MNCS Morning Navigator 08 October 2020

Global Market Highlight

DJIA dropped by +1.91% on Wednesday (07/10) followed by S&P 500 (+1.74%) and Nasdaq (+1.88%). The statement by US President Donald Trump regarding his readiness to provide stimulus for airlines and other stimuli was responded positively by the market. Trump urged congress to approve the airline's support program by taking the remaining budget from the previous stimulus package one. In addition, Trump also urged Congress to approve a USD1,200 stimulus for cash transfers for US citizens. Moreover, the market will look forward to several data releases today, such as: 1) US Vice President Debate; 2) US FOMC minutes; 3) Eurozone ECB Monetary Policy Meeting Accounts.

Domestic Updates

Bank Indonesia released Indonesia's foreign exchange reserves amounted to USD135.2 billion as of September 2020. The number remains high even though compared to the position at the end of August 2020 of USD137.0 billion it is slightly lower. The position of the foreign exchange reserves is equivalent to financing 9.5 months of imports or 9.1 months of imports and servicing of government external debt, and is above the international adequacy standard of around 3 months of imports. Bank Indonesia considers that the foreign exchange reserves are capable of supporting external sector resilience and maintaining macroeconomic and financial system stability.

Company News

1.        ASGR IJ will distribute an interim dividend amounting to IDR6.58 billion or equals to IDR5/share on 20 October with dividend yield stood at 0.69%. The cum date will be on 14 October 2020. Meanwhile, ASGR managed to a net profit of IDR21 billion in 1H20 (CNBC). MNCS Comment: Though ASGR business was hit by the pandemic, as seen from the -26.31% YoY decline on net profit in 1H20, ASGR is pretty solid in maintaining dividend distribution. ASGR is currently traded at 4.55x/0.62 PE/PBV.
2.       SHID IJ noted occupancy improvements in 3Q20.  Management said that the average hotel occupancy rate increased by about 20% from the occupancy in the second quarter of 2020. Performance improvements were recorded in July and August 2020 in line with the relaxation of Large-Scale Social Restrictions (PSBB).  However, the average occupancy declined again in September after PSBB volume II was implemented.  After the PSBB was implemented again fell. Management hopes that the occupancy rate will improve again after the implementation of the PSBB is complete.  There are several strategies to increase income in the remainder of this year by expanding marketing and providing staycation program promos.  As for the food and beverage business, SHID also serves food and beverage delivery for offices (Market Bisnis). MNCS Comment: SHID must be able to innovate more so that occupancy can continue to increase.  Besides that, an affordable staycation promo can also be an option to last until the end of the FY20 year.  It is hoped that the company will be able to maintain a challenging business turnover. SHID is currently traded at 4.30x PBV
3.       WSKT IJ has the opportunity to get cash in up to IDR14 trillion in the fourth quarter of 2020.  As of August 2020, WSKT has recorded cash receipts from the project term of around IDR14 trillion.  The company will use internal cash sourced from project payments and bank funding to pay off the loan facility from BNI.  WSKT is currently participating in a project tender with a total value of around IDR12 trillion and it is hoped that the contract will be obtained in the remainder of this year.  WSKT is also still eyeing several toll road and pipeline projects with a total value of up to IDR14 trillion (Market Bisnis). MNCS Comment: This cash receipt is a breath of fresh air for WSKT, due to the minimal potential for delays in project payments and infrastructure tenders.  Besides that, WSKT is also expected to be able to maintain running cash flow.  WSKT is currently working to be able to reduce DER again so that it can get back new fund. WSKT is currently traded at 0.49x PBV.

IHSG Updates

JCI increased by +0.10% to 5,004.32 on Wednesday (07/10) though followed by net foreign sell reaching IDR2.03 trillion. Index grew amid the various movement of Regional Asia Indices. It seems that the resilient on the Foreign Exchange reserve has brought up optimism in the market. Furthermore, consumer sector led the strengthening while trade, mining and property tumbled down. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,710. We estimate JCI will move in the range of 4,840 – 5,075 while waiting for Retail Sales data release. Today's recommendation: PGAS, BBCA, GGRM, ANTM.

Corporate Action

Cum Date Dividend: AALI (IDR42/share)

RUPS: AMOR, JIHD

Disclaimer On

PGAS, BBCA, GGRM, ANTM, SHID, WSKT, ASGR