MNCS Morning Navigator 11 December 2020

Global Market Highlight

DJIA lowered by -0.23% on Thursday (10/12) followed by S&P 500 (-0.13%) while Nasdaq rose by +0.54%. Dow slipped as jobless claims jumped to 853,000 last week, up sharply from the prior week's upwardly revised 716,000. Continuing claims rose 230,000 to 5.76 million, the first increase since late August. Meanwhile, Food and Drug Administration advisory panel recommended Thursday night that the FDA approve the Pfizer and BioNTech vaccine for people 16 and older. Panel members spoke positively about the Pfizer coronavirus vaccine, which showed 95% effectiveness in a final-stage trial. As soon as the FDA grants emergency use approval, a massive distribution effort will get underway, with vaccinations starting almost immediately. Pfizer and BioNTech plan to seek full FDA approval next spring, when it will have coronavirus vaccine data for children age 12-15 as well as other groups not included in the first wave of studies. Moreover, the market will look forward to several data releases today, such as: 1) US Michigan Consumer Sentiment Preliminary; 2) US Producer Price Index; 3) Germany Inflation Rate.

Domestic Update

• Tobacco excise tax is officially raised by 12.5% average in FY21F. While details are as follows: cigarette hand kretek +0%, White Machine Cigarette (I: +18.4%, II A: +16.5%,II B: +18.1%), and Machine clove cigarettes (I: +16.9%, II A: +13.8%, II B: +15.4%).
• Retail sales in Indonesia tumbled by -14.9% YoY in October 2020, after declining by -8.7% a month earlier. This marked the eleventh straight month of fall in retail trade, and the steepest pace since June, amid the prolonged impact caused by the Covid-19 crisis that made people to stay at home most of their time. On a monthly basis, retail sales dropped by -5.3% in October, the steepest decline since April, after a -1.4% fall in September.
• Furthermore, the new cases of Covid-19 infection in Jakarta is reported to be 1,180 yesterday.

Company News

1. INAF IJ will potentially get 130 million doses of Corona vaccine from biotechnology company from the United States, Novavax Inc. Vaccine delivery is planned to start in May or June 2021. So, the supply commitment is a binding volume of 30 million doses and a non-binding volume of 100 million doses. In developing this vaccine, the company has received funding from the Coalition for Epidemic Preparedness Innovations (CEPI) of USD388 million and from global funds of USD2 billion (Market Bisnis). MNCS Comment: We hope this will be a catalyst for INAF in the future, as INAF's performance was hit earlier this year. INAF is currently traded at 27.99x PBV.
2. PPRE IJ aiming for the acquisition of new contracts worth IDR3.5 trillion - IDR3.7 trillion in 2021. The target for new contracts is higher than the 2020 target of IDR2 trillion. Meanwhile, optimism for setting targets in 2021 follows the achievement of this year's target, which until November 2020 has been realized worth IDR2.3 trillion. As for several projects targeted by PPRE in 2021, they come from the construction and mining services sector (Market Bisnis). MNCS Comment: PPRE has the potential to get the value of the project. Due to infrastructure funds increased by more than 40% YoY in FY21F. PPRE is currently traded at 121.43x/1.23x PE/PBV.
3. GEMS IJ recorded coal sales of 24.6 million tons as of September 2020. That volume grew 19% YoY from 20.8 million tons as of September 2019. From the production side, there was also an increase to 23.9 million tons, growing 16% YoY from the previous 20.7 million tons. The majority of coal sales to the domestic market were 9.4 million tons, China 8.8 million tons, India 4.5 million tonnes, and South Korea with 0.5 million tonnes. Of the total domestic sales, a total of 3.8 million tonnes was purchased by PLN (Market Bisnis). MNCS Comment: We believe GEMS will also be benefitted from the rise on demand due to winter as the export contributes half of the revenue. GEMS is currently traded at 11.79x/2.74x PE/PBV.

IHSG Updates

JCI dropped by -0.18% to 5,933.70 on Thursday (10/12) followed by net foreign sell reaching IDR70.31 billion. JCI decreased due to the announcement of excise tax while some negative sentiments from vaccine also weigh on the movement. Tobacco stocks dropped such as GGRM and HMSP while some pharmaceutical stocks also dropped due to a bad report of vaccination in the UK. Meanwhile, the Rupiah exchange rate was weakening at IDR14,105. We estimate JCI will move in the range of 5,775 – 6,010 while waiting for balance of trade data release. Today's recommendation: UNTR, WSBP, ADRO, TKIM.

Corporate Action

Cum Dividend Date: GEMS (USD0.0034/share), AMRT (IDR6.03/share)

IPO: ATAP (IDR100/share)

Disclaimer On

UNTR, WSBP, ADRO, TKIM