MNCS Morning Navigator 30 September 2020

Global Market Highlight

DJIA slipped by -0.48% on Tuesday (29/09) followed by S&P 500 (-0.48%) and Nasdaq (-0.29%). The slump was caused by the decrease on financial sector after fearful investors fled their funds due to the increase in Covid-19 cases. It seems that the prospects for economic recovery would be even more uncertain. Meanwhile, the market are also expecting the premiere debate between the two running US candidate. Moreover, the market will look forward to several data releases today, such as: 1) US GDP Growth Rate; 2) China Caixin manufacturing PMI; 3) UK GDP Growth Rate.

Domestic Updates

World Bank estimates Indonesia's economic growth in FY20E will decrease at a range of -1.6% to -2% YoY. This projection is worse than the consensus issued last June, which is at 0%. Indonesia's economic recovery will be slower than other countries in the Asia Pacific region as World Bank evaluate that the handling of Covid-19 in Indonesia is not optimal. Meanwhile, the World Bank predicts that the economies of countries in the Asia Pacific region will contract by an average of 0.9% to 3.5% in FY20E. Previously, Minister of Finance stated that the government's projection of economic growth throughout 2020 would be at -0.6% YoY to -1.7% YoY.

Company News

1.       BBCA IJ has done an acquisition of PT Bank Interim Indonesia or previously known as Rabobank. The acquisition value is amounting to IDR643.65 billion while prior to BBCA, Rabobank was Cooperative Rabobank UA's subsidiary. Thus, BCA officially owns 99.9% of the shares of Bank Interim. Meanwhile, PT BCA Finance, a subsidiary whose entire shares are owned directly and indirectly by BCA, owns 0.000027% of the shares (Emiten News). MNCS Comment: We see that the goal of the decision was intended to support BBCA’s business development going forward. BBCA’s large customer base provides potential for the business development of subsidiaries through cross selling, and conversely the business of subsidiaries will strengthen customer relationships. This acquisition plan will be funded through BBCA’s internal fund. BBCA is currently traded at  4.01x PBV which considered premium or higher than peers.
2.       UNTR IJ will distribute interim dividends of IDR637.85 billion. Dividend per share stood at IDR171 with a yield of 0.75%. Cum date will be at 06 October 2020 while Payment date will be at 20 October 2020 (Kontan). MNCS Comment: Previously, UNTR has distributed a dividend of IDR805 per share on June, UNTR usually distribute 2 dividends a year, and the second time with a lower amounts. However, the dividend per share this time is way lower than the final dividend in FY19 which stood at IDR408 per share.UNTR is currently traded at 10.40x/1.44x PE/PBV.
3.       BRPT IJ ready to buy back and prepare IDR1 trillion funds for this share buyback. Meanwhile, the number of shares to be bought back will not exceed 2% of the total issued capital of BRPT. According to management, the implementation of this share buyback will not have a significant negative impact on BRPT's performance and revenue. This is because BRPT's current retained earnings and cash flow are sufficient for the funds needed to carry out share buybacks (Kontan). MNCS Comment: The action was probably due to management's assessment on BRPT's stock which has dropped by 54.6% YTD and the company found BRPT's value is underpriced in the market. Furthermore, BRPT's performance over the course of six months are also weakening due to the pandemic as they recorded a net loss of IDR93 billion in the 2Q20.BRPT is currently traded at 3.50x PBV.

IHSG Updates

JCI dropped by -0.56% to 4,879.10 on Tuesday (29/09) followed by net foreign sell reaching IDR341.94 billion. Index fell after increasing earlier due to the weakening movement of the European indices following the news regarding the increase of Covid-19 cases. Furthermore, the economic estimates from World Bank which stated that Indonesia's growth will further be contracted has weigh on the index movement. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,895. We estimate JCI will move in the range of 4,850 - 5,000 while waiting for Money Supply data release. Today's recommendation: ACES, EXCL, UNTR, BEST.

Corporate Action

RUPS: TOPS, BBYB, AISA

Disclaimer On

ACES, EXCL, UNTR, BEST, BBCA, BRPT, UNTR