MNCS Morning Navigator 19 October 2020

Global Market Highlight

DJIA rose by +0.39% on Friday (16/10) followed by S&P 500 (+0.01%) though Nasdaq weakened by -0.36%. Stock price movements were affected by gains in the Utilities, Healthcare and Industrials sectors which led shares higher while losses in the Oil & Gas, Consumer Services and Consumer Goods sectors led shares lower. Meanwhile Nasdaq were being dragged Calyxt Inc which was down 21.27%, and Adaptimmune Therapeutics Plc which was down 20.13%. Moreover, the market will look forward to several data releases today, such as: 1) China GDP 3Q20; 2) China Retail Sales; 3) China Unemployment Rate.

Domestic Updates

GAIKINDO reported car sales of September increased by 30.2% MoM to 48,554 units. Though on a yearly basis, car sales dropped by 47.9%. GAIKINDO stated that car sales has shown recovery from June 2020, though it is undeniable that Covid-19 has disrupt all sectors. The car sales target remains at 600,000 unit while the realization has only reached 62%.

Company News

1.       ASII IJ has sold 25,799 cars in September 2020. Toyota brand still dominates car sales by 13,234 units. followed by Daihatsu (11,204 units), Isuzu (1,314 units), UD Trucks (38 units), and Peugeot (9 units) while 39.03% were LGCC. Management hope that this gradual increase in sales will continue until the end of the year, so that the automotive industry can contribute to restoring the national economy (IDN Financials). MNCS Comment: ASII as the market leader would surely recover faster, we hope that the 0% down payment law from the government will further boost car sales in the future. ASII is currently traded at 8.77x/1.31x PE/PBV.
2.       BSDE IJ recorded marketing sales of IDR 4.7 trillion in 3Q20 which is equivalent to 65% of the pre-sale target set by the company of IDR7.2 trillion in FY20E. This was supported by the successful sales of a number of new products in 3Q20, both residential and commercial segments, a.l. Freja House, Freja Suites, Loka 65, 92 Avenix, YC Hub in BSD City and O2 + Urban Pop at Grand Wisata - Bekasi. The BSDE marketing sales details consist of several segments. The commercial segment recorded the highest marketing sales of IDR1.6 trillion or 34% of total pre-sales revenue in the January - September 2020 period (Market Bisnis). MNCS Comment: The marketing sales achievement deserves appreciation. This is due to BSDE's strategy of launching new products in the 3Q20. Besides that, compact houses are also still a property that BSDE relies on. BSDE is currently traded at 0.57x PBV.
3.       HRTA IJ stated that gold sales is spiking and contributes to 20% of revenue. While the rest of income still came from jewelry. The contribution of gold is increasing, considering that the company just launched it at the end of last year and its portion throughout last year was still relatively small. Meanwhile, jewelry products with low gold content are more attractive as 60% -70% of HRTA's jewelry sales come from lower gold content, and in terms of profit margins this product is better than jewelry with higher gold content (Kontan).  MNCS Comment: We believe rising demand on precious metal (LM) will continue along the year as management is optimistic that the sales contribution of precious metals will grow 20%-25% YoY in FY21E. HRTA is currently traded at 5.61x/0.69x PE/PBV.

IHSG Updates

JCI dropped by -0.03% to 5,103.41 on Friday (16/10) followed by net foreign sell reaching IDR493.87 billion. Index movement was flat amid mixed closing on Regional Asia indices. Six out of nine sectors rose, led by ADRO and ASII. Coal price rise must have driven the stock while ASII was supported by the car sales increase. Meanwhile, the Rupiah exchange rate was weakening at IDR14,698. We estimate JCI will move in the range of 5,000 – 5,187 while waiting for motorbike sales data release. Today's recommendation: BBCA, INCO, PGAS PWON.

Corporate Action

RUPS: BRAM

Disclaimer On

BBCA, INCO, PGAS PWON, HRTA, BSDE, ASII