MNCS Morning Navigator 24 September 2020

Global Market Highlight

DJIA dropped by -1.92% on Wednesday (23/09) followed by S&P 500 (-2.37%) and Nasdaq (-3.02%).Index movement was caused by the fall on tech stocks while the British Prime Minister imposed extra social restrictions as the spike in positive Covid-19 cases continues to increase.  Recorded from worldometers data, the number of cases in the UK was 409,729 and the total number of deaths reached 41,862.  So that the UK occupies the top 14 position in the total cases of Covid-19 infection. While the US will not take the same steps as Britain, especially after the rules appear to prevent an economic revival. Moreover, market will look forward to several data releases today such as: 1) US Initial Jobless Claims; 2) Germany IFO Business Climate; 3) US New Home Sales.

Domestic Updates

The National Economic Recovery Fund (PEN) for healthcare sector has only reached IDR18.45 trillion or around 21.1% of the budgeted IDR87.55 trillion. This low absorption is due to the budget which is carried out once in a few months. The Ministry of Health will disburse the PEN health budget more quickly and in large numbers in October and December. Thus, it is estimated that the realization of budget absorption will be around 96% or around IDR84 trillion. One of the reasons for this greater absorption of budget is the accelerated distribution of incentives for health workers.

Company News

1.       ANTM IJ is appointed to manage Grasberg mine, a former of Freeport’s. ANTM’s management of the ex-Freeport mine has made this state-owned company not just an intermediary, but a gold mining company. ANTM will take care of slime anode which is classified as the remaining material of copper refining. This slime can be processed by ANTM into gold bullion. So far, Freeport's slime anode has been produced from the copper smelter PT Smelting Gresik in East Java - a gold processor which is also a subsidiary of Freeport. However, the material has to be sold abroad because the processing facilities are not yet available in Indonesia (Kompas). MNCS Comment: This is good news for ANTM as Grasberg is the largest gold mine in Indonesia. We see that this will be a booster for ANTM’s future performance as they recorded a net loss in the 1Q20. ANTM is currently traded at 1.00x PBV.
2.       BNGA IJ develop the digital banking ecosystem by developing an Application Programming Interface (API). API is an open banking platform that facilitate business partners, including e-commerce, financial technology (fintech), start-ups, and other companies, to access information and integrate Banking products and services into their digital platforms. (IQ Plus). MNCS Comment: This API development is not only used to serve payment transactions but this technology is also used to facilitate digital account opening directly from the platforms of fintech lending and securities companies that have become partners with BNGA. We see that API development provides greater opportunities to expand public access to banking services. BNGA is currently traded at 0.46x PBV.
3.       SIMP IJ estimates that capex absorption by the end of FY20E will reach IDR1.5-1.6 trillion. Allocation of capital expenditure is used for replanting and new plants, as well as other maintenance. In addition, for the downstream sector, the capex will be used to add new oil refinery capacity in Jakarta, add to the existing margarine factory facilities in Surabaya, and to complete a new palm oil mill in East Kalimantan which will have a production capacity of 45 tons of FFB per hour (Bisnis Indonesia) MNCS Comment: SIMP seems to be more focused in new plants this year rather than their mature plants and production as well as their downstream production contrast to LSIP, its subsidiary whose CPO focused. Meanwhile, performance-wise SIMP has been recording a net loss from FY19 until now. SIMP is currently traded at 0.33x PBV.

IHSG Updates

JCI dropped by -0.33% to 4,917.96 on Wednesday (23/09) followed by net foreign sell reaching IDR233.84 billion. Index weakening continues following the drop on Regional Asia indices, still in continuity of the major banks scandal as the names of the banks are being published. Most sectors in the JCI tumbled down except for infrastructure and trade. Meanwhile, the Rupiah exchange rate was weakening at IDR14,815. We estimate JCI will move in the range of 4,850-4,980 while waiting for Money Supply data release. Today's recommendation: BMRI, ADRO, UNTR, ERAA.

Corporate Action

RUPS: BRPT, KJEN, CMPP

Disclaimer On

BMRI, ADRO, UNTR, ERAA., ANTM, BNGA, SIMP