MNCS Morning Navigator 07 August 2020

Global Market Highlight

DJIA increased by +0.68% on Thursday (06/08) followed by S&P 500 (+0.64%) and Nasdaq (+1.00%). The climb was supported by the decline in unemployment benefits claims to the level of 16.1 million (previously 17 million).  In addition, Trump's statement regarding the aid for the aviation industry was also well responded to by the market as one of the boosters for economic recovery.  Investors are also waiting for the final results of the tough discussion of the stimulus. Steven Mnuchin's proposal for an allocation of USD400 per week unemployment benefits has not yet been approved by the Senate.  This will bring turmoil to the pace of global stock exchanges going forward.  Moreover, the market will look forward to several data releases today, such as: 1) US Unemployment Rate; 2) US Non Farm payrolls; 3) China Foreign Exchange Reserve.

Domestic Updates

The Bank Indonesia Consumer Survey in July 2020 indicates that consumer confidence in the current economic condition is improving, although it remains in the pessimistic zone (<100). This is reflected in the Consumer Confidence Index of 86.2, up from 83.8 in the previous month. Consumer confidence increased in all age groups and in almost all categories of expenditure levels. The strengthened confidence was driven by improvement in income, availability of employment, and the purchase of durable goods since the easing of PSBB. Despite improving business activities, consumers still expect limited income and job availability for the next 6 months.

Company News

1. INTP IJ saw a less encouraging performance in 1H20. It posted net revenue worth IDR6.15 trillion, which is down by -11.5% YoY. As a result of the revenue decline, net profit also decreased by -26.55% YoY to IDR640.03 billion. This is still the case even though the company recorded a decrease in expenses, such as cost of revenue (-11.3% YoY to IDR4.29 trillion), sales expenses (-4% YoY to IDR1.2 trillion), and administrative expenses (-12.4% YoY to IDR311.15 billion) (Market Bisnis). MNCS Comment: The decline in performance was caused by the floods that hit in early 2020 and the implementation of PSBB due to the COVID-19 pandemic, however, sales volume began to show improvement in June-20 and is expected to continue to grow with the relaxation of PSBB. INTP is currently traded at 1.93x PBV.
2. TOTO IJ on August 3, 2020, received approval from shareholders to distributed dividends for FY19, which is IDR61.92 billion or equivalent to IDR6 per share. FY19 Net profit is IDR140.60 billion, so the payout ratio is 44.40%. Cum dividend date will be 11 August, 2020 (Emiten News). MNCS Comment: Although top and bottom line decreased in FY19, TOTO still distribute a higher dividend per share compared to IDR3/share in FY19. We see that TOTO's bottom line performance improved in 1Q20 as net profit margin rose to 12% from 9.5% in 4Q19. TOTO is currently traded at 1.15x PBV.
3. SMBR IJ stated that it will distribute dividends at IDR6.15 billion, which is 20.48% of its FY19 net profit at IDR30.07 billion. The remaining IDR23.91 will be placed in reserves. Since the outstanding share is 174.41 million, the dividend per share is IDR35. This dividend is smaller than last year when the company distributed IDR18.97billion or IDR108 per share, which has a payout ratio of 25% from FY18 net profit of IDR76.07 billion. The decrease in net profit is due to an increase in financial burden from interest expense on the Baturaja II investment loan of IDR100 billion, and loan interest of IDR25 billion (Market Bisnis & CNBC). MNCS Comment: The dividend is quite attractive even though it is only 20% of total net profit and less than the payout ratio in FY18, however, SMBR's performance is quite good, this is indicated by an increase in revenue by 1% to IDR 2 trillion (+ 1% YoY) amidst the declining cement industry. SMBR is currently traded at 1.55x PBV.

IHSG Updates

JCI rose by +1.00% to 5,178.27 on Thursday (06/08) followed by net foreign sell reaching IDR9.47 billion. Continuing yesterday's rally, JCI increased amid various movement of the regional Asia indices. The consumer confidence index improvement contributes towards the rise in JCI, as the miscellaneous and mining lead the incline. The market are waiting for foreign exchange reserve data release which is estimated to increased to IDR132.1 billion in Jul-2020.  Moreover, the Rupiah exchange rate was weakening at IDR14,585. We estimate JCI will move in the range of 5,090-5,200. Today's recommendation: ASII, SMGR, TBIG, UNTR.

Corporate Action

Cum Dividend Date: UCID, MERK, KEEN

Disclaimer On

ASII, SMGR, TBIG, UNTR, SMBR, INTP, TOTO