MNCS Morning Navigator 11 November 2020

Global Market Highlight

DJIA increased by +0.90% on Tuesday (10/11) followed by weakening S&P 500 (-0.14%) and Nasdaq (-1.37%). Stocks movement were limited due to corrections in technology stocks caused by profit taking. On the other hand, stocks in the aviation sector rose significantly, boosted by the good news from Pfizer's vaccine progress.  Market participants consider that economic improvement has occurred and even exceeded projections. Currently, investors are waiting for the continued development of vaccines amid the increase in Covid-19 cases around the world. Meanwhile, data on the number of US job vacancies in September increased to 6.4 million (previously 6.3 million). However, this figure is still below consensus (6.5 million). This shows that not all sectors have shown recovery. Moreover, the market will look forward to several data releases today, such as: 1) US Veterans Day; 2) US MBA Mortgage Application; 3) Eurozone ECB President Lagarde Speech.

Domestic Update

The Ministry of Finance reiterated that the National Economic Recovery (PEN) budget allocation will continue in 2021 amounting to IDR372 trillion to handle health and the PEN stimulus. As for the end of October 2020, the total PEN distribution as a whole had reached 52.8% or around IDR367 trillion of the total budget of IDR695.2 trillion. This is a fairly large number and the PEN scheme is finalized around August so the absorption is relatively fast.

Company News

1.       INTP IJ booked a decrease in revenue of -10.56% YoY to IDR10.14 trillion in 3Q20. Revenues are mostly came from local market especially Java, with breakdown such as cement (contributes 95.07% of total sales), concrete (7.38%) and aggregate mine (0.09%). INTP also reported a net income of IDR1.11 trillion which fell by 5.02% YoY (Market Bisnis). MNCS Comment: The decline in revenue and cement sales volume were due to the presence of Covid-19, causing stagnation in infrastructure projects, especially in Java. On the other hand, INTP and other cement issuers benefited from the decline in coal commodity prices so that they could increase efficiency from production costs. INTP is currently traded at 55.22x/2.21x PE/PBV.
2.        CSRA IJreported revenue of IDR451.24 billion in 3Q20 which grew 20.6% YoY. The company managed to increase its production volume by 3.2% YoY while the yield for TBS production was maintained at 14.1 ton/ha. As result, the net profit increased significantly by 360.17% YoY to IDR 64.01 billion (Market Bisnis). MNCS Comment: For the 4Q20, CSRA will be benefitted from the increase on CPO price due to La Nina. Though net profit kept on increasing we note that the margin decrease. CSRA is currently traded at 8.41x/1.24x PE/PBV.
3.        DEWA IJ revenue increased 30.51% YoY to USD169.11 million in 1H20. The highest revenue contributor was through related parties up to USD160.18 million (94.71%). Even though the company experienced a rise in COGS of 39.3% YoY, DEWA managed to book a net profit of USD727.448 million in 1H20 from a net loss in 1H19 (Market Bisnis). MNCS Comment: We see that the performance was supported by the recovering demand from coal as in 3Q20 the coal price started to rise to around USD60/ton which will be beneficial for DEWA. DEWA is currently traded at 49.94x/0.28x PE/PBV.

IHSG Updates

JCI soared by +1.99% to 5,462.74 on Tuesday (10/11) followed by net foreign buy reaching IDR2.25 trillion. JCI kept rising boosted by the foreign inflow while this is in line with the strengthening on the global and regional Asia indices. The increase on JCI was supported by finance, miscellaneous and basic industry sector. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,058. We estimate JCI will move in the range of 5,250 – 5,570 while waiting for current account data release. Today's recommendation: BRPT, DMAS, LSIP, ACES.

Corporate Action

RUPS: PURE, BRMS

Disclaimer On

BRPT, DMAS, LSIP, ACES, INTP, CSRA, DEWA