MNCS Morning Navigator 10 September 2020

Global Market Highlight

DJIA rose by +1.60% on Wednesday (09/09) followed by S&P500 (+2.01%) and Nasdaq (+2.71%). After 3 days of consecutive corrections, global markets rebounded finally although still limited. The market is quite anxious about AstraZeneca's vaccine trials due to volunteers getting sick after testing. Even though this vaccine is the main candidate who is thought to be the most ready. On the other hand, investors are also still waiting for data on the results of the US job opening survey.  Based on consensus, the employment rate increased to 6 million (previously 5.9 million).This is expected to be a positive catalyst for global indices.Moreover, the market will look forward to several data releases today, such as: 1) US Initial Jobless Claims; 2) US Purchasing Price Index; 3) US Wholesale Inventories.

Domestic Updates

BI release Retail Sales which still tumbled by -12.30% YoY in July, although it seems to recover from a -17.1% YoY decline last month. Retail sales have continued to improve even though they are still in a contraction phase. Sales improvement is predicted for nearly all commodity groups surveyed, with sales in the Food, Beverage and Tobacco category experiencing the lowest contraction, with growth at -1.9% YoY. This is in line with the increase in people's purchasing power and the implementation of New Habit Adaptation (AKB). In terms of prices, inflationary pressure is predicted to increase, reflected in the General Price Expectation Index (IEH) for the next 3 and 6 months of 133.7 and 157.7, respectively, higher than the previous period. Respondents estimated that the price increase was influenced by disruption in the distribution of goods and services in line with the arrival of the rainy season.

Company News

1. BEEF IJ posted revenue of IDR684.62 billion in 1H20 which jumped by 18%. The increase came from the sale of biological asset amounting to IDR326.44 billion, while sales of offal meat and local beef products decreased by 25.65% YoY, imported offal meat and beef products decreased by 0.37% YoY, advanced products decreased by 24.28% YoY and the rest was contributed by other sales. Subsequently, cost of revenue jumped by 51.91% YoY causing BEEF to record a net loss of IDR78.44 billion in 1H20, inversely proportional to a net profit of IDR32.02 billion in 1H19 (Kontan). MNCS Comment: BEEF's increase in revenue seem to not came from the operational, as the meat sales overall recording a decrease. This is followed by inefficiency which caused the bottom line to slump. BEEF is currently traded at 1.11x PBV.
2. LINK IJ managed to grow their net subscribers by 62.430 customer in the 2Q20. Moreover, the additional subscribers in July reached 21.807 making the total subscribers stood at 784.199 in 7M20. Churn rate dropped to 2.4% in the 2Q20, while ARPU is stable at IDR375.000. LINK's top line grew by 6.2%YoY in 2Q20, standing at IDR971 billion. According to management, the company's achievements in 2Q20 exceeded expectations and recorded new high, supported by customer growth and the company's asset utilization. (Market Bisnis). MNCS Comment: LINK gained advantage by the work-school activities from home, making internet usage at home increase. Furthermore, with the solid incline on subscribers and good performance surely will lift LINK's outlook in FY20E. LINK is currently traded at 6.71x/1.42x PE/PBV.
3. JSMR IJ has listed four series of Jasa Marga Phase I Sustainable Bonds II Year 2020 which received an AA- rating from PT Pemeringkat Efek Indonesia (Pefindo). Previously, JSMR Management stated that it was oversubscribed after announcing the plan to issue bonds. Management revealed that the incoming demand for Jasa Marga's Phase I Sustainable Bonds II in 2020 reached IDR2.7 trillion. This amount exceeds the value offered by the company of up to IDR2 trillion (Market Bisnis). MNCS Comment: We consider that JSMR's oversubscribe bond is something to be grateful for in the midst of a pandemic. This is because JSMR will get the funding it wants to achieve, so that the company's target will move according to plan. JSMR is currently traded at 120.69x/1.35x PE/PBV.

IHSG Updates

JCI slipped by -1.81% to 5,149.38 on Wednesday (09/09) followed by net foreign sell reaching IDR630.38 billion. JCI drop along with the Regional Asia indices due to the fall on China's Consumer Price Index which stood at 2.4 in August 2020 from 2.7 in the same period last year. Subsequently, Indonesia's retail sales is still decreasing despite the thinning decline, these sentiments has brought the market down. Meanwhile, the Rupiah exchange rate was weakening at IDR14,799.We estimate JCI will move in the range of 5,119-5,230 while waiting for Balance of Trade data release. Today's recommendation: WSBP, ADRO, BBRI, SMRA.

Corporate Action

IPO: ROCK (IDR1.340/share), HOMI (IDR380/share)

RUPS: JAYA

Disclaimer On

WSBP, ADRO, BBRI, SMRA, BEEF, LINK, JSMR