23 Juni 2020
MNCS Morning Navigator 23 June 2020
Global Market Highlight
DJIA rose slightly by +0.59% on Monday (22/06) followed by S&P 500 (+0.65%) and Nasdaq (+1.11%). These increases was still supported by the euphoria caused by the lockdown easing followed by a positive sentiments from The Fed data release of National Activity Index which rose up to 2.61 from previously -17.89, being the highest in history which give optimism towards the market. Moreover, the market will look forward to several data releases today, such as: 1) US Markit Manufacturing; 2) UK PMI Markit Manufacturing; 3) Eurozone PMI Markit Composite.
Domestic Updates
Bappenas targets the level of inequality or the Gini ratio in 2021 to be around 0.377 - 0.379 points. During the Covid-19 pandemic, to reduce this ratio due to the impact of the pandemic the expansion of social protection has been carried out such as the provision of basic food needs, electricity tariff discounts, the BPJS program, the Family Hope Program (PKH), pre-employment cards, fiscal stimulus for MSMEs and reallocation adjustments transfers to regions through the Special Allocation Fund (DAK).
Company News
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TINS IJ recorded a slight increase in revenue of 5.3% YoY in 1Q20 from IDR4.16 trillion to IDR4.38 trillion. The majority of revenue comes from export market sales which contributed 96% or IDR4.21 trillion while the rest, around IDR174.72 billion came from domestic market sales. The increase in income was also accompanied by an increase in cost of revenue by 34.9% YoY. As a result, the company experienced a net loss of IDR412.85 billion. Whereas in 1Q19, TINS still posted a net profit of IDR301.27 billion. (Kontan) MNCS Comment: The decline in performance was still caused by the disruption in operation caused by Covid-19 outbreak. TINS is currently traded at 0.89x PBV.
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MDKA IJ plans to do a share buyback of 2% of the company's issued and paid-up capital with the budget amounting to IDR568 billion for the corporate action. Management explained that the share buyback is intended so that the company gets flexibility to maintain price stability. Based on the latest stipulations, issuers who carry out share buybacks will get a corporate income tax (PPh) rate cut by 3% from 19%. (Kontan) MNCS Comment: The management has not yet stated the exact price of stock for the buyback, as the price has bounce back from their lowest level at IDR905 in March 2020. MDKA is currently traded at 4.21x PBV.
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INDY IJ will continue to increase productivity and cost efficiency so that it can have a positive impact on EBITDA. Meanwhile, during 4M20, the company through its subsidiary Kideco recorded production of around 11.5 million tons of coal and another subsidiary of PT MUTU of 600,000 tons of coal. (Market Bisnis) MNCS Comment: With this strategy INDY will be able to increase bottom line margin. INDY is currently traded at 0.31x PE.
IHSG Updates
JCI slipped slightly by -0.47% to 4,918.83 on Monday (22/06), followed by a net foreign sell reaching IDR513.57 billion. This was due to the reluctance in investors to trade risky assets caused by the concern over the re-spread of the Covid-19. Furthermore, there is an additional of 954 cases in Indonesia, making the total cases to reach 46,845 as of yesterday. On the other hand, the Minister of Finance states that the economy will return to positive growth, or estimated to reach 1.4% in the 3Q20 and 4Q20, provided that state spending was well absorbed and PSBB continued to be relaxed. Meanwhile, the Rupiah exchange rate against the USD was weakening at IDR14,150. We estimate JCI will move in the range of 4,880-5,020 while waiting for Loan Growth Data as of May 2020. Today's recommendation: TLKM, ICBP, BRPT, SMGR.
Corporate Action
Recording Date: UNTR, JSMR
Cash Dividend Date: ITMG
Disclaimer On
TLKM,
ICBP,
BRPT,
SMGR,
TINS,
MDKA,
INDY
