MNCS Morning Navigator 05 October 2020

Global Market Highlight

DJIA dropped by -0.48% on Friday (02/10) followed by S&P 500 (-0.96%) and Nasdaq (-2.22%). Indices fell driven by tech stocks following the announcement of that President Donald Trump and First Lady Melania Trump have tested positive for Covid-19 after the President's advisor, Hope Hicks, tested positive. The news is a destabilizing moment that raises questions about the election campaign and the US administration. Moreover, the market will look forward to several data releases today, such as: 1) US ISM Non Manufacturing; 2) Eurozone PMI Markit Composite; 3) US Eurozone Retail Sales.

Domestic Updates

Bank Indonesia will periodically convey the development of indicators for the stability of the Rupiah value. The indicators referred to are exchange rates and inflation, as follows: 1) Indonesia's 5-year CDS (Credit Default Swaps) premium fell to 109.28 bps as of 1 October 2020 from 117.26 bps as of 25 September 2020; 2) Based on transaction data from 28 September - 1 October 2020, non-residents on the domestic financial market bought a net IDR1.03 trillion, with a net purchase on the SBN market amounting to IDR2.46 trillion and a net sale on the stock market amounting to IDR1.43 trillion; 3) Based on settlement data for 2020 YTD, non-residents on the domestic financial market sold net of IDR173.83 trillion.

Company News

1.       MEDC IJ reported revenue of USD551.76 million in 1H20 which decreased 7.56 % YoY from USD596.88 million in 1H19. Revenue consists of: 1)Net oil and natural gas sales of USD470.68 million or Rp6.72 trillion; 2) sales of electricity and related services of USD79.31 million; 3) and service revenues of USD1.77 million. Meanwhile, MEDC's cost of revenue increased to USD349.19 million. So that MEDC recorded a net loss amounting to USD95.75 million from the previous net profit of USD27.86 million in the 1H19 (Market Bisnis). MNCS Comment: MEDC performance suffers from the drop of -39.59% YTD in oil price as it cause a decline on the top line. Furthermore, the increase on expenses has resulted in a net losses from earlier this year. MEDC is currently traded at  0.44x PBV.
2.       SSMS IJ posted revenue of IDR1.77 trillion in the 1H20 which rose by 18.33% YoY from IDR1.49 trillion in 1H19. Furthermore, cost of goods sold decreased to IDR964.45 billion (-9.86% YoY) from previouslyIDR1.07 trillion in 1H19. SSMS also managed to book a net profit of IDR100.61 billion in 1H20, reversed from a net loss of IDR15.01 billion in 1H19 (Market Bisnis). MNCS Comment: It seems that the plantation sector specifically the CPO industry is currently growing, supported by the return of CPO imports. Along with the increase of the top line, SSMS also managed to implement efficiency which caused the bottom line to soar as a net loss of IDR339 billion were booked in the 1Q20.SSMS is currently traded at 2.08x PBV.
3.       AYLS IJ announced a revenue drop of -65.25% YoY from IDR13.11 billion in 1H19 to only IDR4.5 billion in 1H20. AYLS only obtained revenue from two business segments, namely asphalt sales worth IDR3.49 billion (76.74% of total sales) and Geotextile sales worth IDR1.06 billion (23.26% of total sales). Moreover, other expenses increased, such as selling expenses which went up significantly by 726% YoY and AYLS also bears non-business expenses of IDR 117.80 million. Thus, AYLS booked a net loss of IDR2.5 billion in the 1H20 from a net profit of IDR278.48 million in 1H19 (Kontan). MNCS Comment: As a trading company, AYLS only managed to sell two products as of 1H20 and the lack of efficiency in the business is causing a heavy decrease on the bottom line. AYLS is currently traded at 0.78x PBV.

IHSG Updates

JCI slipped by -0.87% to 4,926.73 on Friday (02/10) followed by net foreign sell reaching IDR49.11 billion. Index fall again following the Covid-19 news from the US President, although the Regional Asia indices were dominated by increases. JCI was dragged by all sector except basic industry. Meanwhile, the Rupiah exchange rate was weakening at IDR14,865. We estimate JCI will move in the range of 4,900 – 5,000 while waiting for Consumer Confidence data release. Today's recommendation: MDKA, SMGR, CPIN, WIKA.

Corporate Action

Cum Date Rights Issue: PNBS (IDR100/share)

RUPS: ARTO

Disclaimer On

MDKA, SMGR, CPIN, WIKA, MEDC, SSMS, AYLS