MNCS Morning Navigator 12 November 2020

Global Market Highlight

DJIA dropped by -0.08% on Wednesday (11/11) followed by strengthening S&P 500 (+0.77%) and Nasdaq (+2.01%). Pfizer's vaccine development is slowly abating and making global markets start to stagnate. Market players are more focused on observing the clarity of vaccine production and distribution plans. The rebound of technology giants such as Amazon, Google and Facebook after the massive selloff has not been able to boost the market rate. Small cap stocks and cyclical sectors are becoming the main target of investors. Moreover, the market will look forward to several data releases today, such as: 1) US Inflation Rate; 2) UK GDP 3Q20; 3) Germany Inflation Rate.

Domestic Update

The Indonesia retail sales dropped by 8.7% YoY in September 2020, marked a tenth straight month of fall in retail trade. Categories that experienced the contraction was  clothing (-59.7% vs -64.9% in August 2020), followed by cultural & recreational goods (-39.5% vs -38.2%), home appliances (-26.2% vs -24.5%), automotive parts & accessories (-23.3% vs -25.2%), information & communication equipment (-22.2% vs -19.2%), and fuel (-18.7% vs -23.5%). Meantime, the sales of food, beverages & tobacco increased by 3.1% (vs 2.7%).

Company News

1.       BBRI IJ  performance fell as net income decreased by 43.05% YoY in 3Q20. There were increased in the revenue on fee-based commission and administration by 16.4% YoY , increased in lending by 3.4% YoY to IDR934.12 trillion, and third-party fund by 10.5% YoY. The company’s loan loss provision increased by 22.5%. As result, BBRI reported a decrease in net interest income of 6.2% to IDR57.08 trillion (Kontan). MNCS Comment: We observe, on quarterly basis BBRI booked a better result in 3Q20 despite the provision hike. Meanwhile rumours on sinergy with Pegadaian and PNM delivers stock 25% higher in a week. BBRI is currently traded at 24.96x/2.74x PE/PBV.
2.        HEAL IJreported increase in revenue by 7.26% YoY to IDR2.88 trillion in 3Q20, where 64% of the revenue came from inpatient services which increase by 12.48% YoY. Even though the COGS and operating expenses increased 5.96% and 5.68% YoY respectively, the company managed to maximise other income and financial income which rose to IDR52.37 billion and IDR24.32 billion respectively. Thus, HEAL booked a net profit of IDR262 billion (Market Bisnis). MNCS Comment: The improvement in reports in 3Q20 was due to the opening of the PSBB and the urgent health needs, leading to an increase in the volume of patients (the majority of whom were JKN members). With the improvement in volume, this has improved HEAL's financial position in 3Q20. HEAL is currently traded at 28.21x/4.16x PE/PBV.
3.        KIJA IJ recorded revenue increase of 29.79% YoY to IDR1.41 trillion in 3Q20, supported mostly by significant increase in the sales in mature land and power plant. On the other hand, the operating expenses increased 8.57% YoY to IDR 328.66 billion and other expenses reported at IDR279.99 billion. Since the expense figure exceeded the revenue amount, KIJA booked a loss of IDR266.01 billion despite the rise in revenue (Kontan). MNCS Comment: the loss experienced by KIJA was due to the depreciation of the rupiah that occurred during 9M20, in addition to that high financial burden also triggered KIJA's loss in 9M20. KIJA is currently traded at 0.81x PBV.
4.        SSIA IJ reported decrease in revenue of 23.25% YoY in 3Q20. Construction segment which made 78.68% of the total revenue performed 12.47% decrease in realization compared to previous year. With operating expenses increased to IDR 145.32 billion (-19.21% YoY), SSIA booked higher net loss of IDR8.11 billion (Market Bisnis). MNCS Comment: The decline in SSIA's financial statements in line with the decreasing need for construction services and industrial land which caused SSIA's income to be unstable in 3Q20. SSIA is currently traded at 0.69x PBV.

IHSG Updates

JCI increased by +0.86% to 5,509.51 on Wednesday (11/11) followed by net foreign buy reaching IDR2.02 trillion. JCI is still on the rise though the global indices closed indifferently. JCI is still boosted from the large amount of foreign inflow which support telco, automotive, mining and banks to increase. Meanwhile, the Rupiah exchange rate was weakening at IDR14,085. We estimate JCI will move in the range of 5,250 – 5,700 while waiting for balance of trade data release. Today's recommendation: MEDC, TLKM, BBRI, AKRA.

Corporate Action

RUPS: TBIG, BBRM

Cum Dividend Date: IPCM

Disclaimer On

MEDC, TLKM, BBRI, AKRA, KIJA, SSIA, HEAL