MNCS Morning Navigator 03 August 2020

Global Market Highlight

DJIA rose by 0.44% on Friday (31/07) followed by S&P 500 (+0.77%) and Nasdaq (+1.49%). Stock closes higher as biggest tech companies such as Amazon, Apple and Facebook,  buoyed the S&P 500 and offset disappointing earnings from some industrials and weak economic data. Meanwhile, consumer spending rose 5.6% in Jun-2020 but appears to have weakened in recent weeks, restraining the economic recovery from the coronavirus outbreak. Moreover, the market will look forward to several data releases today, such as: 1) US Manufacturing PMI; 2) China Caixin Manufacturing PMI; 3) Japan GDP Growth.

Domestic Updates

Indonesia’s economic liquidity or broad money supply (M2) grew slowly in June 2020, in which the M2 position was recorded at IDR6,393.7 tn, an 8.2% YoY increase, lower than the previous month’s growth of 10.4% YoY. The slowing growth was caused by all of its components - money supply in the narrow sense (M1), quasi money, and securities. M1 growth slowed down from 9.7% YoY in May to 8.2% YoY in June, due to slowing rupiah demand deposits. Quasi money grew slowly from 10.5% YoY in May to 8.1% YoY in June. Finally, securities other than shares rose 31.4% YoY in June, which lower compared to the previous month’s growth of 37.5% YoY. Overall, the slowdown was caused due to a downturn in net foreign assets and landings.

Company News

1. ASII IJ recorded 1H20 revenue at IDR89.8 tn, a -23% YoY decrease. However, its net profit increased by 16% YoY to IDR11.4 tn because it includes the one-time gain from the sale of shares in Bank Permata. Without the divestment, its net profit decreased by -44% YoY to IDR 5.5 tn, due to the weak performance on the automotive, heavy equipment and mining, and financial services division. To mitigate the impact of Covid-19, the company temporarily closed the automotive manufacturing and distribution activities and increased the number of restructured loans in the financial services business (Market Bisnis).MNCS Comment: The automotive and heavy equipment segment are incriminating ASII's performance, while still recording an incline in bottom-line, ASII's operational performance has not recovered. ASII is currently traded at 9.16x/1.36x PE/PBV.
2. UNVR IJ recorded net sales for 1H20 at IDR21.77 tn, a 1.46% YoY increase. However, it also registered an increase in all kinds of cost, including an 0.80% YoY increase in COGS to IDR10.58 tn. In the end, its net profit decreased by -5.56% YoY to IDR4.73 tn. In terms of other factors, EPS decreased by 2 points YoY to IDR95, but the total assets of the company reached IDR21.35 tn, a 3.39% YoY increase (Emitennews). MNCS Comment: Efficiency seems to has not been implemented by UNVR as reflected by the bottom-line. However, during this troubled time, UNVR still managed to distribute dividends. UNVR is currently traded at 44.27x/36.38x PE/PBV.
3. LSIP IJ recorded a -1.88% YoY decrease in revenue, from IDR1.59 tn to IDR1.56 tn in 1H20. However, its net profit skyrocketed by 778% YoY to IDR91.98 bn, amidst the Covid-19 negative sentiment. The increase in net profit was due to the rise in additional income from other operating income posts at IDR28.21 bn and financial revenue of IDR24.08 bn. Thus, the EPS increased from IDR2 per share at the same time last year, to IDR13 per share (Market Bisnis). MNCS Comment: A 9.16% YoY decrease in COGS seems to significantly impact the gross profit as the margin rise from 11% in 1H19 to 17.63% in 1H20 followed by a 122.37% YoY growth in finance income resulted in a substantial increase on bottom line. LSIP is currently traded at 20.84x/0.79x PE/PBV.

IHSG Updates

JCI rose by +0.75% to 5,149.63 on Thursday (30/07) followed by net foreign buy reaching IDR49.58 billion. The stock movement is in line with most of the global and regional Asia indices. Meanwhile PMI Markit Manufacturing stood at 46.9 as of Jul-2020, higher than estimated making the fifth straight month of contraction in factory activity amid relaxed COVID-19 containment measures, while both output and new orders falling at much slower rates. Moreover, the Rupiah exchange rate was weakening at IDR14,600. We estimate JCI will move in the range of 5,070-5,130 while waiting for Inflation Rate. Today's recommendation: UNVR, EXCL, BBCA, LSIP.

Corporate Action

RUPS: TOTO, APII

Disclaimer On

UNVR, EXCL, BBCA, LSIP, ASII