Global Market Highlight
DJIA increased by +1.34% on Friday (25/09) followed by S&P 500 (+1.60%) and Nasdaq (+2.26%). Stocks climbed on Friday, driven by the technology sector which has led markets lower over the past month. Subsequently, investors continued to focus on rising Covid-19 cases, including surges in the UK and France. On top of that, Congress' likely inability to pass additional stimulus measures before the November election has put pressure on equities and economic outlooks. Goldman Sachs lowered its 4Q20E GDP estimates because of the lack of additional stimulus measures, and JPMorgan followed suit. Moreover, the market will look forward to several data releases today, such as: 1) Dallas Fed Manufacturing Index; 2) Japan Leading Economic Index; 3) Eurozone President Lagarde Speech.
Domestic Updates
Indonesia's International Investment Position (IIP) recorded a net liability of USD280.8 billion in 2Q20 (25.7% of GDP), an increase compared to the net liabilities at 1Q20 which was recorded at USD256.6 billion (22.8% of GDP). Bank Indonesia views the development of Indonesia's IIP in the second quarter of 2020 to be maintained. This is reflected in the structure of Indonesia's IIGF obligations which are dominated by long-term instruments. However, Bank Indonesia will remain vigilant on the risk of IIP's net liability to the economy. Going forward, Bank Indonesia believes that the performance of Indonesia's IIP will be maintained in line with efforts to recover Indonesia's economy from the impact of the COVID-19 pandemic, which is supported by the synergy of the policy mix between Bank Indonesia and the Government, and other relevant authorities.
Company News
1. DSNG IJ obtained a loan amounting to IDR202 billion from PT Bank Mandiri Tbk. This loan is for refinancing of oil palm plantation development. These funds are obtained through five company-owned partnership cooperatives. The company's total oil palm plantation area reaches 2,600 hectares located around the company's plantation area in Muara Wahau, East Kalimantan. The loan is a manifestation of the National Economic Recovery (PEN) program launched by the government to support the economy of the micro, small and medium enterprises (MSMEs) in the midst of the Covid-19 pandemic and has a 5-year tenor with an interest rate of around 9.5% per year (Market Bisnis). MNCS Comment: Despite DSNG's DER stood at 1.65x, which we considered quite high, they are still entrusted with loan as the company is still expanding. This is also probably due to the staggering increase of 165.16% YoY on 1H20 net profit. DSNG is currently traded at 13.76x/1.33x PE/PBV.
2. BIRD IJ is expanding the business into the logistics sector by launching the BirdKirim service. This program is designed to meet the needs of people who have to do activities at home but hindered by limited mobility. BIRD has collaborated with several hotels such as the Dharmawangsa hotel and Aston Hotel as well as several shopping centers such as Central Park, Neo Soho and Plaza Indonesia (Investor Daily). MNCS Comment: We see that this is one of an effective strategy to diversify business, as taxi service demand tumbled down during the PSBB season, affecting BIRD's performance in the 2Q20 which recorded a net loss. BIRD is currently traded at 0.42x PBV.
3. TOTL IJ has reached around 99% of the minimum target for new contracts this year which is set at IDR500 billion to IDR3 trillion. As of mid-September 2020, TOTL has secured a new contract of IDR497 billion. The new contracts held by TOTL this year are in the form of hotel, office, educational building, factory building as well as shopping centers. Currently, TOTL has an order book value from carry-over in the previous year amounts to IDR4.96 trillion (Kontan). MNCS Comment: TOTL is also benefitted from the turnkey project while the pandemic has been a hard blow for the construction companies. TOTL's performance was affected in the 2Q20 which recorded a net loss. TOTL is currently traded at 9.01x/0.80x PE/PBV.
IHSG Updates
JCI rose by +2.13% to 4,945.79 on Friday (25/09) though still followed by net foreign sell reaching IDR829.60 billion. JCI rebounded significantly, in line with the Regional Asia indices due to a catalyst from vaccine development. China announced that Sinovac has been approved as a Covid-19 vaccine. The news has boosted some pharma stocks such as KAEF, PYFA, PEHA, INAF and KLBF. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,873. We estimate JCI will move in the range of 4,900 - 5,000 while waiting for Money Supply data release. Today's recommendation: BBCA, ASII, JSMR, DMAS.
Corporate Action
Cum Dividend Date: HEXA (USD0.03/share)
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