MNCS Morning Navigator 14 December 2020

Global Market Highlight

DJIA increased by +0.16% on Friday (11/12) while S&P and Nasdaq dropped by -0.13%/-0.23% respectively. Stocks closed lower as uncertainty of new economic stimulus undermined investor confidence, although a strong gain from Walt Disney helped the Dow Industrials add to gains. The US Senate facing a midnight deadline on Friday, unanimously approved a one-week extension of federal funding to avoid a government shutdown and to allow more time for separate negotiations on Covid-19 aid and a comprehensive spending bill. Lawmakers have been debating for months over a new fiscal stimulus package to support the economy. The US Food and Drug Administration is expected to issue an emergency use authorization for Pfizer Inc's Covid-19 vaccine expected as soon as Friday evening. Moreover, the market will look forward to several data releases today, such as: 1) China Foreign Direct Investment; 2) UK China House Price Index; 3) Eurozone Industrial Production.

Domestic Update

• Based on the Price Monitoring Survey for the second week of December 2020, the inflation rate in December 2020 is estimated at 0.30% MoM. With these developments, the inflation forecast for 2020 is at 1.54%. Bank Indonesia will continue to strengthen coordination with the Government and relevant authorities to closely monitor the dynamics of the spread of COVID-19 and its impact on the Indonesian economy from time to time, as well as further policy coordination steps that need to be taken to maintain macroeconomic and financial system stability, as well as sustain Indonesia's economic growth remains good and resilient.
• Furthermore, there is an additional of 1.298 new Covid-19 cases in Jakarta yesterday.

Company News

1.        ULTJ IJ posted a slight decline of -2.8% YoY of revenue to IDR4.45 trillion in 3Q20. The UHT milk business increased by 1% YoY while sales of the carton pack tea segment decreased -15.4% YoY. However, ULTJ managed to earned a net profit of IDR973.71 billion in 3Q20 which increased by 19.5% YoY (Kontan). MNCS Comment: Management stated that sales dropped due to Covid-19 pandemic but the company implement efficiency in their expenses to maintain margins and resulted in an increase on the bottom line. ULTJ is currently traded at  14.55x/4.17 PE/PBV.
2.        TRIN IJ recorded marketing sales of IDR185.2 billion until September 2020, down by -58.1% YoY. The largest portion of Triniti Land's sales came from Collins Boulevard which reached IDR98.2 billion. But TRIN are optimistic that next year the property sector will bounce back marked by sales that began to increase since August 2020. For 2021, TRIN is targeting pre-sales at IDR800 billion (Investor Daily). MNCS Comment: The potential for economic improvement in 2021 has the potential to achieve the target set by TRIN, supported by low mortgages in 2021. TRIN is currently traded at 60.04x/1.59x PE/PBV.
3.        BUMI IJ sales volume amounted to 60 million tons in 3Q20, a -5% YoY decrease from sales in the same period the previous year which reached 63.1 million tons. While production amounted to 60.7 million tons, or decreased by -3% YoY from the previous year's production, which was 62.8 million tons. The realization of BUMI's overburden (OB) removal fell slightly by -0.3% to 480.5 million bcm. Production target still stood at 82 million tons to 85 million tons by the end of 2020 (Kontan). MNCS Comment: We see that the current production of coal is still in line with the yearly target while we believe that the increase on coal price in 4Q20 will be beneficial for BUMI's performance.

IHSG Updates

JCI was flat by +0.08% to 5,938.33 on Friday (11/12) though followed by net foreign sell reaching IDR1.31 trillion. JCI probably experienced profit taking from the foreign investor as consumer sector slipped. Although we see that property, agriculture and mining sector are still rising which we believe still due to the increase on commodity price. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,080. We estimate JCI will move in the range of 5,563 – 6,010 while waiting for loan growth data release. Today's recommendation: AKRA, GGRM, PTBA, BRPT.

Corporate Action

Cum Dividend Date: MFMI (IDR53/share)

RUPS: VINS, EMTK

Disclaimer On

AKRA, GGRM, PTBA, BRPT, TRIN, BUMI, ULTJ