MNCS Morning Navigator

14 Januari 2021

MNCS Morning Navigator 14 January 2021

Global Market Highlight

DJIA movement was flat -0.03% on Wednesday (13/01) while S&P 500 ticked up by +0.23% and Nasdaq rose by +0.43%. U.S. stocks was flat as investors monitored the impeachment proceedings against President Trump in Washington. Moreover, market still weighed the prospect of new government stimulus against political turmoil and rising Covid-19 cases. Moreover, the market will look forward to several data releases today, such as: 1) US Initial Jobless Claims; 2) China Balance of Trade; 3) China Foreign Direct Investment.


Domestic Update

• The government will provide a corporate income tax (PPh) discount of 100% from the amount of tax stated for business activities in the Special Economic Zone (KEK) area. This fiscal incentive is given to business entities and business actors to encourage ease of doing business in KEK with an investment requirement of a minimum of IDR100 billion.

• Car sales in 2020 reached 578,000 vehicles, a 45% YoY decrease. Toyota is still the leader of the Indonesian automotive market with a market share of 31.9% of total car sales in 2020, followed by Daihatsu with 17.3%.

• Bank Indonesia's Prompt Manufacturing Index (PMI-BI) was recorded at 47.29% in 4Q20 (vs 44.91% in 3Q20 and 28.55% in 2Q20). Manufacturing sector performance seemed to improve in 4Q20, although it is still in a contractionary phase.

• Furthermore, there was an addition of 3,476 new Covid-19 cases in Jakarta yesterday.


Company News

1. KAEF IJ will develop a paracetamol factory with an investment of USD40-50 million with a capacity of 3,800 tons per year. The development carried out with PT Pertamina International Refinery (KPI) is part of the government's strategy to support the independence of domestic pharmaceuticals industry, which still relies on imports of 95% for raw materials for drug manufacturing. The investment will come from state capital participation and bank loans (IDN Financials). MNCS Comment: We hope that the factory would be able to contribute significantly to KAEF's revenue in the future other than vaccine distribution and development as KAEF is still suffering losses. Currently KAEF is trading at 727.89x/5.30x PE/PBV.

2. ROTI IJ completed the sale and transfer of all shares of its subsidiary, Sarimonde Food Corporation, on January 11, 2021. The sale of 55% shares was made to Monde Nissin Corporation in the Philippines with a value of around IDR75 billion. This divestment will make the company more focused on domestic business opportunities (Kontan). MNCS Comment: We believe that the proceeds from this divestment will be used to support better business activities in FY21E. Meanwhile, sales from the Philippines region only contributed about 2.77% of the total 9M20 sales and still recorded a loss. ROTI is currently trading at 49.61x/3.12x PE/PBV.

3. ERAA IJ plans to open 200 outlets in FY21E. Until 9M20, ERAA has opened 103 outlets. The additional outlets will focus on the island of Java, which has a sales contribution of up to 60%. The source of funds will use the company's cash, which in 9M20 the net cash obtained from activities was recorded at IDR1.22 trillion (Emitennews). MNCS Comment: We believe that the economic recovery in FY21E will drive the expansion of ERAA, supported by sentiment for the implementation of IMEI. ERAA is trading at the level of 21.08x/1.62x PE/PBV.


IHSG Updates

JCI rose by +0.62% to 6,435.20 on Wednesday (13/01) followed by net foreign buy reaching IDR1.16 trillion. The increase is backed by almost all sectors, especially mining as coal price still spike up but the consumer sector weakened. Pharmaceutical stocks fell despite the ongoing euphoria on vaccination. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,060. We estimate JCI will move in the range of 6,350 – 6,460 while waiting for balance of trade and consumer confidence data release. Today's recommendation: INKP, JSMR, HMSP, PTPP.


Corporate Action



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