MNCS Morning Navigator 13 November 2020

Global Market Highlight

DJIA dropped by -1.08% on Thursday (12/11) followed byS&P 500 (-1.00%) and Nasdaq (-0.65%). The increase in the average number of Covid-19 cases made the US makes market players still quite worried so that the global stock exchange rate tends to be restrained. Even the chairman of the Fed, Jerome Powell also said that the US economic prospects have not yet come to a bright spot despite positive news about vaccine developments this Sunday. On the other hand, the release of US inflation data for October fell to a level of 1.2% (previously 1.4%). This figure is still below the inflation rate proclaimed by Powell of 2%. The core inflation rate also fell to the level of 1.6%. Commodity price pressures also brought their own pressure. However, it is believed that the projected improvement in economic activity in the fourth quarter will be able to boost the US inflation rate again. Moreover, the market will look forward to several data releases today, such as: 1) US Michigan Consumer Sentiment Preliminary; 2) Eurozone GDP Growth Rate Estimation; 3) China Foreign Direct Investment.

Domestic Update

Bank of Indonesia announce a start in improvement of the economy in 3Q20. The recovery was accelerated mainly by the expansion of budget realization, supported by improvement in several indicators such as the retail sales side to non-oil and gas exports. The trade balance booked a surplus of USD8.03 billion in 3Q20 (vs USD2.89 billion in 2Q20). Furthermore, with the allocation of 2021 State Budget, the economic is projected to grow up to 5.8%.

Company News

1.       AMRT IJreported a stable sales growth in 3Q20. The food segment experienced an increase of 2.29% YoY, while the beverages segment rise by 8.07% YoY. While the COGS rose by 3.6%, followed by increase in operating expenses and administration expenses by 7.21% and 10.89% YoY respectively, the company’s net income successfully increased by 4.16% YoY to IDR56.3 trillion (Investor Daily). MNCS Comment: On quarterly basis, bottom-line slightly increased given current PSBB relaxation. We estimate the festive season in Dec-20 should support 4Q20 revenue. AMRT is currently traded at 29.89x/4.44x PE/PBV.
2.        KINO IJaims to distribute IDR28.57 billion of interim dividend for 1.43 billion outstanding shares. Dividend per share equivalent to IDR20 with dividend yield of 0.68%. The cum date will be on 18 November 2020 (Investor Daily). MNCS Comment: We expect that next year it will be difficult to distribute dividends as management has revised its revenue and net profit targets to 15% / 30% respectively lower this year, due to the pandemic. KINO is currently traded at 19.41x/1.56x PE/PBV.
3.        BSDE IJ earned IDR4.28 trillion in revenue on 9M20 which fell -18.16% YoY. The drop in was due to a sales discount interest expense of IDR360.62 billion which did not exist last year. Interest and other financial expenses also jumped 26.29% YoY. Thus, the net profit fell deeply by -79.67% YoY to IDR469.56 billion in 9M20 (Kontan). MNCS Comment: The decline in profit was due to the lack of marketing sales generated in 1Q20 and 2Q20. The increase in debt is also due to the company having to maintain cash flow amidst a challenging business. BSDE is currently traded at 34.15x/0.72x PE/PBV.

IHSG Updates

JCI decreased by -0.92% to 5,458.60 on Thursday (12/11) but still followed by net foreign buy reaching IDR256.26 billion. JCI finally dropped following the uncertain movement on the global indices upon the vaccine continuation. Most of the sectors fell due to profit taking by investors as JCI has strengthened these past few days while agriculture increased due to the short production issue. Meanwhile, the Rupiah exchange rate was weakening at IDR14,170. We estimate JCI will move in the range of 5,390 – 5,250 while waiting for current account data release. Today's recommendation: HMSP, ADHI, INTP, JSMR.

Corporate Action

RUPS: MSIN, IRRA

Disclaimer On

HMSP, ADHI, INTP, JSMR, BSDE, KINO, AMRT