MNCS Morning Navigator 03 July 2020

Global Market Highlight

DJIA rose by +0.36% on Thursday (02/07) followed by S&P 500 (+0.45%) and Nasdaq (+0.52%). Stocks rose on Thursday following a better-than-expected U.S. jobs report as the economy tries to recover from the Covid-19 pandemic. The unemployment rate fell to 11.1% in June-2020 from 13.3% in May-2020. Moreover, Boeing contributed to the gains, rising 0.6% after the airplane maker completed recertification flights for its grounded 737 Max jet. Furthermore, the market will look forward to several data releases today, such as: 1) Eurozone Markit Composite PMI, 2) China Caixin Composite PMI, 3) UK Consumer Confidence.

Domestic Updates

The government's national economic recovery program (PEN) has increased the cost to IDR695.2 trillion from IDR677.2 trillion. This cost overruns were followed by a widening of the projected budget deficit of 6.34% or widening to IDR1,039.2 trillion of gross domestic product (GDP). The government has now issued a presidential regulation (Perpres) number 72 in 2020 which is a revision of PMK number 54 in 2020. In this regulation the state revenue is IDR1,699.94 trillion with a tax revenue composition of IDR1,404.5 trillion, PNBP of IDR294.14 trillion and IDR1.3 trillion grants. Then for state expenditure of IDR2,739.16 trillion consisting of central government expenditure of IDR1,975.24 trillion including additional Covid-19 handling expenditure of IDR358.88 trillion, TKDD expenditure of IDR763.92 trillion and including expenditure of Covid-19 handling of IDR5 trillion.

Company News

1.       PZZA IJ sales grew 5.91% YoY to IDR955.64 billion in 1Q20. Sales from food are still the company's business support with a turnover of 92.72% of total revenue before deducting sales discounts. From the geographical segment, sales in the Jakarta area are still the main contributor around 41.03%, followed by Java and Bali around 30.01%. However, the increase in cost of goods sold and sales expenses was 11.15% YoY to IDR324.94 billion and 8.84% YoY to IDR567.3 billion respectively. So the net profit was only IDR6.04 billion (-84.95% YoY) in 1Q20. (Market Bisnis) MNCS Comment: Although revenue still managed to grow, the bottom line is still slashed due to inefficiency in maintaining cost. PZZA is currently traded at 1.67x PBV.
2.       GIAA IJ recorded a 30.14% YoY revenue decline to USD768.12 million in 1Q20. The decline in income is inseparable from the Covid-19 pandemic which made a number of countries limit or even ban flights. The main contributor to scheduled flights also dropped 29.23% YoY to USD654.52 million. Charter flights contributed USD5.31 million in revenue, an increase of 85.44% YoY in 1Q20. Meanwhile, other revenue contributions, decreased by 36.96% YoY to USD108.27 million. However, GIAA still recorded a loss for the current period of USD123.51 million in 1Q20, from the previous year's profit of USD19.74 million. (Market Bisnis) MNCS Comment: With the social distancing, travel ban and lockdown on several countries, aviation sectors specifically scheduled flights revenue would definitely be impacted. GIAA is currently traded at 0.81x PBV.
3.       BMTR IJ will carry out additional capital without pre-emptive rights (PMTHMETD) alias private placement as much as 1.53 billion or around 10% of all paid up and placed shares. The nominal value of shares to be issued is IDR100 per share. To get the approval of the shareholders, BMTR will hold an RUPSLB on 30 July 2020. (Kontan) MNCS Comment: BMTR  is currently traded at 5.11x/0.27x PE/PBV.

IHSG Updates

JCI was rose by +1.07% to 4,966.78 on Thursday (01/07), although followed by net foreign sell reaching IDR210.15 billion. This increase occurred amid the strengthening of global and regional Asia indices which were due to the optimism towards the developed vaccine as well as the releases of the positive economic data releases despite an increase of 1,624 cases of Covid-19 in Indonesia which in total has reached 59,394 cases. Meanwhile, the Rupiah exchange rate against the USD was weakening at IDR14,378. We estimate JCI will move in the range of 4,862-5,020 while waiting for Consumer Confidence Data. Today's recommendation: CTRA, WIKA, UNVR, INKP.

Corporate Action

Ex Dividend Date: MIKA

Cash Dividend: PPRO, UNTR

Disclaimer On

CTRA, WIKA, UNVR, INKP, PZZA, GIAA, BMTR