14 September 2020
MNCS Morning Navigator 14 September 2020
Global Market Highlight
DJIA grew by +0.48% on Friday (11/09) followed by S&P500 (+0.05%) though Nasdaq fell by -0.60%. The worst fall in share prices occurred in the technology sector, where Apple shares slumped by 3.3% after rising 2.7% while Netflix, Microsoft, Facebook and Amazon shares also decreased which sent technology sector shares on the S&P 500 Index down 2.3%. In addition, market players are also watching the US consumer price index (CPI) data for August which solidly increased by 0.4%. Moreover, the market will look forward to several data releases today, such as: 1) China House Price Index; 2) Japan Industrial Production; 3) Eurozone Industrial Production.
Domestic Updates
The Ministry of Finance has set a target for excise revenue from excisable goods (BKC), reaching IDR1.5 trillion in FY21. As a result, the total excise revenue target for next year will increase by 0.83% YoY. The Minister of Finance hopes that the plastic bag excise law can be passed together with the parliament this year. In early FY21, the government will be able to collect excise on plastic bags while compiling a roadmap for other plastic products such as plastic containers and packaging. The escalation of the application of excise on plastic products is planned to take effect in FY22, while plastic bags will be priced at an excise rate of IDR200 per sheet.
Company News
1.INDY IJ managed to produce 20.4 million ton of coal as of July 2020. Meanwhile, there has been no plans to revise production target, which is 30.95 million tons, divided into Kideco with 29.65 million tons and MUTU at 1.3 million tons as INDY’s subsidiaries. Kideco Jaya Agung is one of the seven first generation mines that are waiting for confirmation of the extension of the Coal Mining Exploitation Cooperation Agreement (PKP2B) and a change in status to a Special Production Operation Mining Business Permit (IUPK-OP) whose license will expire on March 13, 2023 (Kontan). MNCS Comment: INDY is quite optimist with the coming period as demands from China and India returns to normal and coal price starts to stabilize. Furthermore, the Omnibus law regarding the extension of operating permit will benefit coal companies, INDY included. INDY is currently traded at 0.36x PBV, lower than peers.
2.PNGO IJ is quite optimist to reach IDR1.7 trillion of revenue in FY20E. Management state that this target can still be achieved through pandemic and prolonged dry season whereas the company would focus on efficiency to achieve this target. Nearing the peak crop, supply of fruit from third parties has also increased so that it can increase production (Kontan). MNCS Comment: Approaching the La Nina that is predicted to come this month will also be a positive catalyst for PNGO as it will further increase production. On the other hand, the labor shortage has caused production to not be optimized, leading to inequality on supply and demand which will lift sentiments on CPO price. PNGO is currently traded at 17.64x/0.87x PE/PBV, lower than peers.
3.AMOR IJ will distribute final dividends totaling IDR50.8 billion to shareholders. This equals to IDR45.8 per share yielding at 2.24%. The dividend distribution is in line with the company's commitment to distribute at least 50% of net income each year. Meanwhile, revenue slipped by 9.47% to IDR279.82 billion due to a decrease in managed funds, especially since February 2020. Total assets under management (AUM) from mutual fund products were recorded at IDR22.78 trillion at the end of June 2020, dropped by 17.79% YoY (Kontan). MNCS Comment: As the market take a toll from the pandemic in the 1Q20, it definitely affect the operational of AMOR. But we see that they are pretty solid in committing to distribute dividend at 50% DPR. AMOR is currently traded at 28.33x/7.94x PE/PBV.
IHSG Updates
JCI rose by +2.56% to 5,016.71 followed on Friday (11/09) though still followed by net foreign sell reaching IDR2.26 trillion. JCI bounce back after hitting below five thousand, this is inline with the strengthening Regional Asia indices. It seems that the negative sentiment from the PSBB announcement didn’t sit long with the market, as investor buys back. Seeing that the foreign investors are running away, the domestic players starts to act. Meanwhile, the Rupiah exchange rate was weakening at IDR14,890. We estimate JCI will move in the range of 4,753-5,050 while waiting for Balance of Trade data release. Today's recommendation: JSMR, AKRA, TLKM, LSIP.
Corporate Action
IPO: ENZO (IDR105/share)
Disclaimer On
JSMR,
AKRA,
TLKM,
LSIP,
INDY,
PNGO,
AMOR
