MNCS Morning Navigator

20 Mei 2020

MNCS Morning Navigator 20 May 2020

Global Market Highlight
DJIA slipped by -1.59% on Tuesday (19/05) followed by the weakening of S&P 500 (-1.05%) and Nasdaq (-0.54%). These falls are due to profit taking actions caused by investors amid lingering fear of the economic impact from the Covid-19 towards the future. This is followed by the decline in the banking stocks namely: 1) Wells Fargo (-5.8%); 2) Bank of America (-2.7%); 3) Citigroup (-2.7%); 4) and JP Morgan (-2%). Furthermore, the US Department of Trade released new house construction data that plunged by 30.2% YoY in Apr-2020 after the previous decrease of 18.6% in Mar-2020. The market will look forward to several data releases today, such as: 1) UK Core Inflation Rate per Apr-2020; 2) Eurozone Core Inflation Rate per Apr-2020; 3) US MBA Mortgage Applications per Apr-2020.

Domestic Updates
BI decided to maintain the BI 7-Day Reverse Repo Rate (BI7DRR) at 4.50%, the Deposit Facility interest rate at 3.75%, and the Lending Facility interest rate at 5.25%. This decision considers the need to maintain exchange rate stability amid the uncertainty of global financial markets, although Bank Indonesia still evaluates room for lower interest rates as there is a need to encourage economic growth, especially in 2020. In addition to the steps that have been taken, Bank Indonesia has done the following: 1) Providing liquidity for banks in restructuring MSME loans and ultra-micro businesses; 2) Considering the provision of reserve requirement accounts to all banks; 3) Strengthening monetary operations; 4) Encouraging the acceleration of the digital economy.

Company News
  1. BBNI posted net income reaching IDR177 billion in 1Q20 (+4.3% YoY). Net Interest Income stood at IDR680 billion (+7.7% YoY) supported by the 2.5% YoY decrease in Interest expense. NIM is stable at 4.9%. Loan grew by 11.2% YoY. Meanwhile, provision increased by 31.4% YoY due to the implementation of IFRS 9. Furthermore, LDR stood at 92.3% and NPL at 2.4%. (Kontan)  
  2. CPIN recorded revenue of IDR13.88 trillion in 1Q20, a decrease of 3.94% YoY from IDR14.45 trillion in 1Q19. Two main contributor came from animal feed and broilers which contributed IDR6.56 trillion and IDR3.96 trillion respectively. The decline in sales was due to the 6.90% decrease in the animal feed segment. Thus, net profit recorded IDR922.25 billion (+13.68% YoY) in 1Q20. (Market Bisnis)  
  3. TBIG will be distributing dividend amounting to IDR606 billion. Dividend per share is at the level of IDR28/share, so the dividend yield is at 2.59%. Cum date will be at 29 May 2020 followed by recording date at 03 June 2020. The cash distribution date will be on 19 June 2020. (Kontan)  
IHSG Updates
JCI increased by +0.83% to 4,548.66 on Tuesday (19/05) although followed by a net foreign sell reaching IDR2.07 trillion. The flat index movement is caused by the unchanged 7DRRR at the level of 4.5% while consensus and the market expected that the BI rate would be cut down by 25 bps. While JCI rallied on the first session, the rate release caused a laggard on the index. On the other hand, the steps taken by BI were not a huge impact on the market movement. Meanwhile, the Rupiah exchange rate against the USD was appreciated at IDR14,770. We estimate JCI will move in the range of 4,474-4,660 while waiting for the Current Account as of 1Q20 and Loan Growth as of Apr-2020. Today's recommendation: GGRM, BMRI, WSKT, SMGR.

Corporate Action
Cash Dividends: BJBR, INDY

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