MNCS Morning Navigator 06 August 2020

Global Market Highlight

DJIA increased by +1.39% on Wednesday (05/08) followed by S&P 500 (+0.64%) and Nasdaq (+0.52%). Stock prices rally was supported by positive catalyst from Disney's better-than-expected earnings followed by a USD1 billion deal between Johnson & Johnson and the US government to produce 100 million doses of vaccine. Furthermore, investors are also monitoring negotiations for a new stimulus package in which, Democrats and Republicans have agreed on a USD1,200 benefit for the unemployed but still disagree on the value of unemployment benefits per week. Moreover, the market will look forward to several data releases today, such as: 1) US Initial Jobless Claims; 2) UK Interest Rate Decision; 3) Taiwan Inflation Rate.

Domestic Updates

Indonesia’s economy in the second quarter of 2020 faced a contraction by -4.19% QoQ and -5.32% YoY. In terms of production, the transportation and warehousing industry experienced the highest contraction at -29.22% QoQ and -30.84% YoY. In terms of expenditure, both export sector and import sector contracted at -12.81% QoQ/-11.6% YoY and -14.16% QoQ/-16.96% YoY, respectively. In terms of 1H20, Indonesia’s economy fell by -1.26% CoC.

Company News

1. MAPI IJ posted a sharply decline in revenue for 1H20 at IDR6.7 trillion, a -47.47% YoY decrease. As a result, it posted a net loss of IDR407.94 billion. This is a contrast to the previous period, in which it managed to record a profit of IDR499.32 billion. The net loss was also caused by the high operating income from the SOGO outlets, which caused a net income loss of IDR330.93 billion, and the application of the PSAK 73 accounting standards. The company said that it will strengthen its business by deploying its omnichannel capabilities (Market Bisnis). MNCS Comment: MAPI's 1H20 decline performance resulting from the widespread closing of stores for the majority of the fiscal period due to Covid-19 pandemic. We see that management is re-organizing actively to substantially reduce operating expenses which includes salaries and rentals and limiting capital expenditure. MAPI is currently traded at 2.02x PBV.
2. ACES IJ announced that it will distribute cash dividends at IDR310.41 billion, which is IDR18.1 per share since the company’s total outstanding shares at the moment is 17.15 billion. The cash dividend will have a payout ratio of 30% from FY19 net profit. However, this payout ratio is actually smaller in comparison to the dividends from FY18 net profit, which has a payout ratio of 50%, and each share is worth IDR28.25. In actuality, the company’s revenue increased by 12.5% YoY, and net profit grew by 6.2% YoY (Market Bisnis). MNCS Comment: We believe ACES will potentially benefited from both the higher income target segment and exposure to home improvement and lifestyle necessities. Moreover, ACES provides a variety of survival kit and sports product during the pandemic. ACES is currently traded at 40.12x/5.79x PE/PBV.
3. TBIG IJ saw strong growth in 1H20, with revenue increasing by 13.18% YoY to IDR2.57 trillion, and net profit increasing by 33.51% YoY to IDR510 billion. Tower rentals are still the company’s primary source of income, with TLKM alone contributing revenue of IDR1.02 trillion. The company is optimistic that it can achieve performance targets throughout 2020, leading to double-digit growth for both revenue, EBITDA, and net profit. Its strategy is to increase capital expenditure by IDR1 trillion and tenants to a total of 3000 tenants, with 2500 tenants so far in June 2020 (Market Bisnis). MNCS Comment: TBIG delivered the solid growth in 1H20 supported by a defensive business model and manageable credit risk. Meanwhile, Covid-19 may impact the municipal permit issuance process of new tower. TBIG is currently traded at 28.33x/5.10x PE/PBV.

IHSG Updates

JCI rose by +1.03% to 5,127.05 on Wednesday (05/08) followed by net foreign sell reaching IDR435.81 billion. The strengthening occurred despite the disappointing GDP data release which dropped by -5.32% YoY in the 2Q20. It seems that investors have been anticipating this, as the market has decline on Monday, while it remains resilient yesterday. The rise is led by the mining sector as gold prices hike.  Moreover, the Rupiah exchange rate was strengthening at IDR14,550. We estimate JCI will move in the range of 5,080-5,150 while waiting for Consumer Confidence data. Today's recommendation: EXCL, GGRM, INKP, ADRO.

Corporate Action

Cum Dividend Date: INTP, SRSN

IPO: TOYS

Disclaimer On

EXCL, GGRM, INKP, ADRO, MAPI, ACES, TBIG