MNCS Morning Navigator 15 October 2020

Global Market Highlight

DJIA dropped by -0.58% on Wednesday (14/10) followed by S&P 500 (-0.66%) and Nasdaq (-0.80%). US stocks fell after the US finance minister was pessimistic that a stimulus deal would happen before the US election, due to disagreement about the amount of stimulus between the Democratic and Republican parties. Furthermore, pharmaceutical company Eli Lilly has temporarily suspended trials of its drug for Covid-19. This temporary suspension after the discovery of potential safety problems by the US health regulators. Moreover, the market will look forward to several data releases today, such as: 1) US Initial Jobless Claims; 2) China Inflation Rate; 3) France Inflation Rate.

Domestic Updates

PT Permodalan Nasional Madani (Persero) or PNM has distributed presidential assistance (Banpres) of up to 4.06 million Mekaar customers with total funds disbursed reaching IDR9.74 trillion until September 15, 2020. In general, Banpres is an assistance for micro businesses that have not yet been accessed by credit from banks. The goal is so that their businesses can operate again and be able to survive the Covid-19 pandemic.

OJK stated that 100 banks had restructured loans worth IDR904.28 trillion from 7,465,990 debtors. This consists of 5,824,976 MSME debtors with a credit value of IDR359.97 trillion, and 1,641,014 non-MSME debtors with IDR544.30 trillion credit. OJK itself confirmed that it would extend the validity period of the credit restructuring provisions which originally expired in February 2021.

Company News

1.       UNTR IJ recorded a decrease in OB volume to 561.6 million bcm in August 2020 compared to 656.4 million bcm in the same period last year. From the production side, the company recorded a decline in production performance to only 75.8 million tons until August 2020 compared to 84 million tons in 8M19. (Market Bisnis). MNCS Comment: UNTR's coal segment seems to be slowing down in efficiency and production though management stated that it was on track with the target. UNTR should prepare for the upcoming season because La Nina will not be the ordinary rainy season. UNTR is currently traded at 10.32x/1.43x PE/PBV.
2.       ADRO  IJ still maintain its operational performance guidelines this year. ADRO targets its coal production to reach 52-54 million tons by the end of this year, decreased by 10% YoY from last year's realization. ADRO stated that they will not increase export to China along with the import banned from Australia, this is due to ADRO's export had to be align with their current production (Kontan). MNCS Comment: ADRO's strategy to cut their production target is quite reasonable given the pandemic situation in the first two quarters of the year, followed by the upcoming La Nina that will disrupt operation. We hope that the import banned from China will not impact ADRO negatively from the coal price. ADRO is currently traded at 8.54x/0.72x PE/PBV.
3.       BLTZ IJ has reopened six of its CGV cinemas in Bandung and are operating with a number of health protocols in accordance with the Ministry of Health guidelines and will apply them strictly. With the protocol, CGV Cinemas will reduce the seating capacity in the auditorium space by up to 50% of normal capacity. In addition, viewers are asked to order cinema tickets and food and drinks through online channels and use digital payments (IDN Financials). MNCS Comment: We hope that with this small steps towards recovery, BLTZ will be able to graze back their profit after recording a IDR185.46 billion of net loss due to being closed during the pandemic. BLTZ is currently traded at 2.58x PBV.

IHSG Updates

JCI increased by +0.85% to 5,176.09 on Wednesday (14/10) followed by net foreign buy reaching IDR39.49 billion. JCI continue rising this time backed by mining sector (+3.72%) as ANTM and INCO are being the top stocks following the issue of nickel downstreaming for EV batteries that will be produced domestically. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,718.We estimate JCI will move in the range of 5,060 – 5,187 while waiting for Balance of Trade. Today's recommendation: MEDC, TLKM, ADRO, BMRI.

Corporate Action

RUPS: MPPA, BULL

Disclaimer On

MEDC, TLKM, ADRO, BMRI, BLTZ, UNTR, ADRO