOOD will distribute IDR206.63 billion of dividend with 47.41% payout ratio. Dividend per share is at IDR28/share making the dividend yield equals to 2.18%. Dividend will be distributed on June 25, 2020. MNCS comment: Although the dividend yield is relatively low, GOOD still managed to book a growing performance as of last year. GOOD is traded at 22.75x/3.64x PE/PBV (Market Bisnis)
2. SILO posted revenue of IDR7.02 trillion in FY19, increased by 17.79% YoY. The increase in revenue was supported by growth in the number of hospital patients by 17% YoY and hospital occupancy rates reached 64% in FY19. Revenue from the inpatient segment reached IDR4.09 trillion (+16.19% YoY), equivalent to 58.35% of total revenue. While the outpatient segment recorded revenues of IDR2.93 trillion (+20.08% YoY) or equal to 41.74% of total revenue. However, cost of revenue which rose 19.31% YoY followed by operating expenses and other expenses which also went up. Thus SILO posted an operating loss of up to IDR100.27 billion. MNCS comment: We believe that SILO will perform well during the Covid-19 pandemic as demands in healthcare increase. SILO is traded at 1.40x PBV. (Kontan)
3. HRUM revenue stood at USD61.19 million in 1Q20, decreased by 15.08% YoY. The majority of HRUM's revenue came from export coal sales of USD57.52 million. HRUM also earned rental income of USD3.67 million. Net profit also dropped by 87.12% YoY to USD0.82 million in 1Q20. MNCS comment: The slowdown on performance was already seen since last year as coal price spiraled down, while 1Q20 performance was affected by the Covid-19 pandemic. HRUM is traded at 0.71x PBV, relatively lower than peers. (Kontan)

IHSG Updates
JCI surged by +1.98% to 4,847.51 on Tuesday (02/06) supported by a net foreign buy reaching IDR872.23 billion. The increase was due to a consecutive inflow from the foreign investor in three days in a row, despite unsatisfying data releases such as another low inflation followed by a slump on the PMI manufacturing index which were anticipated due to the slowing down global and domestic economy. Meanwhile, the Rupiah exchange rate against the USD was appreciated at IDR14,415. We estimate JCI will move in the range of 4,597-4,975 while waiting for Foreign Exchange reserve as of May-2020. Today's recommendation: JPFA, RALS, BSDE, BBRI.

Corporate Action
Recording Dividend Date: EXCL, KLBF
Cum Dividend Date: ADRO

Disclaimer On

GOOD, SILO, HRUM, JPFA, RALS, BSDE, BBRI