MNCS Morning Navigator 04 June 2020

Global Market Highlight
DJIA rose by +2.05% on Wednesday (04/06) followed by the increase of S&P 500 (+1.36%) and Nasdaq (+1.25%). These increases were still driven by the positive catalyst of the economic recovery as businesses and factories can now re-operate, although the situation in the US are not getting any better as demonstration has been going for more than a week followed by some riots and pillage on some retails. The market will look forward to several data releases today, such as: 1) Eurozone Interest Rate Decision; 2) US Balance of Trade per May-2020; 3) US Initial Jobless Claims per May-2020.

Domestic Updates
Money supply (M2) grew slowly in April 2020, recorded at IDR6,238.3 trillion or grew 8.6% YoY lower than the previous month's growth of 12.1% YoY. The slowdown in M2 growth was caused by a slowdown in all its components such as M1 only grew by 8.4% YoY due to slowing rupiah demand deposits. In addition, quasi money in April 2020 slightly increases to 8.5% YoY. The slowdown also occurred in securities other than shares, from 44.6% YoY in the previous month to 20.6% YoY in April 2020.

Company News

1. RALS revenue decreased by 12.41% YoY to IDR916.13 billion in 1Q20 from Rp1.046 trillion in the same period the previous year. Outright goods sales dropped to IDR768.26 in 1Q20 billion from IDR876.73 billion and the commission on consignment sales fell to IDR147.87 billion in 1Q20 from Rp169.31 billion. So net profit decreased by 82.84% YoY to IDR13.29 in 1Q20 compared to IDR77.50 billion in 1Q19. MNCS comment: The slump performance on retail companies are already anticipated along with the outbreak of Covid-19 as shopping centers had to shut down operation. RALS is traded at 7.05x/0.98x PE/PBV, lower than peers. (Emiten News)
2. PPRE will be distributing dividend amounting to IDR66.3 billion or equals to 20% of the net profit in FY19. Dividend per share is at IDR6.50/share with dividend yield at 3.20%. The allocation for retained earnings balance increased by 17.1% YoY to IDR248.4 billion or equivalent to 75% of net income attributable to owners of the parent entity. MNCS comment: We see that PPRE can still manage to distribute dividends amidst the pandemic situation. PPRE is traded at 6.69x/0.87x PE/PBV, lower than peers. (Market Bisnis)
3. SMBR halts the operation of one factory in the city of Baturaja and maximizes the operation of the other factories. Management predicts the contribution of income from operational activities will decrease by 25%-50% from the total consolidated revenue over the past year. MNCS Comment: We consider this will impact of delays in infrastructure projects and property sales, furthermore the covid-19 pandemic has forced the companies to close their plant temporarily to reduce operating costs. SMBR is traded at 0.91x PBV, lower than peers. (Market Bisnis)

IHSG Updates
JCI surged by +1.93% to 4,941.01 on Wednesday (04/06) supported by a net foreign buy reaching IDR1.50 trillion. The increase was due to a consecutive inflow from the foreign investor in four days in a row, amidst optimism toward the opening of large scale social restriction tomorrow, although health and safety precautions will always be done in business operations as a part of the new normal lifestyle. Moreover, the Covid-19 cases in Indonesia increased by 684 cases yesterday, making the current cases reaching 28.233 cases. Meanwhile, the Rupiah exchange rate against the USD was appreciated at IDR14,095. We estimate JCI will move in the range of 4,780-4,975 while waiting for Foreign Exchange reserve as of May-2020. Today's recommendation: TBIG, INCO, UNVR, WIKA.

Corporate Action
RUPS: ADHI, LPPF
Ex Dividend Date: ADRO

Disclaimer On

TBIG, INCO, UNVR, WIKA, RALS, SMBR, PPRE