MNCS Morning Navigator 17 September 2020

Global Market Highlight

DJIA was flat (+0.13%) on Wednesday (16/09) on the other hand S&P500 and Nasdaq dropped by -0.46%/-1.25%. The Fed announced to hold its benchmark interest rate near zero percent and will hold on for a long time until US reached full employment and inflation rate at 2%. The projected unemployment rate was also lowered to 7.6% from 9.3% which was already above the 8.4% unemployment rate for August yesterday. Moreover, the market will look forward to several data releases today, such as: 1) US Initial Jobless Claims; 2) Japan Interest Rate Decision; 3) Eurozone Core Inflation Rate.

Domestic Updates

Ministry of Finance stated that health budget reaches 6.2% of the state budget which equals to IDR2,747.5 trillion. Furthermore, the government has allocated IDR 130.7 trillion of health budget for central government spending in FY21. In addition, the budget allocation for health is also contained in the eight focus areas of National Health System reform (SKN), namely the development of information technology in health services, strengthening health financing, pharmacy independence, improving disease control and immunization, strengthening health centers, improving hospitals and health services, improving the quality and distribution of health personnel, and strengthening health security.

Company News

1.       WSKT IJmanaged to obtain a construction contract amounting to IDR1.08 trillion consist of three infrastructure project. So the total contract has reached IDR9.6 trillion as of September 2020. WSKT is assigned as a contractor for Way Sekampung Dam Phase IV, Jragung Dam Phase I, and Sewerage Jambi B2. Progress for Way Sekampung Phase 2 has reach 92.92% in August and is set to be completed this year. Furthermore, WKST is also working on nine other dams all over Indonesia (Investor.id) MNCS Comment: We evaluate that this project will give a little breather for WKST’s performance in FY20E, while we estimate that there still will be a significant decline. WSKT is currently traded at 0.53x PBV.
2.       ASII IJcar sales reached 16,773 units in August 2020, which grew 65.41% MoM. The biggest contribution came from the Toyota followed by Daihatsu and Isuzu. Overall domestic car sales reached 37,277 units, so that Astra's market share reached 45%. Thus, the cumulative sales for the January-August 2020 period amounted to 166,418 units which dropped by 51.7% YoY compared to the same period last year of 344,581 units (Kontan) MNCS Comment: We note the recovery of car sales is still slow especially with the reimplementation of PSBB. While the realization of Gaikindo car sales only reached around 50% of their car sales target in FY20E amounting to 600.000 units. Furthermore, ASII will be benefited from the new car tax easing that is proposed but has not yet been approved by the government. ASII is currently traded at 8.51x/1.27x PE/PBV.
3.       GIAA IJrecorded a decrease in traffic for both passengers and cargo transported by 72% YoY and 50% YoY respectively. In addition, GIAA also experienced a decline in domestic production by 55% YoY and international production by 88% YoY while the segment contributed 51% to 75% of the airline's total revenue. Thus, management estimates that there will be a decline in revenue of 51-75% YoY by the end of this year with a decrease in net profit of more than 75% YoY (Kontan). MNCS Comment: We note that transportation especially the aviation sector is one of the most impacted by the Covid-19 pandemic. It seems that the estimated decline on top and bottom line is in line with the decrease on traffic as PSBB is reinstated.

IHSG Updates

JCI dropped by -0.83% to 5058.48 on Wednesday (16/09) followed by net foreign sell reaching IDR850.54 billion. The decrease continues as investors are waiting for the interest rate decision that will be announced, consensus estimated that there will be no rate cut this time as the government evaluates the economic progress on the current rate. Furthermore, banking sector has not fully adjusted their rates yet as they are catching up with previous rate cuts as well as loan restructure.Meanwhile, the Rupiah exchange rate was strengthening at IDR14,843. We estimate JCI will move in the range of 5,000-5,220 while waiting for 7 Days Repo Rate Decision. Today's recommendation: BRPT, PGAS, AKRA, UNTR

Corporate Action

RUPS: KOPI

Disclaimer On

BRPT, PGAS, AKRA, UNTR, GIAA, WSKT, ASII