MNCS Morning Navigator 05 June 2020

Global Market Highlight
DJIA were flat, rising only +0.05% on Thursday (05/06) followed by the decrease of S&P 500 (-0.34%) and Nasdaq (-0.69%). These flat movements were driven by the profit taking done by investors, followed by a higher than expected unemployment claims in the US which increased by 1,877 million compared to Dow Jones estimates of 1,775 million which increase wariness on investors towards the pandemic effect in the economy. The market will look forward to several data releases today, such as: 1) UK Consumer Confidence per May-2020; 2) US Unemployment Rate per May-2020; 3) US Non Farm Payrolls per May-2020.

Domestic Updates
The Financial Services Authority (OJK) stated that the total value of credit that had been restructured by banks and financial institutions by the end of May-2020 has reached IDR592.28 trillion. This will increase in the near future because there are still 583,000 restructuring proposals being processed. As much as IDR517.2 trillion of that figure came from banks, while 5.3 million debtors consisting of 4.5 million MSME debtors (IDR250.6 trillion) and 780,000 non-MSME debtors (IDR266.5 trillion). Meanwhile, the remaining IDR75.08 trillion came from financial institutions, from 2.4 million customers.

Company News

1. PTPP plans to divest four of its assets and is targeted to be implemented in 2020. PTPP plans to target fresh funds of IDR1.26 trillion from the divestment. MNCS Comment: we see that PTPP will better maintain the balance sheet amid the uncertainty of infrastructure development in pandemic covid-19. PTPP is traded at 5.48x, lower than peers. (Kontan)
2. TOTL has gathered new contracts up to IDR404 billion as of the end of May-2020. Around IDR6.13 trillion is a pipeline of projects that are still in the tender process. The target of new contracts this year is around IDR500 billion - IDR3 trillion. In the 2H20E there were a number of projects that were temporarily suspended according to the wishes of the customers, while TOTL are still participating in several project tenders. MNCS comment: TOTL is a building specialized constructor, with this pandemic some clients are forced to halt their construction projects. TOTL is traded at 5.80x PE, lower than peers. (Market Bisnis)
3. ADHI will distribute cash dividends of IDR66.4 billion or equals to 10% of net profit of Rp663.8 billion in FY19. The dividend payout ratio is lower than last year which reached 20%. This decision was taken considering the company's liquidity needs. This was also done to anticipate the impact of the Covid-19 pandemic which caused many project work delays. MNCS Comment: We consider that ADHI has quite the performance that it still can distribute dividends amidst the pandemic. ADHI is traded at 3.49x PE, lower than peers. (Market Bisnis)

IHSG Updates
JCI slipped by -0.49% to 4,916.70 on Thursday (05/06) despite a net foreign buy reaching IDR980.67 billion. We considered the decline as a healthy correction as JCI has been on a climb this week. Although the euphoria was still rising in the market as the large scale social restriction has been loosened up followed by a transition period towards the new normal. Meanwhile, the Rupiah exchange rate against the USD was stagnant at IDR14,095. We estimate JCI will move in the range of 4,770-5,040 while waiting for Foreign Exchange reserve as of May-2020. Today's recommendation: BSDE, BMRI, ANTM, AKRA.

Corporate Action
Cum Dividend Date: ITMG
RUPS: POLA
Recording Date: ADRO

Disclaimer On

BSDE, BMRI, ANTM, AKRA, ADHI, PTPP, TOTL