MNCS Morning Navigator 15 September 2020

Global Market Highlight

DJIA soar by +1.18% on Monday (14/09) followed by S&P500 (+1.27%) and Nasdaq (+1.87%). The strengthening was supported by the increase in technology stocks. Nvidia shares closed 5.8% higher due to plans on buying designer chip from Soft Bank for USD40 billion. Oracle shares closed up 4.3% to become TikTok's technology partner in the US. This is followed by news of the Covid-19 vaccine. AstraZeneca continues its third phase of the vaccine trial in the UK after being discontinued due to safety concerns. Meanwhile, the CEO of Pfizer said that the Covid-19 vaccine could be distributed in the US before the end of the year. Moreover, the market will look forward to several data releases today, such as: 1) US Industrial Production; 2) China Retail Sales; 3) China Unemployment Rate.

Domestic Updates

•         The central government will use hotel rooms as an alternative isolation rooms for Covid-19 patients in case the referral hospitals cannot accommodate all patients.  Temporary capacity at around 1.500-3.000 beds. Moreover, the government is preparing more places for self-isolation to help those that don't have adequate isolation rooms in their houses. (Detik)
•         Indonesia's coal export volume in Jul-2020 declined by 11% YoY, while its export value also declined by 22%. The decline in coal export was due to the decline in coal demand in the global market due to the Covid-19 pandemic such as India declined by 20%, while demand from South Korea also declined by 15%. (IDN Financials)

Company News

1.       WIKA IJ credit profile has downgraded by Fitch Ratings as WIKA’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) are cut to 'BB-', from 'BB'. At the same time, Fitch Ratings Indonesia has downgraded WIKA's National Long-Term Rating to 'A(idn)', from 'AA-(idn)'. New project tenders are likely to dip as the pandemic takes a toll on business activity, while construction is also set to slow due to social-distancing measures. (Bisnis) MNCS Comment: We see that the rating downgrade is quite relevant to the current condition of the construction sector, due to the absence of new tenders that can increase the value of WIKA's new contract in FY20E. WIKA is currently traded at 21.52x/0.79x PE/PBV.
2.       ADHI IJ posted a new contract of IDR4.7 trillion by the end of Aug-2020. The acquisition of this new contract was dominated by the East Sumatra highway preservation project worth IDR436.9 billion. In the midst of challenging conditions, management is still optimistic that they can obtain new contracts in the 2H20 in the range of IDR25 trillion to IDR27 trillion. (Kontan) MNCS Comment: The acquisition of this new contract is a breath of fresh air for ADHI in the midst of a challenging business. ADHI is currently traded at 95.83x/0.37x PE/PBV.
3.       BSDE IJ collaborates with Mitbana Pte Ltd, a joint venture company between Mitsubishi Corp and Surbana Jurong Pte Ltd to develop a transit-oriented development (TOD) with a smart concept in BSD City, Tangerang. Mitbana will work with BSDE to transform over 100 ha of greenfield land in BSD city. Management belives that the TOD development collaboration with the smart city concept, follows the current urban trend. (Kontan) MNCS Comment: BSDE continues to transform as a developer that has complete public facilities. This is due to the MRT plan which will also visit the southern Tangerang area, which will be utilized by BSDE by building TOD housing. BSDE is currently traded at 0.54x PBV.

IHSG Updates

JCI rose by +2.89% to 5,161 on Monday (14/09) though still followed by net foreign sell reaching IDR478 billion. JCI continuous rally after the market responded positively to the clarity of the latest Jakarta PSBB regulations where several important sectors were still being opened and market has already learned from the past downturn where companies are better prepared.Meanwhile, the Rupiah exchange rate was strengthening at IDR14,880. We estimate JCI will move in the range of 4,879-5,220 while waiting for Balance of Trade data release. Today's recommendation: PTBA, INDF, WIKA, MDKA

Corporate Action

IPO: PLAN (IDR112/share)

Disclaimer On

PTBA, INDF, WIKA, MDKA, WIKA, ADHI, BSDE