MNCS Morning Navigator 02 October 2020

Global Market Highlight

DJIA was flat by +0.13% on Thursday (01/10) followed by S&P 500 (+0.53%) and Nasdaq (+1.42%). These were due to the uncertainty in stimulus agreement as The White House offered a USD1.6 trillion package, short of Democrats' USD2.2 trillion proposal. While the counter-offer also included USD400 a week in additional unemployment insurance, less than the USD600 the Democrats requested. The stimulus bill would also include much-needed aid for the airline industry to stem a wave of layoffs in the wake of weaker travel demand.  Moreover, the market will look forward to several data releases today, such as: 1) US Unemployment Rate; 2) US Non Farm Payroll; 3) US Michigan Consumer Sentiment Final.

Domestic Updates

• BPS announce a deflation of 0.05% MoM while on a yearly basis inflation are recorded at 1.42% YoY and 0.89% YTD. Deflation occurred due to lower prices as indicated by the fall in several indexes for the expenditure group, namely: the food, beverages and tobacco group by 0.37%; clothing and footwear group by 0.01%; the transportation group of 0.33%; and the information, communication and financial services group of 0.01% (BPS).
• The IHS Markit Indonesia Manufacturing PMI fell to 47.2 in September 2020, from 50.8 in August 2020 due to the re-imposition of large-scale social restrictions (PSBB) in Jakarta in mid-September amid rising COVID-19 infections. Output and new orders both shrank solidly, while firms stepped up their efforts to scale back on capacity and overheads, with employment and purchasing activity falling further. Looking ahead, sentiment remained elevated on hopes that the pandemic will be brought under control (Trading Economics).

Company News

1.       AALI IJ will be distributing an interim dividend of IDR42 per share, with yield at 0.91%. Total dividend amounted to IDR80.83 billion. Cum date will be at 07 October 2020 while Payment date will be at 27 October 2020. Meanwhile AALI's bottom line in 1H20 rose significantly by 796.59% YoY (Market Bisnis). MNCS Comment: AALI's performance in 1H20 has exceed expectation, this is benefitted from the rise on CPO price. We expect the final dividend that will be distributed next year might has a larger amount. AALI has not yet distributed an interim dividend since FY18. AALI is currently traded at 26.21x/1.09x PE/PBV.
2.       ADHI IJ has received the realization of the sixth payment for the Jabodebek Phase I LRT project worth IDR1.8 trillion. The amount does not include tax. This payment is made based on the progress of work from October 2019 to December 2019. Overall, ADHI has received payment for the construction of the Jabodebek LRT infrastructure amounting to IDR10.8 trillion. As of September 25, 2020, the progress of the implementation of the Jabodebek Phase I LRT infrastructure development has reached 77.3% (Market Bisnis). MNCS Comment: the acceptance received by ADHI will at least help ADHI's cash flow in the midst of a challenging business.ADHI is currently traded at 80.56x/0.32x PE/PBV.
3.       ENRG IJ recorded a 28% YoY increase in sales to USD148 million compared to the USD116.3 million in the 1H19. In addition, the company's net profit also managed to increase by 3% to USD 27.34 million in 1H20. From the operational side, the company has produced 2,556 barrels of oil per day, up 8% YoY from the same period last year. Meanwhile, gas production rose 36% YoY to 172 million cubic feet of gas per day (Market Bisnis). MNCS Comment: The increase in ENRG profit was quite good amidst the volatility of oil commodity prices. However, investors must remain alert to share prices which are still in the range of IDR50-60 per share. ENRG is currently traded at 0.73x/0.17x PE/PBV.

IHSG Updates

JCI rose by +2.05% to 4,970.09 on Thursday (01/10) followed by net foreign sell reaching IDR9.33 billion. Index rallied entering October, despite the release of monthly deflation and a lower PMI, market seems to ignore the bad news. Moreover, China is currently celebrating mid-autumn festival so the stock exchanges won't open for a week. As for Nikkei, the index was not running yesterday due to technical faulty. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,835. We estimate JCI will move in the range of 4,900 – 5,000 while waiting for Consumer Confidence data release. Today's recommendation: TLKM, PGAS, AALI, SMRA.

Corporate Action

RUPS: MBTO, JSKY, BEKS

Disclaimer On

TLKM, PGAS, AALI, SMRA, ADHI, ENRG