MNCS Morning Navigator 29 July 2020

Global Market Highlight
DJIA slipped by 0.77% on Tuesday (28/07) followed by S&P 500 (-0.65%) and Nasdaq (-1.27%). The stock prices drop was caused by the stimulus proposal by the House of Representative as the Democrat suggest a USD3 trillion stimulus, larger than USD1 trillion from the Republican. While Kentucky State Senator disagrees with both proposal as the Government has spend a large amount, whereas the Direct Cash assistance of USD600 will end by the week. Without it, and limited employment opportunities, it is feared that household consumption will be disrupted as it accounts for nearly 70% in the formation of Gross Domestic Product. Moreover, the market will look forward to several data releases today, such as: 1) US MBA Mortgage Application; 2) US Goods Trade Balance; 3) US Pending Home Sales.

Domestic Updates
The Indonesian government will widen the deficit of the state budget in 2021 to 5.2% of GDP. Previously, the 2021 state budget deficit was agreed at 4.15% of GDP, in which the House of Representatives noted that it could be increased to 4.7% of GDP. Although the deficit has widened further, the state budget deficit increase will give the government a larger reserve fund to around IDR179 tn, which will be used to restore the economy next year. Priorities will be given to the SME private sector.

Company News

1. WEGE IJ recorded new contract of IDR1.02 trillion, decreased by 42.49% YoY in 1H20. While order book grew by 4.03% YoY to IDR12.22 trillion in 1H20. WEGE targets to develop 70% from order book in FY20E. While WEGE projection to booked net profit of IDR138 billion and new contract IDR3.4 trillion in FY20E. (Analyst meeting) MNCS Comment: WEGE still manage order book in 1H20, besides new contract decreased in 1H20. WEGE is currently traded at 0.87x PBV.
2. BRIS IJ noted an incline of net profit by 226% YoY to IDR116 billion in 1H20. While total asset grew by 33.7% YoY to IDR37.92 trillion. Changes in business portfolio targets are potentially still be above 25%. Third Party Funds also increased by 46.2% YoY to IDR41.07 trillion in 1H20. Financing grew by 56% YoY to IDR37.44 trillion supported by consumers segment, which grew by 39% YoY. BRIS is committed to staying focused on the retail segment, including SMEs, which contributed up to 75% of the portfolio. (Republika). MNCS Comment: BRIS shows a solid performance compare to other BUKU II banks. BRIS also applies a digital transformation strategy to maintain its performance this year. BRIS is currently traded at 1.11x PBV.
3. FREN IJ recorded revenue of IDR4.30 trillion in 1H20, increased by 41.98% YoY compared to the same period the previous year. Revenue from the data business reached IDR3.91 trillion and non-data revenue reached IDR226.52 billion, followed by interconnection revenue of IDR61.69 billion and other income of IDR101.83 billion. At the same time, the company's operating expenses also rose by 22.86% YoY, from the original to IDR2.25 trillion. Thus FREN still recorded a loss of IDR1.22 trillion in 1H20, deeper than the loss in 1H19 which amounted to IDR1.07 trillion. (Market Bisnis). MNCS Comment: Even though FREN recorded a significant growth of revenue, a sharply decline of forex loss and higher finance cost damning the bottom-line. FREN is currently traded at 2.60x PBV.

IHSG Updates
JCI slipped by -0.07% to 5,113 on Tuesday (28/07) followed by net foreign sell reaching IDR295.44 billion. The flat movement was due to profit taking done by investors, as JCI has increased by 4.31% within this month. Furthermore, Covid-19 will still be a source of uncertainty, at least until next year according to the Minister of Finance. As of yesterday, 1.748 cases were added making the total reach 102.051 cases in Indonesia. While the corona virus is still haunting, then community and business activities will not return to normal quickly which will hamper the economy as the market are expecting the release of 2Q20 economic growth in early August. We estimate JCI will move in the range of 5,030-5,150 while waiting for Loan Growth and Money Supply data release. Today's recommendation: HMSP, TKIM, KLBF, ANTM.

Corporate Action
Cum Dividend: FISH
Ex Dividend: AMAG
RUPS: KAEF

Disclaimer On

HMSP, TKIM, KLBF, ANTM, WEGE, BRIS, FREN