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MNCS Morning Navigator

07 Oktober 2020

MNCS Morning Navigator 07 October 2020

Global Market Highlight
DJIA dropped by -1.34% on Tuesday (06/10) followed by S&P 500 (-1.40%) and Nasdaq (-1.57%). Stock prices fell due to Trump's rejection on Pelosi's USD2.4 trillion stimulus proposal, stating that it is poorly run and unrelated to Covid-19. On the other hand, Powell from the Fed said that a stimulus is needed to ensure a robust recovery. Meanwhile, stocks linked to the strength of the economy like financials, industrials, and materials were dragging the broader market down. Moreover, the market will look forward to several data releases today, such as: 1) US MBA Mortgage Application; 2) HK Markit PMI; 3) Eurozone ECB Non-Monetary Policy Meeting.

Domestic Updates
Bank Indonesia released their monthly Consumer Survey in which the Consumer Confidence Index (IKK) for September 2020 stood at 83.4, in lower than 86.9 in August 2020. This indicates that improvement in consumer confidence in economic conditions was restrained in September 2020. This is reflected in all categories of respondents, both according to expenditure levels and age group categories. The restrained improvement in consumer confidence in September 2020 was mainly due to lower consumer expectations of economic conditions in the next 6 months. This is due to the not-so-strong predictions of expansion in business activity, job availability and future income, although at an optimistic level. Meanwhile, consumer confidence in current economic conditions declined, as consumer confidence in income and purchases of durable goods declined.

Company News
1. BRMS IJ will conduct a rights issue amounting to 24 billion B Series share worth IDR50/share then the value will potentially reach IDR1.32 trillion. Apart from the rights issue, BRMS also plans to issue up to 24.5 billion series II warrants accompanying the issuance of these new shares. Management believes the company will be benefitted from the corporate action, such as an additional factory construction with a larger capacity will result in an increase in gold and silver production volume from the Company's mining project in Palu (CNBC). MNCS Comment: We see that BRMS will use the fund to finance their gold plant construction to increase the gold and silver ore production, as well as to pay the ongoing debt. BRMS is currently traded at 123.53x/0.28 PE/PBV.
2. DMAS IJ managed to record IDR1.38 trillion in pre-sales revenue as of September 2020. This is equivalent to 69% of the company's target for this year amounting to IDR2 trillion. Most of it came from industrial land (67.7%) as demand for industrial areas remains strong despite the pandemic. There were still demands for about 120 Ha of industrial land, mostly from automotive, logistics, and IT company. Management believes that they will be able to achieve its target due to high consumer interest (IDN Financial). MNCS Comment: The achievement of the DMAS has the potential to be achieved if management can take advantage of the omnibus law that has been passed by the DPR. This is due to the potential for increased FDI to enter Indonesia through direct investment. DMAS is currently traded at 71.44x/2.07x PE/PBV.
3. ARTO IJ plans to issue 3 billion new shares through a rights issue to raise IDR1.34 trillion. The purpose of the rights issue is to increase their capital to a minimum of IDR3 trillion. This shows the high commitment of shareholders in supporting the bank's strategic plan in the future, as a technology-based bank embedded in an ecosystem. Management has not provided an explanation regarding the timing, price of the shares, the ratio and the target for the proceeds from the rights issue that will be held (IDN Financial). MNCS Comment: We believe this strategy will further strengthen ARTO's capital as a BUKU II level bank as well as promoting digitalization on their daily banking system. ARTO is currently traded at 24.24x PBV.

IHSG Updates
JCI soared by +1.68% to 4,999.22 on Tuesday (06/10) though followed by net foreign sell reaching IDR263.41 billion. Index strengthened amid the increase on Regional Asia indices. The index movement was supported by the approval of Omnibus Law that has come to advantage for many companies. Furthermore, finance, miscellaneous and infrastructure sector led the movement. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,735. We estimate JCI will move in the range of 4,840 – 5,075 while waiting for Foreign Exchange Reserve data release. Today's recommendation: ASII, HMSP, TLKM, JPFA.

Corporate Action
Cum Date Dividend: AALI (IDR42/share)
RUPS: AMOR, JIHD

Disclaimer On

ASII, HMSP, TLKM, JPFA, BRMS, ARTO, DMAS

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