MNCS Morning Navigator 06 November 2020

Global Market Highlight

DJIA rose by +1.95% on Thursday (05/11) followed byS&P 500 (+1.95%) and Nasdaq (+2.59%). Stocks soared on hopes the winner of the U.S. presidential and congressional elections would soon be determined, with shares of major tech-related companies leading the gains. Investors in this high growth sector cheered a potential divided government as it likely means taxes won’t go up, antitrust scrutiny could stay in check and the China trade war doesn’t get any worse. Moreover, the market will look forward to several data releases today, such as: 1) US Unemployment Rate; 2) US Fed Rate Decision; 3) US Non Farm Payroll.

Domestic Update

Indonesia’s annual economic shrank by 3.49% YoY (5.05% QoQ) in 3Q20, slightly lower from market consensus of 3% contraction. 64.13% of GDP made up from Industry, Agriculture, Trade, Construction, and Mining sector. Most of the sector experienced a contraction such as manufacturing (-4.31% YoY), construction (-4.52% YoY), trade (-5.03% YoY), accommodation and F&B (-11.86% YoY), transportation (-16.07% YoY), while agriculture sector increased 2.15% YoY. Household consumption contracted 4.04% (vs -5.52% Q2) or -2.17% YoY, and export and import dropped by 10.82%YoY and 21.86% YoY respectively. Meanwhile government spending increase 9.76% YoY.

Company News

1.       TLKM IJ announced a revenue of IDR99.94 trillion (-2.62% YoY) for 9M20. Data revenues reached IDR56.45 trillion (+3.46% YoY), revenue from the mobile data business reached IDR48.82 trillion (+5.17% YoY), Indihome's income also increased to IDR16.11 trillion (+17.07% YoY) but unfortunately telephone revenue which fell to IDR15.13 trillion. Thus, the net income still increased by 1.33% YoY to IDR16.68 trillion in 9M20 (Market Bisnis). MNCS Comment: Despite the drop on top line, TLKM's bottom line is lifted from the mobile data and internet business. TLKM is currently traded at 12.49x/2.86x PE/PBV.
2.       GOOD IJreported revenue decreased by -9.15% YoY to IDR5.74 trillion which comprised 95.09% from local sales and the rest came from export. Even though, the company managed to reduce its COGS and selling expenses by -6.32% and -20.28% YoY respectively, the financial expenses and other operating expenses increased significantly by 18.81% and 122.78% YoY respectively. Therefore, the net income slumped -42.92% YoY to IDR162.98 billion (Market Bisnis).  MNCS Comment: GOOD's performance seem to still be affected by the pandemic while GOOD has not implement an efficiency strategy causing the bottom line to drop. GOOD is currently traded at 32.38x/3.63x PE/PBV.
3.        EXCL IJ booked revenue of IDR19.66 trillion in 3Q20, rose 5% YoY. The data revenue grew 12% YoY, increasing its contribution to the total service revenue (92%). Data traffic for 9M20 has increased 47% YoY, while customer smartphone’s penetration rate increased to 88%. EXCL managed to decrease the operating cost by 14% YoY for 9M20. The decrease was driven by lower cost of infrastructure (-28% YoY) due to adoption of IFRS16, interconnection costs and other direct costs (-24%YoY), and marketing costs (-6% YoY). Hence, the net income rose significantly by 316.32% YoY to IDR2.07 trillion in 3Q20 (Market Bisnis). MNCS Comment: Aside from the increasing traffic, EXCL managed to slashed the cost and improved the bottom line significantly. EXCL is currently traded at 8.16x/1.08x PBV.

IHSG Updates

JCI soared by +3.04% to 5,260.33 on Thursday (05/11) followed by net foreign buy reaching IDR711.04 billion. JCI increased higher although the 3Q GDP slumped deeper than estimated but it seems that investors has anticipated this. The optimism rose from Bidden whose the running US vote leader which has boost the finance and infrastructure sector significantly. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,380. We estimate JCI will move in the range of 5,200 – 5,280 while waiting for Consumer confidence. Today's recommendation: TLKM, BBRI, SMGR, BEST.

Corporate Action

RUPS: PKPK

Rights Issue: PNBS

Cum Dividend Date: DVLA

Disclaimer On

TLKM, BBRI, SMGR, BEST