MNCS Morning Navigator 13 July 2020

MNCS Morning Navigator

13 July 2020

Global Market Highlight

DJIA climbed +1.44% on Friday (11/07) followed by S&P 500 (+1.05%) and Nasdaq (+0.66%). Stock market gains after big tech rally as potential Covid-19 treatment increased hope for an economic recovery. Gilead Sciences said its remdesivir, showed an improvement in clinical recovery and a 62% reduction in the risk of mortality compared with standard care. Furthermore, earnings season is set to kick off this week with big banks and others reporting their quarterly results. According to Refinitiv data, corporate earnings are expected to fall by 44% in the 2Q20E, which would be the biggest drop in quarterly earnings since the fourth quarter of 2008. Moreover, the market will look forward to several data releases today, such as: 1) US Fed William Speech; 2) Japan Tertiary Industry Index; 3) China FDI per June-2020.

Domestic Updates

BI stated that inflation was at a low and controlled level. Based on the Price Monitoring Survey in the second week of July 2020, inflation in July 2020 is estimated at 0.04% MoM. With these developments, the July 2020 inflation forecast was 1.13% YTD/1.69% YoY. Bank Indonesia will continue to strengthen coordination with the Government and relevant authorities to closely monitor the dynamics of the spread of Covid-19 and its impact on the Indonesian economy from time to time, as well as further policy coordination steps that need to be taken to maintain macroeconomic and financial system stability, and sustain Indonesia's economic growth remains good and resilient.

Company News

1. BSDE IJ recorded marketing sales of IDR1.79 trillion in 1Q20. This achievement reflects as much as 25% of targeted marketing sales of IDR 7.2 trillion in FY20E. Meanwhile, IDR1.05 trillion in BSDE marketing sales was obtained from residential areas, while IDR734 billion came from commercial projects. Management said the corona virus pandemic had a significant impact on revenue decline. This happened mainly from the office business and shopping center. (Market Bisnis) MNCS Comment: BSDE will continue to strive to achieve marketing sales targets through homes at IDR 1 billion-2 billion per unit. BSDE is curently traded at 15.20x/0.57x PE/PBV.
2. TOPS IJ recorded a new contract of IDR426.1 billion until June 2020. The realization is still far from the target of a new contract of IDR3 trillion this year. The realization of the new TOPS contract is much lower compared to the same period last year of IDR1.83 trillion. Even so, Totalindo is still optimistic that the value of new contracts can increase. Management said the slow growth of new contracts was due to the property sector's recovery that had not been recovered due to the corona virus pandemic. The application of new normal also has not had a significant impact. (Kontan) MNCS Comment: New contracts that are still far from the target due to the delay of several tenders by property developers. TOPS is curently traded at 1.25x PBV.
3. STTP IJ recorded an increase in sales of 8.63% YoY to IDR1.79 trillion in 1H20. Aside from product value, the increase in STTP sales also came from export performance where the company's export growth, such as China, South Korea, Vietnam, and Taiwan contributed to total sales. So far, STTP's sales growth target is still 10% YoY in FY20E because industrial and economic activities both in Indonesia and several export destination countries have gradually improved in 2H20E. (Kontan) MNCS Comment: We see that snacks are very much in demand especially now during the Covid-19 pandemics where people cannot dine outside. STTP is curently traded at 16.23x/4.97x PE/PBV.

IHSG Updates

JCI dropped by -0.43% to 5,031.26 on Friday (10/07), although followed by net foreign buy reaching IDR95.58 billion. The weakening was caused by the addition of Covid-19 cases in Indonesia which is still in an upward trend which makes the market players start to be careful due to it’s interference towards economic recovery. Moreover, Jakarta recorded a new high of adding 404 cases per day with the total 1,681 cases nationally. The number of positive patients with Covid-19 is now 75,699, Indonesia being the country with the most cases in ASEAN. Meanwhile, the Rupiah exchange rate against the USD was weakening at IDR14,435. We estimate JCI will move in the range of 5,009-5,140 while waiting for the Balance of Trade data release. Today's recommendation: CTRA, INCO, TBIG, ELSA.

Corporate Action

Cum Dividend: VINS, TBMS

RUPS: BRNA

Disclaimer On

CTRA, INCO, TBIG, ELSA, STTP, BSDE, TOPS