10 Juni 2020
MNCS Morning Navigator 10 June 2020
Global Market Highlight
DJIA decreased by -1.09% on Tuesday (09/06) followed by the flat movements of S&P 500 (-0.78%) and Nasdaq (+0.29%). These were due to the waning sentiments from lockdown easing where aviation, hotels, finance, industry and energy sectors tumbled. Meanwhile, World Bank predicts that the world will be entering recession in FY20E with global economic dropped by 5.2% YoY, worst since World War II. The market will look forward to several data releases today, such as: 1) China Inflation Rate per May-2020; 2) US Core Inflation Rate per May-2020; 3) Japan Machinery Orders per May-2020.
Domestic Updates
The Indonesian Chamber of Commerce and Industry (Kadin) stated that there have been around 6.4 million workers who have been laid off by Covid-19. According to the Chairman, the number that was laid off was around 90% and the number of dismissed was around 10%. Seeing this situation, the economic conditions in the second quarter of 2020 will be more severe, where there will be an increase in poverty and economic growth that can enter the minus level. The Chairman believes that ease of business and investment will be very important after the Covid-19 pandemic ends.
Company News
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TINS IJ spent IDR13.03 billion on exploration activities in Bangka and Belitung. The company conducted water exploration activities in Belitung, which included geological drilling, prospecting, and detailed drilling. The exploration used two drilling vessels at a depth of 2,216 metres. Moreover, land exploration took place in Bangka and Belitung, which included mapping, geomagnetic exploration, core-logging, and tin drilling at a depth of 331 metres. (IDNFinancials) MNCS Comment: The exploration was done to find a new excavation location. To date tin price has slightly decline. TINS is traded at 0.86x PBV, lower than peers.
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BBCA IJ plans to acquire PT Rabobank International Indonesia and merge it with its subsidiary. BBCA estimates that the acquisition may cost IDR500 billion. However, the final figure will be decided based on Rabobank's equity value at the time of the acquisition, plus a fixed premium of USD20.5 million. Management said that the company would purchase 3.72 million shares, equivalent to 99.99% of Rabobank's shares. The remaining 0.01% will be purchased by PT BCA Finance. Management claimed that the acquisition will be done using the company's internal capital. (IDNFinancials) MNCS comment: The higher acquisition price which increased by 25.94%, is still manageable. Based on our calculation, Rabobank will be acquired at 1.25x PBV while the average acquisition value on BUKU 1 & 2 was around 3x PBV. BBCA is traded at 4.17x PBV, higher than peers.
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INDY IJ booked an increase on coal production volume by 10% YoY in 4M20. Volume reached 12.1 million tons from January to April. Meanwhile, in the midst of the Covid-19 pandemic, INDY will focus on improving employee health and safety, as well as maintaining production efficiency and controlling operational costs. (Market Bisnis) MNCS Comment: We see that the increase on production volume was quite decent because most of plants and business operations were forced to stop due to the pandemic. INDY is traded at 0.33x PBV, lower than peers.
IHSG Updates
JCI slipped by -0.70% to 5,035.06 on Tuesday (09/06) despite a net foreign buy reaching IDR275.01 billion. This decrease was due to profit taking done by investors followed by the negative sentiment caused by World Bank’s estimation on Indonesia’s GDP. World Bank forecast that Indonesia’s economic will be stagnant or 0% growth in FY20E. Meanwhile, the Rupiah exchange rate against the USD was flat at IDR13,890. We estimate JCI will move in the range of 4,950-5,100 while waiting for Consumer Confidence as of May-2020. Today's recommendation: UNVR, TLKM, BRPT, MDKA.
Corporate Action
Cum Dividend Date: GOOD, MLPT
Cash Dividend Date: LUCK
Disclaimer On
UNVR,
TLKM,
BRPT,
MDKA,
TINS,
BBCA,
INDY
