MNCS Morning Navigator 28 December 2020

Global Market Highlight

DJIA rose by +0.23% on Thursday (24/12) followed by S&P 500 (+0.35%) and Nasdaq (+0.26%). Stock market rose as investors are starting to see that business sectors that have been hit by the Covid-19 pandemic will rise. The latest employment data also added to investor optimism. In the week ended December 19, 2020, the number of claims for unemployment benefits decreased by 89,000 to 803,000. Much lower than the market consensus gathered by Reuters with a forecast of 885,000. Moreover, the market will look forward to several data releases today, such as: 1) HK Balance of Trade; 2) Japan Industrial Production; 3) France Unemployment Benefit Claims.

Domestic Update

• Bank Indonesia is optimistic that Indonesia's economy in 2021 will return to the positive zone, even soaring to be in the range of 4.8% to 5.8%. Economic resilience in the next year will be supported by improvements in a number of components that make up the gross domestic product (GDP) which are: 1) Export performance is already good and next year it will be even better supported by improved global economic growth; 2)Private and government consumption, which are able to firmly support the domestic economy in line with the rolling out of fiscal stimulus through social protection programs; 3) Moreover, another source of Indonesia's economic growth will come from investment in line with the enactment of the Employment Creation Law (UU).
• Furthermore, there is an additional of 1.997 new Covid-19 cases in Jakarta yesterday.

Company News

1.        UNTR IJ booked coal sales volume of 587,000 tonnes in November 2020 which increase by 15.5% MoM. Furthermore, the volume of gold sales through the Martabe Gold Mine was 21,000 ounces in November 2020, decreased slightly by -4.54% MoM. Meanwhile, sales of Komatsu heavy equipment in the period of November 2020 were 136 units, down by -11.6% MoM (Kontan). MNCS Comment: Though gold sales were down, coal sales were still recorded an increase which will also be supported by the increase on coal price. UNTR is currently traded at 13.66x/1.60x PE/PBV.
2.        EXCL IJ continues to work on preparing the network for the implementation of 5G services. After the 2.3GHz auction is over, EXCL is waiting for the next 5G spectrum auction, namely 700MHz, 2.6GHz, 3.5GHz, 28GHz with a total of 1280MHz. EXCL hopes that the procurement of 5G spectrum can be realized in accordance with the government's plan (Emiten News). MNCS Comment: We believe EXCL will be able to implement 5G services in the future, along with the upcoming spectrum auction. EXCL is currently traded at 10.49x/1.39x PE/PBV.
3.        TBIG IJ will acquire 3,000 towers from IBST with a total value of IDR3.97 trillion or equivalent to USD280 million. While, the company will use internal funds and bank loan facilities for acquisition funds. The settlement of this transaction still requires multiple approvals including shareholder and lender approval from TBIG and IBST. This transaction is expected to be completed near the end of 1Q21 (Market Bisnis). MNCS Comment: With the future acquisition, TBIG would be able to expand it's tower services as well as a revenue increase. TBIG is currently traded at 39.33x/6.54x PE/PBV.

IHSG Updates

JCI fell by -0.24% to 6,008.71 on Wednesday (23/12) followed by net foreign sell reaching IDR390.66 billion. JCI fell due to profit taking in anticipation of a long holiday season. While some sectors such as agriculture, trade and basic industry sector remains strong. We believe the La Nina has not yet done taking effect in the CPO production and therefore will causing further disruption, resulting in the rising commodity price. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,200. We estimate JCI will move in the range of 5,911 – 6,100 while waiting for money supply data release. Today's recommendation: AKRA, BBCA, EMDC, ACES.

Corporate Action

Stock Split: MSIN (1:2)

Disclaimer On

AKRA, BBCA, EMDC, ACES, EXCL, TBIG, UNTR