MNCS Morning Navigator 23 October 2020

Global Market Highlight

DJIA increased by +0.54% on Thursday (22/10) followed by S&P 500 (+0.52%) and Nasdaq (+0.19%). Global stocks finally regained their strength after the release of several companies financial statements that recorded brilliant performance in 3Q20, this is a form of investor appreciation for the improved performance in the midst of the increasing Covid-19 case. Meanwhile, NatWest Markets Global predicts the US fiscal stimulus package will not yet be available ahead of next month's elections, given the uncertainty that there will be high volatility in the market. Moreover, the market will look forward to several data releases today, such as: 1) US Presidential Debate; 2) US PMI Markit Manufacturing; 3) Japan Inflation Rate.

Domestic Updates

The government has set IDR51.2 trillion for the National Health Insurance (JKN) program in the 2021 APBN. The JKN program allocation is around 30.1% of the health budget which is IDR169.7 trillion in 2021. There will be JKN contribution assistance for non-wage earner (PBPU) and non worker (BP) participants within class III amounting to IDR2.4 trillion, so the subsidy is sustainable. While the contribution assistance for PBI reached IDR48.8 trillion.

Company News

1.        BJTM IJ posted a net profit of IDR1.1 tn (-3.59% YoY) in 9M20, due to the -7.79% YoY drop in Non-interest income despite a rise of 4.37% YoY in interest income. While NIM stood at 5.70%. Non-Performing Loan (NPL) remains at 4.49% level in 9M20 with the net NPL at 1.85%. Subsequently, BJTM has restructured IDR1.69 tn of loan as of 9M20 equals to 4.20% of the total loan, we see that the loan restructure has eased down since July 2020. (Analyst Meeting). MNCS Comment: BJTM managed to sustained their performance during the tough time by focusing on strengthening the technology breakthrough. BJTM has been heightening their bank digitalization, reflected on the increasing transaction volume on both mobile internet banking. BJTM is currently traded at5.70x/0.96x PE/PBV.
2.       LINK IJ recorded 6.76% YoY increase in revenue to IDR2.95 trillion in 3Q20. The revenue consist of subscription fees for internet and network broadband services amounted to IDR1.60 trillion, subscription fees for cable television services of IDR1.20 trillion, and other income of IDR144 billion. However, cost of revenue increased by 14.48% YoY along with selling expenses which grew by 33.33% YoY. So, LINK posted a decrease in profit of 9.59% YoY to IDR698 billion in 3Q20 (Market Bisnis). MNCS Comment: The increase on top line is essentially from the subscribers growth in 3Q20. Though, LINK seems to not have implement efficiency causing the bottom line to suffer. Furthermore, LINK is currently in the process of being acquired by foreign companies which will resulted in fresh fund for the company. LINK is currently traded at 6.45x/1.32x PE/PBV.
3.       UNVR IJ recorded a slight increase of 0.31% YoY in revenue to IDR32.46 trillion in 3Q20. Domestic sales rose by 0.77% YoY while export sales decreased by -8.92% YoY. The increase in marketing and sales expenses and general and administrative expenses by 8.03% YoY/13.16% YoY has caused net profit to slipped a little to IDR5.44 trillion (-1.27%) in 3Q20 (Kontan). MNCS Comment: Seems flat but this has proven that UNVR managed to maintained their performance in spite of the uncertainty. The export decrease must have been caused by a tight import regulation by several countries. Furthermore, UNVR has planned to replace their executives which we hope will bring a new direction to the company. UNVR is currently traded at 41.30x/46.17x PE/PBV.

IHSG Updates

JCI fell flat by -0.09% to 5,091.82 on Thursday (22/10) followed by net foreign sell reaching IDR262.45 billion. JCI remains sideway along with the slip on the regional Asia indices. Investors seems to be waiting for a sentiment to move the market as there are barely any. Meanwhile, the Rupiah exchange rate was weakening at IDR14,660. We estimate JCI will move in the range of 5,067 – 5,135. Today's recommendation: JSMR, ACES, EXCL, WSKT.

Corporate Action

RUPS: NZIA, DIGI, CLEO

Disclaimer On                                                     

JSMR, ACES, EXCL, WSKT, LINK, UNVR, BJTM