MNCS Morning Navigator 13 August 2020

Global Market Highlight

DJIA rose by +1.05% on Wednesday (12/08) followed by S&P 500 (+1.40%) and Nasdaq (+2.13%). S&P climb to just below the all-time high since February, while the rise in Nasdaq was supported by Facebook, Amazon, Netflix, Google, Alphabet, Apple and Microsoft that strengthened yesterday. Furthermore, the release of US inflation data is at the level of 1% (previously 0.6%) and core inflation increased by 1.6% annually, illustrates the slowly improving level of public consumption towards economic recovery. Moreover, the market will look forward to several data releases today, such as: 1) US Initial Jobless Claims; 2) US Export Import; 3) Japan Unemployment Rate.

Domestic Updates

Residential Property Price Index shows an increase of only 1.59% YoY in 2Q20, lower than 1.68% YoY in 1Q20. This indicated a continuous slowdown in the rise of residential property prices in the primary market. The index is predicted slow down even more in 3Q20, with a growth of 1.19% YoY. In terms of residential property sales, the volume contracted by -25.60% YoY in 2Q20, although not as steep as -43.19% YoY in 1Q20. Meanwhile, financing for residential developers came mainly from non-banking sources, as 67.67% of the total capital requirement came from internal developer funds. On the consumer side, KPR is the primary source of financing properties, attributing to 78.41%.

Company News

1. ITMG IJ posted 1H20 revenue of USD652.62 million, a substantial -26.89% YoY decrease when compared to 1H19 revenue of USD892.70 million. The decline is caused by the weakening global coal selling prices as well as a decrease in coal sales volume to third parties and related parties by -25.29% YoY and -48.25% YoY, respectively. However, the decline in sales resulted in a -23.51% YoY decrease in the cost of revenue to USD558.63 million. Overall, net profit is USD25.92 million, smaller than 1H19 net profit of USD75.99 million (Investor Daily). MNCS Comment: Coal mining industry is affected by the pandemic as the demand for coal were weakened due to the restriction in business activities and ITMG is no different. Though the net profit margin is slightly better in the 2Q20 standing at 5.2% compared to 4.2% from the previous quarter. ITMG is currently traded at 10.74x/0.74x PE/PBV.
2. MTLA IJ will distribute cash dividends of IDR48.27 billion on September 9, 2020 while the recording date is August 19, 2020. The dividend is equivalent to IDR6.3 per share and has a payout ratio of 9.9% from its FY19 net profit of IDR486.97 billion. The dividend yield is 1.6% (Bisnis). MNCS Comment: Despite the 1.03% YoY increase on FY19 net profit, MTLA's dividend per share is smaller than the previous of IDR9.4/ share which is due to a smaller dividend payout ratio. MTLA is currently traded at 16.96x/0.82x PE/PBV.
3. IPTV IJ posted 1H20 revenue of IDR1.73 trillion, an 11.88% YoY increase from 1H19 revenue of IDR1.54 trillion. Revenue from satellite services, which is the main contributor to the company’s top line, increased by 11.58% YoY from IDR1.11 trillion to IDR1.24 trillion. Then, revenue from digital business, internet protocol television, and broadband services increased rapidly by 17.7% YoY, from IDR367 billion to IDR430 billion. As a result, the company’s bottom line increased by more than 300% YoY, from IDR24 billion last year to IDR105 billion this year (Bisnis). MNCS Comment: We see that IPTV is still going strong by recording a very solid performance in the 1H20 amid the Covid-19 outbreak that affected many industries. With a decent channel performance and a multiplying subscriber, IPTV will be able to remain strong and sustainable throughout the year. IPTV is currently traded at 65.60x/2.06x PE/PBV.

IHSG Updates

JCI increase by +0.83% to 5,233.45 on Wednesday (12/08) followed by net foreign buy reaching IDR142.86 billion. Stock price continues to rally and is in line with the strengthening from most of the Regional Asia index. Furthermore, the rise is supported by an interest rate subsidy from the Minister of Finance towards small business starting from 3% to 6%. This is followed by an approval of the first Covid-19 vaccine regulations in Russia which further boost the market sentiment.  Moreover, the Rupiah exchange rate was weakening at IDR14,760. We estimate JCI will move in the range of 5,150-5,280 while waiting for the release of balance of trade data. Today's recommendation: MDKA, MAPI, CTRA, BBNI.

Corporate Action

Cum Dividend: ACES, SMBR

RUPS: LION

Disclaimer On

MDKA, MAPI, CTRA, BBNI, ITMG, MTLA, IPTV