MNCS Morning Navigator 19 November 2020

Global Market Highlight

DJIA slipped by -1.16% on Wednesday (18/11) followed by S&P 500 (-1.16%) and Nasdaq (-0.82%). Final data on the Pfizer vaccine test results show that the efficacy rate went up from 90% to 95%.  However, this good news has not been able to significantly boost the rate of global stock exchanges. The number of new Covid-19 patients, which continues to set records in the US, is still overshadowing market. In addition, US retail sales data per October showed unsatisfactory results which makes global exchanges tend to be sluggish. Market players are also looking forward to the release of jobless claims data which is projected to decline (previously 6.7 million people). Moreover, the market will look forward to several data releases today, such as: 1) US Continuing Jobless Claims; 2) Switzerland Balance of Trade; 3) Eurozone Current Account.

Domestic Update

Village funds allocated in FY20E APBN amounted to IDR71.19 trillion in which the distribution had reached IDR38.9 trillion or 54.63%. The proceeds has been used for ‘Padat Karya Tunai Desa (PKTD)’ amounting to IDR11.11 trillion, response to Covid-19 amounting to IDR3.17 trillion, village funds BLT of IDR18.84 trillion  and other infrastructure development of IDR5.78 trillion. The remaining budget will be distributed to the BLT funds and PKTD, in which if the 55% of remaining budget allocated to the PKTD wages, it is expected to absorb a workforce of 7.7 million workers.

Company News

1.       HMSP IJrecorded a decrease in revenue of -12.55% YoY to IDR67.78 trillion in 9M20. Based on the product segmentation, sales from local machine-made kretek contributes most of the 2020 total revenue (66.81%) while the hand-rolled kretek cigarettes contributes 22.67%. HMSP booked a net income decrease by -32.25% to IDR6.91 trillion. However, on quarterly basis HMSP's revenue soared by 9.50% QoQ while net profit followed suit by 29.37% QoQ in 3Q20 (Market Bisnis). MNCS Comment: Cumulatively, HMSP’s volume during 9M20 reached 58.3bn sticks (-19.03% YoY), in line with our estimate. Volume decreased primarily reflecting the impact of significant excise tax-driven ASP increases and lower average daily consumption due to pandemic.HMSP is currently traded at 18.75x/6.03x PE/PBV.
2.        SRIL IJis currently negotiating a 2-year tenor extension for a syndicated loan amounting to USD350 million (from 2022 to 2024) in which the decision is expected to be obtained in Feb-21. In 2020, SRIL has a maturing debt (USD42 million) consist of a short-term debt of USD2million and MTN of USD40 million which will be paid in Dec-20. Moreover, for 2021, SRIL has global bonds maturing (USD150 million), and debts of USD33 million. There are also a maturing bank loan (USD3 million) in 2023, maturing bond (USD150 million) in 2024 and maturing global bonds (USD225 million) in 2025 (Market Bisnis). MNCS Comment: A tenor extension will prevent the pressure on corporate liquidity due to lower working capital amidst a softer demand on apparel and footwear globally as a result of the Covid-19 outbreak. SRIL is currently traded at 3.23x/0.48 PBV.
3.        BRMS IJ revenue in 8M20 has reached USD3.19 billion. BRMS also managed to maximize the production capacity and resulted in 54.55kg of metal bullion and 17.76kg of gold metal. Hence, the net income reported to be USD2.11 million in 8M20 (Market Bisnis). MNCS Comment: The increase on BRMS top and bottom line from their position in FY19 was supported by the gold production that has started this year. BRMS is currently traded at 146.83x/0.33x PE/PBV.

IHSG Updates

JCI increased by +0.50% to 5,557.52 on Wednesday (18/11) followed by net foreign buy reaching IDR722.25 billion. JCI is continuing it's uptrend align with the majority of global and regional Asia indices. Despite the drop in agriculture sector, JCI was still backed by the rise on finance and mining sector. This is due to further news on Tesla's factory construction in Indonesia as well as the signing on investment contract from LG over the battery factory for the Indonesian battery holding has pump ANTM, INCO and TINS to rise. Moreover, 7DRR will be decided today which is expected to stay at 4% following the economic recovery. Meanwhile, the Rupiah exchange rate was weakening at IDR14,070. We estimate JCI will move in the range of 5,381 – 5,570. Today's recommendation: GGRM, ITMG, BBRI, GIAA.

Corporate Action

RUPS: PZZA

Disclaimer On

GGRM, ITMG, BBRI, GIAA, BRMS, SRIL, HMSP