MNCS Morning Navigator 02 July 2020

1. 1.The Central Statistics Agency (BPS) recorded inflation in June 2020 of 0.18% MoM and 1.96% YoY. The main cause of inflation in June 2020 was volatile prices or volatile price groups, where volatile prices experienced inflation of 0.77% MoM. The causes of volatile prices inflation include an increase in the price of broiler chicken with a share of inflation by 0.14% mom and an increase in broiler eggs by 0.04% mom. Even so, in this component there are also commodities that have experienced price declines, such as garlic, red chili, cooking oil, and cayenne pepper.
2. 2.The IHS Markit Indonesia Manufacturing PMI rose to 39.1 in June 2020 from 28.6 in April 2020. This was the fourth straight month of contraction in factory activity, as the COVID-19 containment measures were gradually eased. However, the latest reading was still the third lowest since the survey started over nine years ago. The drops in both output and new orders, while falling at notably slower rates than in May, were still substantial. Firms also reduced employment and purchasing activity at marked rates.

1. UNTR IJ decides to revise its business targets this year, including the allocation of capital expenditure. This year's capex allocation is estimated at around USD230 million - USD250 million. This amount is lower compared to the capex allocation which was originally budgeted up to USD450 million. In 1Q20, it absorbed capital expenditure of USD150 million. (Kontan) MNCS Comment: We see that with the decline in the heavy equipment sales, UNTR will not need to enlarge capex while its should focused on maintaining efficiency. UNTR is currently traded at 8.70x/1.00x PE/PBV.
2. HOKI IJ announced that it would distribute cash dividends of IDR28.63 billion, equivalent to 27.61% of the total net profit for the year in FY19 which was recorded at IDR103.72 billion. Dividend per share is IDR12/share with yield reaching 1.85%. The distribution date is yet to be announced. (Market Bisnis) MNCS Comment: HOKI maintained their dividend payout ratio at around 25% - 30% while DPS last year was at IDR11/share. HOKI is currently traded at 26.00x/2.36x PE/PBV.
3. FAST IJ recorded a decline in revenue of 0.83% YoY to IDR1.52 trillion in 1Q20. Meanwhile, revenue from food and beverage sales is still the backbone of the company's business with a contribution of 98.58%. On the other hand, the Restaurant Support Center in Jakarta supports the company's largest revenue of around 37.23% of total revenue. But there was an increase in cost of goods sold, selling and distribution expenses, general and administrative expenses, and other operating expenses. Thus, net profit fell 89.24% YoY to IDR5.41 billion in 1Q20. (Market Bisnis) MNCS Comment: Due to the large scale social restriction, FAST cannot open restaurant for dine in which had cut their revenue, however FAST also can’t maintain their efficiency which caused the net profit to tumble. FAST is currently traded at 2.20x PBV.

MDKA, MEDC, BBRI, ICBP, UNTR, HOKI, FAST