MNCS Morning Navigator 16 July 2020

Global Market Highlight

DJIA rose by 0.85% on Wednesday (15/07)followed by S&P 500 (+0.91%) and Nasdaq (+0.59%). This increase was due to the positive development of the Covid-19 vaccine. The pharmaceutical company Moderna reports that vaccine trials have been able to produce antibodies to all of its volunteers. The success of this vaccine trial also helped lift Moderna's shares up to. On the other hand, bank performance in the US has improved. Goldman Sachs reported good financial performance after its revenue rose in the second quarter followed by Morgan Stanley and Bank of America. Moreover, the market will look forward to several data releases today, such as: 1) US Retail Sales; 2) China GDP Growth Rate; 3) Eurozone ECB Interest Rate Decision.

Domestic Updates

1. Indonesia’s trade surplus increased to USD1.27 billion in June 2020 from USD0.30 billion in June 2019. Exports rose 2.28% YoY due to higher sales of non-oil (3.63% YoY), even though sales of oil and gas products plunged (-18.52% YoY). On the other hand, imports dropped by 6.36% YoY, as purchases of oil and gas slumped (-60.47% YoY), while non-oil and gas rose (3.12% YoY).
2. Bank Indonesia Banking Survey indicates that the quarterly growth of new loans in 2Q20 has declined. This is reflected in the 2Q20 weighted net balance (SBT) of new credit demand, which is at -33.9%. The new credit demand for this quarter is 23.7% lower than the previous quarter. The decline in new credit growth occurred in all types of loans, especially investment loans. Fortunately, new credit growth is predicted to increase at 3Q20. This is because the lending policy is predicted to be more relaxed in terms of credit ceilings, collaterals, and credit terms.

Company News

1. SMCB IJ will distribute its final dividend of IDR24.9 billion on August 7, 2020. It will be IDR3.6 per share, a 0.3% yield, and cum dividend date will be at July 17, 2020. The remaining net profit of IDR475 billion will be used to further fund the company’s operations. Aside from dividends, the company also made changes to its directors and commissioners (Market Bisnis). MNCS Comment: The SMCB returned to distributing dividends amid Covid19 after 4 years of not distributing dividends, SMGR will get IDR24.53 billion of dividend while the rest is for public. SMCB is currently traded at 28.75x/1.12x PE/PBV.
2. INDF IJ will distribute a dividend of IDR2.44 trillion, which is equivalent to IDR278 per share and 4.26% yield, to its shareholders. Dividend payout ratio is 49.73% from FY19 net profit. Distribution date will be at August 14, 2020 (Market Bisnis). MNCS Comment: We believe the dividends provided by INDF are still attractive in the midst of uncertainty market conditions with the dividend yield offered is higher than the previous year (3.62% in FY19). INDF is currently traded at 10.21x/1.44x PE/PBV.
3. DILD IJ recorded marketing sales of IDR343 billion up to 1Q20. This is only 13.73% of its total 2020 marketing sales target, which is IDR2.5 trillion. The pandemic not only resulted in the decline of its office and apartment business but also postponed the launching of several projects scheduled for 2020. DILD will focus on selling units in existing projects such as Graha Natura, Serenia Hill, and Talaga Bestari, and it is confident that marketing sales can still reach IDR1 trillion (Market Bisnis). MNCS Comment: We see that property sector is one of the most impacted sectors due to the pandemic. DILD is currently traded at 5.48x/0.36x PE/PBV.

IHSG Updates

JCI was flat by -0.07% to 5,075.80 on Wednesday (15/07), followed by net foreign sell reaching IDR651.98 billion. The flat movement occurred amid the various movement of Regional Asia and Global Indices, as the banking sector became a large contributor towards the slight decrease. While the USD1.27 billion surplus on the balance of trade seems to have no significant impact towards the market. Furthermore, the market is expecting the announcement of BI 7DRR which is expected to be cut by 25 bps to 4%. Meanwhile, the Rupiah exchange rate against the USD was weakening at IDR14,588. We estimate JCI will move in the range of 5,022-5,111. Today's recommendation: SMRA, JPFA, SMGR, BBNI.

Corporate Action

Cum Dividend: ELSA

RUPS: LSIP, MAYA

Disclaimer On

SMRA, JPFA, SMGR, BBNI, INDF, SMCB, DILD