MNCS Morning Navigator 30 December 2020

Global Market Highlight

DJIA slipped by -0.22% on Tuesday (29/12) followed by S&P 500 (-0.22%) and Nasdaq (-0.38%). The decline in the stock market indicates that the correction is still healthy. It is natural for investors to take profit due to the index strengthened to its highest record. In addition, investors are unsure about the prospect of an increase in US fiscal stimulus. The House of Representatives agreed to increase Direct Cash Assistance from USD600 to USD2,000. this is in accordance with the wishes of President Donald Trump. However, in order for it to become lawful, the increase must have the blessing of another chamber, namely the Senate. The problem is, the Senate is controlled by the Republican Party. Moreover, the market will look forward to several data releases today, such as: 1) US MBA Mortgage Applications; 2) US Goods Trade Balance; 3) US Pending Home Sales.

Domestic Update

• Health Minister confirmed that 1.3 million health workers are a priority for getting the Covid-19 virus vaccine. The first stage is to vaccinate health workers or workers. While the next stage will be given to public officials. In the next stage, new vaccinations will be given to people over 60 years of age. To pursue herd immunity, Indonesia must vaccinate 181 million people. In accordance with World Health Organization (WHO) standards, this figure requires two doses plus 15%, so that the total vaccine requirement is 426 million doses. The government has prepared 660 million doses of the Covid-19 vaccine for vaccination.
• Furthermore, there is an additional of 2.056 new Covid-19 cases in Jakarta yesterday.

Company News

1.        ISAT IJ will explore the possibility of a business combination with PT Hutchison 3. Indosat Ooredoo and CK Hutchison Holdings Limited (CK Hutchison) have just changed the Memorandum of Understanding (MoU) exclusively for the potential joint telecommunications business between Indosat Ooredoo and Hutchison 3 Indonesia due to transactions for merging their respective businesses in Indonesia. The exclusivity period of this MoU is until April 30, 2021 (Emiten News). MNCS Comment: We believe that this M&A process will have a positive impact which are: 1) increasing ISAT capex needs; 2) efficiency in network costs; 3) and upscaling business by maximizing a higher customer base. ISAT is currently traded at 2.33x PBV.
2.        WIKA IJ is aiming for a new contract value of IDR40 trillion in 2021 which rose by 87.17% YoY from the target value of new contracts in 2020. Meanwhile, until the end of November 2020, WIKA posted a new contract value of IDR18 trillion. This realization reflects the achievement of the target of 84.22% of this year's target of IDR21.37 trillion (Market Bisnis). MNCS Comment: We hope WIKA's new contract on FY21F can be better, due to the government's focus on building hard infrastructure. WIKA is currently traded at 270.75x/1.34x PE/PBV.
3.        SGRO IJ will expand new plantings as well as replanting next year. Replanting for next year could reach around 4,000-6,000 hectares, while the new planting 1,000-2,000 hectares. So the total combined new planting and replanting is between 5,000- 8,000 hectares. SGRO prepares a capital expenditure or capital expenditure (capex) of IDR400 billion to IDR600 billion, which is mostly used for planting programs (Market Bisnis). MNCS Comment: We consider this as a very good news, considering many plantation companies in Indonesia has minimum replanting and maturing plants. SGRO is currently traded at 131.60x/0.78x PE/PBV.

IHSG Updates

JCI dropped by -0.94% to 6,036.185 on Tuesday (29/12) followed by net foreign sell reaching IDR358.45 billion. JCI fell as anticipated due to profit taking approaching the end of the year holiday. All sectors dropped, but we see this as an opportunity for investors to start accumulating for the upcoming January effect. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,130. We estimate JCI will move in the range of 6,010 – 6,170 while waiting for money supply data release. Today's recommendation: EXCL, PTBA, GIAA, ASII.

Corporate Action

IPO: WIFI (IDR530)

Disclaimer On

EXCL, PTBA, GIAA, ASII, ISAT, WIKA, SGRO