MNCS Morning Navigator 17 November 2020

Global Market Highlight

DJIA rose by +1.60% on Monday (16/11) followed byS&P 500 (+1.16%) and Nasdaq (+0.80%). The good news about the success of the Moderna vaccine has again boosted the rate of global exchanges. In fact, the effectiveness of this vaccine reached 94% in the third phase of trials (higher than Pfizer's 90% effectiveness). This is able to treat the anxiety of market players in the midst of the increasing number of cases which has reached 11 million. If this vaccine is approved, Moderna is ready to deliver 20 million doses and next year it will distribute 500 million - 1 billion doses globally. Meanwhile, political turmoil in the US is still ongoing due to Trump's decision to reject the election results. The Republican Party also refused to coordinate with Biden and this hampered many important decisions regarding stimulus and handling the Covid-19 virus. Moreover, the market will look forward to several data releases today, such as: 1) US Retail Sales; 2) US Industrial Production; 3) US Business Inventory.

Domestic Update

Indonesia’s trade balance increased to USD3.61 billion in October 2020. This was the sixth straight month of surplus in trade balance, and the largest since December 2010, mainly due to a slump in imports, amid the Covid-19 pandemic. Exports fell by -3.29% YoY to USD14.39 billion, mainly due to lower sales of oil and gas products (-26.89% YoY), while non-oil exports fell by -1.84% YoY. Imports plunged -26.93% YoY to USD10.79 billion, as purchases tumbled for both oil and gas (-38.54% YoY) and non-oil and gas (-25.36% YoY). Considering the 10M20, the trade recorded a surplus of USD17.08 billion, shifting from a USD2.41 billion gap in the same period 2019.

Company News

1.       ACES IJposted revenue of IDR5.48 trillion in 9M20 which dropped by -8.27% YoY. Based on the product segment, ACES sales itself was still contributed by home improvement products amounting to IDR2.85 trillion, and lifestyle products of IDR2.35 trillion. Meanwhile, the company is trying to reduce cost of goods sold by -11.61% YoY to IDR 2.77 trillion. But ACES still booked a drop in net profit of -26.6% YoY to IDR529.71 billion in 9M20. However, on a quarterly basis, the company's revenue in 3Q20 was IDR1.83 trillion shot up by 8.56% QoQ. Net profit increased significantly by 48.1% QoQ to IDR169.55 billion in 3Q20 (Market Bisnis). MNCS Comment: We expect SSSG to rise in 4Q20, due to PSBB relaxation despite management maintains its guidance for FY20E SSSG between flat to single-digit negative. ACES is currently traded at 41.89x/6.10x PE/PBV.
2.        UCID IJposted revenue of IDR6.2 trillion in 9M10, a slight decrease of 0.83% YoY. Revenue is still supported by sales of diapers which contributed 95.24%. Meanwhile, the non-diapers or non-principal sales segment recorded revenue growth of 20.49% YoY, despite the segment's contribution to income of only 4.76%. UCID recorded a decrease in net profit of 39.3% YoY to IDR199.84 billion due to foreign exchange losses that swelled to IDR143.37 billion in 9M20 (Market Bisnis). MNCS Comment: It seems that the foreign exchange losses badly affect the bottom line due to some materials that is still imported, though UCID post a stable top line quarterly. UCID is currently traded at 24.26x/1.48x PE/PBV.
3.        SPTO IJ will be distributing an interim dividend of IDR54 billion from the net profit in 1H20. Dividend per share stood at IDR20/share with yield at 4.76%. Cum date will be at November 20 while payment date will be at December 15, 2020 (Kontan). MNCS Comment: Although net profit in 1H20 dropped by -37% YoY, SPTO still distribute an interim dividend, in which the yield is quite attractive from our perspective. SPTO is currently traded at 15.21x/0.95x PE/PBV.

IHSG Updates

JCI increased by +0.62% to 5,494.87 on Monday (16/11) but still followed by net foreign sell reaching IDR368.92 billion. JCI kept on rising backed by strengthening in all sectors supported by a surplus in the trade balance that has become a catalyst. Furthermore, the JCI is still in line with the incline on the global and regional Asia indices following the free trade agreement that will be beneficial for the emerging market, Indonesia included.  Meanwhile, the Rupiah exchange rate was strengthening at IDR14,110. We estimate JCI will move in the range of 5,381 – 5,600 while waiting for car sales and property price index data release. Today's recommendation: MIKA, INCO, INDY, WSBP.

Corporate Action

RUPS: SAMF, CPRO

Disclaimer On

MIKA, INCO, INDY, WSBP, ACES, SPTO, UCID