Global Market Highlight
DJIA grew by +0.57 on Friday (28/08) followed by the strengthening on S&P 500 (+0.57%) and Nasdaq (+0.60). Stock prices rise was boosted by the Fed's strategy to adopt an average inflation target, restoring employment in the US and developing the Covid-19 vaccine on the way. The Fed will not rush to raise the benchmark interest rate. If the unemployment rate falls, the central bank will try to ensure that the benefits of looser monetary policy are as inclusive as possible. Moreover, the market will look forward to several data releases today, such as: 1) US Fed Clarida and Bostic Speech; 2) China NBS Manufacturing PMI; 3) Japan retail sales.
Domestic Updates
Bank Indonesia and the Government are encouraging MSMEs to penetrate the global market through four main focuses: 1) the synergy of economic diplomacy between the BI Foreign Affairs Representative Office, the Government, and all ambassadors to encourage MSMEs to Go Global; 2) ensuring the availability and suitability of MSME products by maintaining continuity and product quality; 3) encouraging the ease in regulation, among others in forming business units and obtaining financing; 4) digital marketing including support for a payment system through QRIS (QR Code Indonesian Standard).
Company News
1. ADRO IJ reported revenue of USD1.36 billion in 1H20 which is a 23% YoY decline. This was due to an 18% decrease in the average selling price and a decline in sales volume. Furthermore, coal production reached 27.29 million tons (-4% YoY) in 1H20. So the company also revised its production guidelines to 52-54 million tons for FY20E. Meanwhile, net profit amounted to USD155.09 million (-47.75% YoY) in 1H20 (Market Bisnis). MNCS Comment: We believe with the economic recovery and the upcoming winter will boost coal demand in the 2H20.Moreover, ADRO will propose it's contract extension that will expired soon. ADRO is currently traded at 8.28x/0.69x PE/PBV.
2. GGRM IJ will not be distributing dividends in FY20E, while management stated that the fund will be used for working capital. For the last five years, GGRM always distributed dividends while the amount remain in the last four years. Meanwhile net profit increased by 39.6% YoY in FY19 (Kontan). MNCS Comment: GGRM share fell significantly (-5.11%) following the policy that management has decided not to distribute any dividends from the profit for FY19. Historically, GGRM is one of those issuers who provide a high dividend yield. We believe that management wants to increase working capital and protect the cash flow as the operating performance will potentially decline this year and Kediri airport will kick of the construction on FY22F. GGRM is currently traded at 12.40x/1.73x PE/PBV.
3. BYAN IJ will be distributing dividends of USD66.67 million from FY19's retained earnings. The management has agreed on not distributing dividends from the FY19 net profit, while unreserved retained earnings amounted to USD458.98 million. So the dividend payout ratio equals to 14.52%. Dividend per share stood at USD0.02 or equals to IDR292/share with yield at 2.34%. Cum date will be at September 3, 2020 (Kontan). MNCS Comment: BYAN has always distributed dividends in the last four years although it usually came from the net profit. Despite the -57.10% YoY drop in BYAN's FY19 net profit, they remain solid in distributing dividends. BYAN is currently traded at 21.04x/4.87x PE/PBV.
IHSG Updates
JCI dropped by -0.46% to 5,346.66 on Friday (28/08) followed by net foreign sell reaching IDR1.13 trillion. JCI dropped amid various movements from the Regional Asia indices while US Indices rise. Consumer and infrastructure sectors lead the decrease on JCI. Moreover, the Government will use all instruments to continue to maintain a positive economic recovery and to avoid recession. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,632. We estimate JCI will move in the range of 5,280-5,380 while waiting for Money Supply data release. Today's recommendation: WIKA, ASII, LSIP, ANTM.
Corporate Action
Cum Dividend Date: MKPI, INOV
IPO: PNGO
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