MNCS Morning Navigator 15 December 2020

Global Market Highlight

DJIA dropped by -0.62% on Monday (14/12) followed by S&P 500 (-0.44%) ehile Nasdaq rose by +0.50%. The decreasing global index was triggered by market players' concerns over the possibility of implementing a full lockdown conveyed by the mayor of New York. On the other hand, the US has also started rolling out the Covid-19 vaccines made by Pfizer and BioNTech to hundreds of distribution centers across the state.  Currently lawmakers in Washington are still trying to return to push the realization of large amounts of aid. Moreover, the market will look forward to several data releases today, such as: 1) US Industrial Production; 2) UK Employment Change; 3) China Retail Sales.

Domestic Update

• Bank Indonesia plans to accelerate money market deepening in accordance with BPPU 2025 to report monetary policy and support national financing through the following 5 visions: 1) Developing a modern and advanced money market to support the financing of the national economy and those that have monetary policy and financial systems; 2) developing products, pricing and market players; 3) reliable, efficient, safe and integrated money market infrastructure; 4) developing data and digitizing that has granular, real-time, and secure features; 5) realizing a regulatory framework with symbols that are agile, industry-friendly, innovative, and meet international standards.
• Furthermore, there is an additional of 1.566 new Covid-19 cases in Jakarta yesterday.

Company News

1.        PTBA IJ stated that they are ready to realize the coal gasification project into dimethyl ether (DME) after signing a cooperation commitment with Air Products and PT Pertamina last Thursday. PTBA as a pioneer of coal gasification is ready to carry out the mandate of Presidential Decree No. 109/2020 for the development of downstream coal into DME to reduce LPG imports. Construction is expected to start in FY21F. The project will be located in Tanjung Enim, South Sumatra with an operating target in the 2Q24F. The total investment for the project reaches USD2.1 billion which will be fully borne by Air Products, while PTBA will be the supplier of coal needs and Pertamina will act as the buyer of DME products (Market Bisnis). MNCS Comment: Although acting as a coal supplier in the first year of operation, PTBA will be given an option of ownership on the second year which we believe will contribute to their income. PTBA is currently traded at 15.25x/2.14x PE/PBV.
2.        FAST IJ said there were 33 KFC Indonesia outlets that were not operating until now because they were right at the transit location, people passing by, such as airports and stations which were advised not to operate first. Meanwhile, the company is indeed aggressively conducting promotions such as a 50% discount for several days a week. This promotion is considered capable of driving an increase in sales during a pandemic period like now. FAST also estimates a decrease in sales of around 30% - 35% at 223 KFC outlets in malls across Indonesia (Market Bisnis). MNCS Comment: We see that the drop estimation on sales is in line with the overall estimation of company earnings growth in FY20E. While FAST is on the track for recovery along with the economy. FAST is currently traded at 2.95x PBV.
3.        DKFT IJ recorded total sales of IDR852.40 billion in 3Q20 which shot up 82.35% YoY. The majority of DKFT's sales came from exports to third party customers, namely Fujian Xingda Import & Export Trading Co. Ltd (IDR 680.69 billion), Shanghai Baoshuo Industrial Group Co. Ltd (IDR137.86 billion) and Five Star General Resources Co. Ltd (IDR33.84 billion). The increase in sales was also followed by COGS which skyrocketed by 215.69% YoY. Thus, DKFT experienced a net loss amounting to IDR90.44 billion in 3Q20 (Kontan). MNCS Comment: Apart from the increasing COGS, DKFT also experience loss on forex which is quite sensitive for commodities. But we believe the 4Q20 performance will be better considering the rise on commodity prices. DKFT is currently traded at 1.54x PBV.

IHSG Updates

JCI rose by +1.25% to 6,012.52 on Monday (14/12) though followed by net foreign sell reaching IDR135.96 billion. JCI continues to rally backed strongly by trading sector, mining sector which is caused by the continuing increase on commodity prices and consumer sector as window dressing is in the season. Meanwhile, the Rupiah exchange rate was weakening at IDR14,095. We estimate JCI will move in the range of 5,910 – 6,150 while waiting for loan growth data release. Today's recommendation: ACES, KAEF, JSMR, BBTN.

Corporate Action

Cum Dividend Date: TOWR (IDR6/share)

RUPS: IMPC, BRIS

Disclaimer On

ACES, KAEF, JSMR, BBTN, PTBA, FAST, DKFT