08 Juli 2020
MNCS Morning Navigator 08 July 2020
Global Market Highlight
DJIA slipped by -1.51% on Tuesday (07/07) followed by S&P 500 (-1.08%) and Nasdaq (-0.86%). These index movements were weakening as the technology giant's stock rally lost power, and concerns about the corona virus outbreak weighed on investor sentiment. Market participants began to be cautious, after seeing a surge in new cases of the corona virus in almost all US states, so more fiscal stimulus was needed to help the economy recover fully from the crisis. Furthermore, the market will look forward to several data releases today, such as: 1) US Mortgage Application; 2) Japan Current Account; 3) UK Supplementary Budget.
Domestic Updates
Indonesia's foreign exchange reserves at the end of June 2020 stood at USD131.7 billion, an increase compared to May 2020 of USD130.5 billion. The position of foreign exchange reserves is equivalent to financing 8.4 months of imports or 8.1 months of imports and payments of government foreign debt, and is above the international adequacy standard of about 3 months of imports. Bank Indonesia assesses that foreign exchange reserves remain adequate, supported by stability and maintained economic prospects, along with various policy responses in encouraging economic recovery.
Company News
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MDKA IJ management estimates that its cash will decrease by 62.42% after its buyback. The buyback will be done using the company's internal cash. It will result in a decrease in the company's internal cash with a maximum value of IDR568 billion. Nevertheless, MDKA ensures that the buyback will not affect the company's revenue. MDKA will seek approval from shareholders to conduct the buyback on 29 July 2020. The buyback will be done no later than 18 months after the approval from the shareholders is given. (IDNFinancials) MNCS Comment: The management has not stated the exact price of stock for the buyback, as the price has bounce back from their lowest level at IDR905 in March. MDKA is currently traded at 3.68x PBV.
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EXCL IJ has spent IDR134.44 billion of its total buyback budget of IDR500 billion in the last three months since 6 April 2020. Management said that the number of shares repurchased by the company reached 56,487,800 shares with an average price of IDR2,376/share. The company still has a budget of IDR365.55 billion for the buyback. As for the buyback plan, the maximum number of shares allowed to be repurchased by the company is 2,137,592,085 shares with a maximum purchase price of IDR2,500 per share. (IDNFinancials) MNCS Comment: We believe the buyback strategies were succesfully applied to maintain its stock movement as it already bounce back 120.53% from the lowest level in Mar-2020. EXCL is currently traded at 5.11x/1.50x PE/PBV.
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PPRO IJ recorded marketing sales of IDR365 billion until June 2020. In 1Q20 the company posted IDR263 billion marketing sales. So when the PSBB took place the company still posted IDR102 billion in 2Q20. When compared with this year's marketing sales target of IDR2.5 trillion, the realization achieved in the first 6 months was only 14.6%. (Market Bisnis) MNCS Comment: Construction sector became one of the companies that is majorly impacted by the Covid-19 outbreak. PPRO is currently traded at 0.77x PBV.
IHSG Updates
JCI was flat by -0.04% to 4,987.08 on Tuesday (07/07), followed by net foreign buy reaching IDR377.39 billion. The movement occurred with the weakening of global and regional Asia indices driven. Moreover, the positive release of the foreign exchange reserves data seem to not affecting the movement of JCI despite optimism within the market as they believe that the risk of the exchange rate will be minimized amid the increase in foreign exchange reserves. The position of foreign exchange reserves will further strengthen the ability of the Indonesian government to fulfill its foreign obligations, such as fulfilling imports plus payment of government foreign debt obligations or even stabilizing the rupiah exchange rate. Meanwhile, the Rupiah exchange rate against the USD was strengthening at IDR14,440. We estimate JCI will move in the range of 4,914-5,020 while waiting for Retail Sales Data. Today's recommendation: ANTM, MEDC, BMRI, ACES.
Corporate Action
Cum Dividend Date: HOKI, TUGU
RUPS: ELSA
Disclaimer On
ANTM,
MEDC,
BMRI,
ACES,
MDKA,
EXCL,
PPRO
