MNCS Morning Navigator 14 May 2020

Global Market Highlight
DJIA fell by -2.17% on Wednesday (13/05) followed by the weakening of S&P 500 (-1.75%) and Nasdaq (-1.55%). These declines were caused by profit taking and lower risk appetite investors amid a rising fear of another Covid-19 wave as China announced a second city lockdown after Wuhan has been unlocked. Meanwhile, The Fed is still considering lowering their rate even further to the negative zone due to the worsening economic condition. The market will look forward to several data releases today, such as: 1) China Foreign Direct Investment per Apr-2020; 2) US Initial Jobless Claims per Apr-2020; 3) Germany Inflation Rate per Apr-2020.

Domestic Updates

1. The Bank Indonesia Residential Property Price Survey indicates a slower growth in residential property prices in the primary market. This is reflected by the increase on the Residential Property Price Index (IHPR) by 1.68% YoY on 1Q20 which is lower than 1.77% YoY in the previous quarter. Residential property sales in the first quarter of 2020 decreased significantly. The decline in residential property sales occurred in all types of houses. Meanwhile, 74.73% of consumers still rely on bank financing in buying residential property.
2. Gaikindo released automotive sales volume on April 2020 which plunged by 70% YoY. Sales volume only reached 24,276 units in April 2020 compared to 80,622 units in April 2019. Meanwhile, factory to dealer sales also fell by 90.63% YoY, only reaching 7,871 units on April 2020 compared to 84,056 units on April 2019. These setbacks are considered the worst after the 1998 crisis.

Company News

1. HMSP recorded a slight revenue decrease of 0.49% YoY to IDR23.69 trillion on 1Q20. Revenue consists of local machine-made clove cigarettes sales (69.8% to revenue), hand-rolled clove cigarettes sales (20.08% to revenue) and machine-made white cigarettes sales (9.16% to revenue). On the other hand, COGS decreased by 0.55% YoY followed by sales and marketing expense by 0.84% YoY as well as general and administrative expense by 4.48% YoY. Thus, net profit recorded amounting to IDR3.32 trillion (+1.10% YoY) on 1Q20. (Market Bisnis)  
2. ITMG booked a decrease on revenue by 19.20% YoY to USD366 million on 1Q20. The revenue decrease is due to the fall on coal prices by 17.40% YoY to USD58.70/ton followed by a decrease on sales volume to 5.8 million ton (-3.3% YoY). Also, production volume fell by 22.40% YoY to 4.5 million ton with stripping ratio at 10.7x, slightly increased from 9.3x at 4Q19. So net profit dropped by 68.90% YoY to USD15 million in 1Q20. (Market Bisnis)  
3. WSKT has obtained new contracts amounting to IDR3.16 trillion on 1Q20. Infrastructure projects dominated 61% of the total contracts, followed by building projects (21%) and civil projects (18%). Along with the previous contracts reaching IDR51.2 trillion then the total contracts or the order book reached IDR54.4 trillion on 1Q20. (Market Bisnis)  

IHSG Updates
JCI dropped by -0.75% to 4,554.36 on Wednesday (13/05) followed by a net foreign sell reaching IDR774.13 billion. The index decreased in the middle of the weakening Asian and global indices due to fears of second wave Covid-19 outbreak. Furthermore, the sluggish growth on residential price followed by a substantial decrease on automotive sales worsens the economic outlook as well as the index movement. Meanwhile, the Rupiah exchange rate against the USD was appreciated at IDR14,865. We estimate JCI will move in the range of 4,474-4,660 while waiting for the Current Account as of 1Q20 and Balance of Trade as of April 2020. Today's recommendation: ACES, WSKT, HMSP, TKIM.

Corporate Action
Cash Dividends: AKRA
Cum-Date Dividend: TOWR
RUPS: AMRT

Disclaimer On

HMSP, ITMG, WSKT, ACES, TKIM