MNCS Morning Navigator 09 September 2020

Global Market Highlight

DJIA slumped 632 points or -2.25% on Tuesday (08/09) followed by S&P500 (-2.78%) and Nasdaq (-4.11%). Technology stocks fell for the third consecutive trading session while energy stocks took a beating as oil prices extended their drop on concerns demand is slumping amid a still uneven economic recovery. Oil prices slumped to their lowest level in nearly three months as Saudi Arabia signaled an expectation for reduced demand over the weekend by cutting prices. Moreover, the market will look forward to several data releases today, such as: 1) China Inflation Rate; 2) US Consumer Credit Change; 3) Canada Interest Rate Decision.

Domestic Updates

Indonesia's consumer confidence index rose from 86.2 in July 2020 to 86.9 in August 2020, and expected to be followed by Retail sales data. The increase in consumer index in August 2020 was supported by the good impact of loosening of PSBB/ semi lockdown due to COVID-19. These number was the highest index since March 2020, as three (3) of six (6) main sub-indices strengthened, including : 1) current economic condition (+4.9 point to 55.6); 2) job availability (+4.8 point to 35.2); 3)the assessment of current income (+6.7 point to 59.8). Inline with it, investor will watch for the realization of retail sales data in July 2020 today. It is estimated to still decline by -12% YoY, but better than -17.1% YoY in June 2020.  

Company News

1.       SIDO IJ will do the stock split with ratio (old : new) : 1 : 2. Therefore the nominal value will change from IDR100 to IDR50 after the stock split. The end trading date for old nominal value (in all market) : Sept 11^th 2020 and the start trading date for new nominal value (in regular and negotiation market) : Sept 14^th 2020 (Emiten News). MNCS Comment: Basically the stock split will not affect SIDO’s prospect fundamentally but more to potentially increase the liquidity in the long run. Historically the stock split will drive the hike of shares price after stock split. Despite the latest corporate action, the Company still has a solid and growing business in midst of COVID-19. SIDO is currently traded at 26.55x/7.12x PE/PBV, premium but still deserved with 26.89% ROE in 2020.
2.       BULL IJ will conduct a private placement (PP) by issuing max 1.18 billion series B shares or equal to max 10% of total paid up shares. The execution price for PP will refer to OJK and IDX regulations. The corporate action agenda still needs approval from AGM which is planned at Oct 15^th 2020 (Market Bisnis). MNCS Comment: the corporate action is positive as for strengthening the capital structure and expansion agenda. For the short term outlook, the stock price still has good sentiment supported by shares buyback agenda with total IDR270 bn within next 3 months (with max share price at IDR450 vs current price at IDR330 as of ). Steady contract and the high expectation for global economy recovery will potentially deliver brighter long term outlook for the Company. BULL is currently traded at 4.32x/0.89x PE/PBV.
3.       ACST IJ has been appointed as the contractor of Package II of the West Java International Airport Access Toll Road (BIJB) in Kertajati, which is 1.5 km long with a project value of IDR260 billion. Overall, the Kertajati airport access toll road is 3.7 km long and is expected to commence operation by the end of FY21E (IDN Financial). MNCS Comment: The new project by the government will surely help ACST in their FY20E target as they still book a net loss in the 2Q20 due to the impact of the pandemic.

IHSG Updates

JCI rose by +0.27% to 5,244.07 on Tuesday (08/09) but still followed by net foreign sell reaching IDR286.37 billion. JCI finally bounce back followed closely by Regional Asia Indices. The strengthening was driven by the rise on Consumer Confidence index although it signaled that household consumption is not strong. Weak consumption is evident from the deflation in July and August while BI estimates that deflation will still occur in September because it is difficult to expect household consumption to drive economic growth in 3Q20. Meanwhile, the Rupiah exchange rate was weakening at IDR14,765.We estimate JCI will move in the range of 5,187-5,330 while waiting for Retail Sales data release. Today's recommendation: BEST, TOWR, PGAS, JSMR.

Corporate Action

RUPS: POLY

Disclaimer On

BEST, TOWR, PGAS, JSMR, SIDO, ACST, BULL