MNCS Morning Navigator 17 December 2020

Global Market Highlight

DJIA slipped by -0.15% on Wednesday (16/12) thoughfollowed by the strengthening of S&P 500 (+0.18%) and Nasdaq (+0.50%). The mixed closing happened as the Fed refuses to make changes to Quantitative Easing (QE) policy and resumed the bond purchase program of at least USD120 billion. The US central bank will also increase its asset purchases if the economic recovery slows down. On the other hand, congressional leaders have begun to reach a fiscal policy agreement in the form of additional assistance worth USD900 billion aimed at the public to boost consumption. This was in response to the weakening of the US retail sales rate by 1.1% in November. This prolonged pandemic has also depressed household income levels. Moreover, the market will look forward to several data releases today, such as: 1) US FOMC Economic Projection; 2) US Fed Interest Rate Decision; 3) Eurozone Core Inflation Rate.

Domestic Update

• President Joko Widodo emphasized that he would be the first party to receive the Covid-19 vaccination. According to him, this was done to increase public confidence that the Covid-19 vaccine is safe to use.
• BPJS Ketenagakerjaan has submitted 20.3 million membership data to the government as a source of data for the distribution of the Covid-19 vaccine. The government has imported 1.2 million doses of the corona vaccine from Sinovac in early December. While, the government will still bring in vaccines in January.
• Furthermore, there is an additional of 1.221 new Covid-19 cases in Jakarta yesterday.

Company News

1.        HOKI IJ will increase the contribution of modern trade and online channels (market place) by adding distribution channels targeting consumers from the middle and upper class people who are starting to switch to branded packaged rice such as HOKI and Topi Koki. Currently HOKI is in the process of increasing production capacity at a new factory in South Sumatra and adding a drying machine at its factory in Subang, West Java, to increase the production of wet unhulled rice into rice (Emiten News). MNCS Comment: We see that the expansion and efficiency strategy will be effective for when the demand return to normal, HOKI will be able to deliver better. HOKI is currently traded at 69.17x/4.09x PE/PBV.
2.        ENRG IJ recorded an increase in net sales of 25% YoY to USD239 million in 3Q20. The increase was backed by a higher production of oil and gas. Thus, net profit increased staggeringly by 254% to USD42 million. ENRG will continue to participate in the government's program to achieve the country's production target of 1 million barrels of oil per day and 12 billion cubic feet of gas per day by 2030 (Emiten News). MNCS Comment: ENRG shows that it could achieve greater performance even during the hard times, especially when oil price was very volatile earlier this year. ENRG is currently traded at 1.26x/0.30x PE/PBV.
3.        META IJ plans to distribute interim dividends to shareholders with a total value of IDR35.42 billion or equivalent to IDR 2 per share, which means that the yield is at the level of 1.25%. The dividend amount has also taken into account the company's financial condition and future business plans. In addition, the implementation of the interim dividend distribution will not result in the net assets being smaller than the total capital. The cum dividend will fall on 22 December 2020 (Emiten News). MNCS Comment: We see that META has return to distributing dividend since 2018, despite the net profit this year was hit by the weakening economy. META is currently traded at 37.76x/1.08x PE/PBV.

IHSG Updates

JCI increased by +1.80% to 6,118.40 on Wednesday (16/12) followed by net foreign buy reaching IDR775.39 billion. JCI rose again supported by the strengthening global indices on previous closing in which the news of vaccine has brought up optimism in the market. Jokowi also stated that vaccine will be free for all, which add to the euphoria. Meanwhile, the Rupiah exchange rate was weakening at IDR14,120. We estimate JCI will move in the range of 6,000 – 6,150 while waiting for interest rate decision. Today's recommendation: RALS, WEGE, UNTR, ASII.

Corporate Action

IPO: VICI (IDR100/share)

Rights Issue Cum Date: BEKS (IDR50/share)

RUPS: BKSW

Disclaimer On

RALS, WEGE, UNTR, ASII, HOKI, ENRG, META