MNCS Morning Navigator 16 November 2020

Global Market Highlight

DJIA rose by +1.37% on Friday (13/11) followed byS&P 500 (+1.36%) and Nasdaq (+1.02%). Indices increased with upbeat earnings reports helping to drive optimism about the economy along with hopes for successful Covid-19 vaccines, even as investors monitored a surge in virus cases and restrictions around the country. After a volatile trading week where the market was whipsawed between hopes and fears around the virus, sentiment regarding the potential for vaccines combined with very strong earnings announcements from a number of companies has investors hopeful that the economy can continue to recover. Moreover, the market will look forward to several data releases today, such as: 1) China Retail Sales; 2) China Unemployment Rate; 3) Japan GDP Growth.

Domestic Update

Bank Indonesia stated that based on the Price Monitoring Survey for the second week of November 2020, the inflation rate in November 2020 is estimated at 0.21% MoM. With these developments, the inflation forecast for November 2020 is estimated at 1.17% YTD/1.53% YoY. Bank Indonesia will continue to strengthen coordination with the Government and relevant authorities to closely monitor the dynamics of the spread of Covid-19 and its impact on the Indonesian economy from time to time, as well as further policy coordination steps that need to be taken to maintain macroeconomic and financial system stability, as well as sustain Indonesia's economic growth remains good and resilient.

Company News

1.       FREN IJ earned IDR6.85 trillion in 9M20 revenue which increased by 37.55% YoY. Data revenue shot up 32.30% YoY to IDR6.24 trillion and contributed the largest while non-data revenue also rose 38.60% YoY to IDR292.97 billion. Interconnection service revenues increased 380% YoY to IDR130.95 billion. However, high operating expenses as well as an increase in interest expense and foreign exchange losses have resulted in FREN to book a net loss of IDR1.75 trillion in 9M20 which YoY increased by 6.71% from the previous loss of IDR1.64 trillion in 9M19 (Kontan). MNCS Comment: FREN already gain benefit from the pandemic as their revenue increased significantly but the poor implementation of efficiency has caused the bottom line to dive deeper. FREN is currently traded at 1.40x PBV.
2.        DVLA IJrevenues reached IDR1.28 trillion in 9M20 which decreased by -9.2% YoY. This decline were compensated for by the DVLA-free drug segment which grew 13% YoY to IDR588.50 billion with the increase in sales of multivitamins such as Enervon-C and Vicee during the pandemic. Even though there's a reduction  on the cost of goods sold, DVLA still recorded a -16.94% YoY drop in net profit to IDR147.2 billion in 9M20 (Market Bisnis). MNCS Comment: We see that the cause of the topline slump was due to the decline on prescription as the pandemic has caused such fear that make people afraid to do activities outside. But we believe with innovation and development on new vitamins will be positive for DVLA in the future as people get more health aware. DVLA is currently traded at 14.60x/2.12x PE/PBV.
3.        PJAA IJ recorded revenue of IDR305.57 billion which fell by -68.68% YoY. The most depreciated segment was ticket revenue which fell -75.70% YoY followed by hotel and restaurant revenue (-63.36% YoY). This declining income caused PJAA to record a net loss of IDR 252.13 billion in 9M20 (Kontan). MNCS Comment: This is expected in the tourism sector as the strict physical distancing is implemented, many public places has to be closed. We hope that with the easing in PSBB, PJAA will gradually recover and start operating. PJAA is currently traded at  0.44x PBV.

IHSG Updates

JCI were flat by +0.04% to 5,461.06 on Friday (13/11) followed by net foreign sell reaching IDR237.85 billion. JCI was flat due to the uncertainty in the market over surging cases making the global index movement rather volatile. It seems that the investors were watching for the sentiments and catalyst as foreign booked an outflow while there are minimum sentiment within the country. Meanwhile, the Rupiah exchange rate was flat at IDR14,170.We estimate JCI will move in the range of 5,390 – 5,520 while waiting for balance of trade data release. Today's recommendation: BMRI, EXCL, TINS, ACES.

Corporate Action

Stock Split: DIGI (1:5)

Cum Dividend Date: KINO (IDR20)          

Disclaimer On

BMRI, EXCL, TINS, ACES, FREN, DVLA, PJAA