MNCS Morning Navigator 16 October 2020

Global Market Highlight

DJIA slipped by -0.07% on Thursday (15/10) followed by S&P 500 (-0.15%) and Nasdaq (-0.47%). Stocks were weakening after weekly unemployment claim rose, further add more information about stunted economic recovery. Meanwhile, hopes for more fiscal assistance before the presidential election seems to fade, weighing the market even more. Moreover, the market will look forward to several data releases today, such as: 1) US Retail Sales; 2) US Michigan Consumer Sentiment; 3) Eurozone Core Inflation Rate.

Domestic Updates

BPS release Balance of Trade which posted a surplus of USD2.44 billion in September 2020. Export stood at USD14.01 billion (-0.51%) while import is smaller at USD11.57 billion (-18.88%). Indonesia has recorded a five consecutive surplus on the trade balance. While the amount is definitely higher than last year's deficit of USD183.3 million.

Company News

1. AMOR IJ will disburse dividend amounting to IDR50 billion. Dividend per share stood at IDR45/share with yield at the level of 2.05%. Apart from distributing the final dividend, the company's shareholders also agreed to set aside IDR560 million from the company's net profit as mandatory reserve. Cum date will be on October 15 while payment date will be on November 6, 2020 (IDN Financials). MNCS Comment: We see that the dividend per share is higher than the last time AMOR distributed at IDR25.75/share. AMOR seems to be able to maintain performance by recording a IDR79.57 billion of net profit in 1H20. UNTR is currently traded at 30.58x/8.52x PE/PBV.
2. PZZA IJ will make changes to the business activities by providing mobile food, or food trucks. For this change in business activities, PZZA has also conducted a feasibility study. As long as there is a place where the food truck is parked, it can change to various places from day to day. To find out the location of the food trucks, people can use social media such as Facebook, Twitter and Instagram (Kontan). MNCS Comment: PZZA's strategy is surely out of the box to evolve the business within the pandemic season. This must be done by PZZA in order to survive. PZZA has suffered a deep cut on net margin as well as a massive outlet closure. PZZA is currently traded at 17.45x/1.54x PE/PBV.
3. ERRA IJ recorded online sales traffic increased 7 times, although the contribution was not yet below 10%. Consumers still prefer to shop for devices offline because they can try the products prior to purchase. ERAA will also spur other business lines such as the Internet of Thing (IoT). This is because businesses outside of handsets have a bigger profit margin, around 15% to 20% (Market Bisnis). MNCS Comment: We believe ERAA to be capable of leveraging its profitability along with the implementation of IMEI in 2020. Besides, IoT products to have a niche market are potential for significant growth as 4.0 digital revolution is the face nowadays. ERAA is currently traded at 23.27x/1.07x PE/PBV.

IHSG Updates

JCI dropped by -1.37% to 5,105.15 on Thursday (15/10) altough followed by net foreign buy reaching IDR23.28 billion. JCI finally ends its consecutive rally along with the weakening on the Regional Asia indices. Finance sector led the drop while investors were taking profit after sharia banks merger news boost the banks stock prices. Market didn't seem to taken the balance trade surplus into account. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,690. We estimate JCI will move in the range of 5,000 – 5,187 while waiting for car sales data release. Today's recommendation: ACES, UNTR, GGRM, CTRA.

Disclaimer On

ACES, UNTR, GGRM, CTRA, ERAA, PZZA, AMOR