MNCS Morning Navigator 23 December 2020

Global Market Highlight

DJIA slipped by -0.67% on Tuesday (22/12) followed by S&P 500 (-0.21%) while Nasdaq rose by +0.51%. Market closed indifferently as optimism over the Covid-19 aid bill is offset by the emergence of a new variant of the virus and a number of lockdowns and travel restrictions to contain it. US lawmakers finalized a USD2.3 trillion year-end expenditure bill and stimulus package. President-elect Joe Biden warned of the "darkest days" of the pandemic still to come and called on Congress to prepare early next year to produce another stimulus package. Moreover, the market will look forward to several data releases today, such as: 1) US PCE Price Index; 2) US Durable Goods Order; 3) US Michigan Consumer Sentiment.

Domestic Update

• The Economic Minister estimated that the Indonesian economy is estimated to grow -2% to 0.6%. This means that the Indonesian economy was showing signs of slow recovery. This makes the government even more optimistic, economic growth in 2021 will reach the target of around 4.5% to 5.5% which is also driven by government spending which recorded a growth of up to 9% for spending on handling the impact of the Covid-19 pandemic.
• Jokowi has replace six minister in his current cabinet, as follows: 1) Minister of Social Affairs: Tri Rismaharini (Previously, Juliari Batubara); 2) Minister of Marine Affairs and Fisheries: Sakti Wahyu Trenggono (Previously, Edhy Prabowo); 3) Minister of Tourism and Creative Economy: Sandiaga Uno (Formerly, Wishnutama Kusbandio); 4) Minister of Religion: Yaqut Cholil Quomas (Formerly, Fachrul Razi); 5) Minister of Trade: M. Lutfi (Previously, Agus Suparmanto); 6) Minister of Health: Budi Gunadi Sadikin (Previously, Terawan Agus Putranto)
• Furthermore, there is an additional of 1.311 new Covid-19 cases in Jakarta yesterday.

Company News

1.        PGAS IJ has absorbed capital expenditure or capital expenditure (capex) of USD168 million in which USD77 million was used for its upstream (upstream) business such as development of existing oil & gas blocks, including the Pangkah Barat and Sidayu fields. While USD88 million was used for the downstream (downstream) business, including the construction of the Rokan oil pipeline, the construction of the Gresik-Semarang gas transmission pipeline, distribution pipeline development, and construction of the Kuala Tanjung distribution pipeline. And lastly a total of USD3 million was used for the support segment, namely to develop fiber optics (Kontan). MNCS Comment: With the capital expenditure to move several mines, it will increase PGAS distribution which has the potential to increase PGAS revenue in the future. PGAS is currently traded at 38.44x/1.08x PE/PBV.
2.        PTPP IJ has budgeted capital expenditure of IDR6.52 trillion for 2021. This value is 92.89% YoY higher than this year's capital expenditure of IDR3.38 trillion. It consists of investments for carry-over projects amounting to IDR4.36 trillion and new investments of IDR1.89 trillion (Market Bisnis). MNCS Comment: The budgeted capex by PTPP will be a preparation in 2021 in facing several tenders, where the government starts to focus on infrastructure development. PTPP is currently traded at 316.55x/1.02x PE/PBV.
3.        TBLA IJ will continue to develop the palm oil and sugar business because it is a consumer product so that it continues to be needed by the community where TBLA prepares a capex of approximately IDR340 billion, the source of which is a combination of internal cash and bank loans. As of 9M20, TBLA recorded sales of IDR8.07 trillion or grew by 27% YoY (Kontan). MNCS Comment: We believe the performance of TBLA in 4Q20 and FY21F will increase along with the rising commodity price. TBLA is currently traded at 8.41x/0.81x PE/PBV.

IHSG Updates

JCI dropped by -2.31% to 6,023.29 on Tuesday (22/12) followed by net foreign sell reaching IDR386.50 billion. JCI dropped due to profit taking as it is predicted for a healthy correction. All sectors deeply weakened, while the market is also observing the minister reshuffle result which was announced by President Jokowi at the market closing. Meanwhile, the Rupiah exchange rate was weakening at IDR14,205. We estimate JCI will move in the range of 5,911 – 6,195 while waiting for loan growth data release. Today's recommendation: BSDE, MAPI, ELSA, UNTR.

Corporate Action

RUPS: MTRA, KLBF, MSIN

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BSDE, MAPI, ELSA, UNTR, PGAS, PTPP, TBLA