Global Market Highlight
DJIA increased by +0.55% on Tuesday (05/01) followed by S&P 500 (+0.71%) and Nasdaq (+0.95%). Wall Street ended higher ahead of the results of the Senate election in Georgia state, which will determine the balance of power in Washington. Along with a small majority in the House of Representatives, a 'blue sweep' of Congress could usher in more fiscal stimulus. It could also pave the way for President-elect Joe Biden to push for greater corporate regulation and higher taxes. Moreover, the market will look forward to several data releases today, such as: 1) US MBA Mortgage Application; 2) UK Markit/CIPS Composite PMI Final; 3) Germany Inflation Rate.
Domestic Update
• The government has distributed the COVID-19 vaccine for vaccination which will soon be implemented in 34 provinces. For the first phase, 700 thousand doses of vaccine were sent from the stock of 3 million doses of Sinovac vaccine. The plan is for vaccination to begin in Indonesia on January 13, 2021. President Joko Widodo will be the first person to be vaccinated. In the first stage, vaccines will be given to priority groups, namely health workers such as doctors and nurses in hospitals. Second, for the TNI-Polri, teachers and at the same time as the community. President Joko Widodo asked Health Minister Budi Gunadi Sadikin to complete the Covid-19 vaccination in less than a year. Previously, vaccinations were targeted to be completed in 15 months. This estimates a target of 182 million people to be vaccinated.
• Furthermore, there was an addition of 1.824 new Covid-19 cases in Jakarta yesterday.
Company News
1. KINO IJ has allocated capex of IDR200-250 billion in FY21E; a 40% lower compared to the previous year's capex valued IDR350 billion. This capex will be allocated for various efficiencies and machine refreshing. This year's capex will be obtained from funds of internal cash and bank loans (Kontan). MNCS Comment: We see that KINO has set a more moderate strategy this year considering that financial performance has not yet recovered due to the pandemic which has reduced purchasing power. In 3Q20 sales were still plunged by 10.7% YoY and net profit decreased by 63.9% YoY. KINO is currently traded at 18.16x/1.46x PE/ PBV.
2. HOKI IJ will carry out a stock split agenda with a ratio of 1:4. Thus, HOKI will seek approval for the stock split plan in the EGMS on January 27, 2021 (Emitennews). MNCS Comment: Through the stock split, HOKI has intention to attract domestic retail investors more broadly and increased its liquidity. After completing the construction of a rice husk power plant and adding a drying machine, HOKI plans to increase its production capacity to 75 tons/hour in FY21E and 95 tons/hour in FY22F supported by the construction of a new factory in Ogan Komering Ilir, South Sumatra. HOKI is currently traded at 71.36x/4.22x PE/PBV.
3. WSKT IJ this year is focusing on increasing the company's liquidity by divesting and restructuring loans. The restructuring that WSKT will undertake is particularly on the component of the short-term working capital loan facility, which is a heavy burden because it is used for investment in toll roads. The number of short-term working capital facilities reached 34% of the total interest bearing debt value of IDR69.9 trillion as of September 2020. In addition, WSKT also plans to issue bonds for bond payments which will mature in February 2021 and September 2021. The total bond debt that will mature in February is IDR1.17 trillion. Meanwhile, in September, it was IDR900 billion and IDR761 billion (Kontan).MNCS Comment: The restructuring will help WSKT cash flow and reduce WSKT DER. In addition, WSKT will be more confident in participating in the tender in FY21F. WSKT is currently traded at -5.81x/1.53x PE/PBV.
IHSG Updates
JCI rose by +0.53% to 6,137.34 on Tuesday (05/01) followed by net foreign buy reaching IDR476.34 billion. JCI continued to rally backed by the positive sentiments from vaccination that soon would be carried out. Meanwhile, the agriculture sector is still leading the strengthening backed by the continuing La Nina sentiments. Meanwhile, the Rupiah exchange rate was weakening at IDR13,915. We estimate JCI will move in the range of 6,000 – 6,170 while waiting for foreign exchange reserves data release. Today's recommendation: ANTM, PNLF, UNTR, ASRI
Corporate Action
IPO: DCII (IDR420/share)
RUPS: PBRX, DEAL
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