MNCS Morning Navigator 11 August 2020

Global Market Highlight

DJIA rose by +1.30% on Monday (10/08) followed by various movements of S&P 500 (+0.27%) and Nasdaq (-0.39%). Nasdaq fell due to the drop in tech stock namely: 1)Facebook (-2%); 2) Netflix (-2%); 3) Microsoft (-1.99%); 4) Amazon (-0.6%); 5)Alphabet (-0.1%). Meanwhile, the other indices strengthening is driven by stimulus provided by President Trump through an executive order by maintaining assistance for unemployment benefits, a temporary payroll tax suspension, eviction protection, and student loan relief. This is considered better than nothing and provides a temporary solution and certainly a catalyst that can provide a picture of further economic recovery. Moreover, the market will look forward to several data releases today, such as: 1) US PPI; 2) UK Employment Change; 3) Eurozone ZEW Economic Sentiment Index.

Domestic Updates

The Minister of Finance will be distributing a guarantee of working capital credit from the government, but the company needs to meet these conditions: 1) have working capital a minimum of IDR10 bn or a maximum of IDR1 tn; 2) have a minimum of 300 employees; and 3) the company needs to prove through corporate performance data that it was affected by the pandemic. The sectors more prioritized for obtaining the guarantee are labor-intensive corporations (including tourism, automotive, and many more), because these companies will be guaranteed 80% by the government and 20% from banks. In comparison, other companies will only be guaranteed 60% by the government and 40% by banks.

Company News

1. IPCC IJ is distributing a total of IDR101 billion, which is equivalent to IDR55.51 share and a payout ratio of 75.01% from its FY19 net profit of IDR135.30 billion. Previously, the company had distributed interim dividends amounting to IDR63.41 billion, 46.86% of the total dividends. Thus, the remaining amount if IDR20.94 per share, or IDR38 billion in total (Neraca). MNCS Comment: IPCC dividend is quite interesting with a relatively high yield at 13.15%, as this time the value is higher than the last dividend of IDR34.87. In 1Q20 IPCC managed to recorded a 0.3% YoY growth while the net profit dropped by 20.5% YoY. IPCC is currently traded at 9.40x/0.7x PE/PBV.
2. APLN IJ has its debt rating lowered again from CCC- to C due to its subsidiary extending the term of the MTN. The company changed the MTN term from 370 days to two years, so the new MTN maturity changes from 26 August, 2020 to 22 August, 2021. A consequence of this change is that the interest rate will increase from 11% per year to 11.61% per year starting January 2021. In total, the company recorded liabilities of IDR19.4 trillion in June 2020, an increase from IDR16.62 trillion in December 2019 (Investor Daily). MNCS Comment: The existence of covid-19 has an impact on the rotation of APLN's financial statements.  This happens in almost all property companies, where the low achievement of marketing sales and not optimal recurring income increases the risk of the current property business. APLN is currently traded at 0.28x PBV.
3. BRPT IJ secured a loan facility of IDR3.64 trillion from Bangkok Bank Public Company Limited. The loan must be repaid within 60 months. Management said that the loan will be used to finance the power plant projects of its indirect subsidiary, PT Indo Raya Tenaga. BPRT controls 34% of Indo Raya Tenaga share (Investor Daily). MNCS Comment: We see that with the loan, the company will be able to finance other projects while the current debt to equity ratio stood at 2.12x. BRPT is currently traded at 4.49x PBV.

IHSG Updates

JCI rose by +0.27% to 5,157.83 on Monday (10/08)although followed by net foreign sell reaching IDR477.71 billion. The rise occurred amid the various movement on the Regional Asia and global indices, while it was supported by positive catalyst from the government such as: 1) Productive social assistance of IDR30 trillion for 12 million Micro, Small and Medium Enterprises (MSMEs); 2) Social assistance in the form of 15 kilograms of rice per head of family, for 10 million recipients of the Family Hope Program (PKH) with a budget of IDR4.6 trillion; 3) Social assistance in the form of direct cash assistance of IDR500,000 per recipient of staple food cards with a budget of IDR 5 trillion; 4) Social assistance in the form of direct cash assistance of IDR600,000 for social assistance for to workers whose salary is below IDR5 million per month; 5) Thirteenth salary distribution amounting to IDR28.82 trillion.  Moreover, the Rupiah exchange rate was weakening at IDR14,648. We estimate JCI will move in the range of 5,080-5,187 while waiting for the release of current account and retail sales data. Today's recommendation: AKRA, ICBP, INTP, BTPS.

Corporate Action

RUPS: RISE, PORT, MARK

Disclaimer On

AKRA, ICBP, INTP, BTPS, IPCC, APLN, BRPT