MNCS Morning Navigator 23 September 2020

Global Market Highlight

DJIA rose by +0.52% on Tuesday (22/09) followed by S&P 500 (+1.05%) and Nasdaq (+1.71%).Index movement was boosted by the technology sector which offset the weakness in the financial sector. Covid-19 cases continues to increase by 52,000 cases and the ongoing uncertainty of fiscal stimulus due to the replacement of Supreme Court judges are weighing down sentiment for investors.  Meanwhile, the Fed emphasized that the central bank remains committed to using its tools as long as necessary to ensure that the economic recovery take place immediately. Moreover, market will look forward to several data releases today such as: 1) US Markit Manufacturing PMI; 2) US House Pricing Index; 3) Eurozone Markit Manufacturing PMI.

Domestic Updates

Minister of Finance estimates the economic growth for the 3Q20 is in the range of -2.8% to -1%. Thus, the economic projection for the full year is estimated to be at -0.6% to -1.7%. The government's projection is in line with several international institutions predicting Indonesia's economy to be in a negative zone, including The Organization for Economic Co-operation and Development (OECD) at -3.3%, Asian Development Bank (ADB) at -1%, Bloomberg  at -1%, the International Monetary Fund (IMF) at -0.3%, and the World Bank 0%.

Company News

1.       PTBA IJ coal exports reached 41.4% of total sales which reached 12.5 million tonnes as of June 2020. Meanwhile, domestic coal sales contribute 58.6% or around 7.3 million tonnes. Production reached 11.9 million tons as of June 2020 accompanied by the performance of coal transportation which also shows a positive performance. During 1H20, coal transportation capacity was recorded at 11.7 million tons. Meanwhile PTBA will not undertake exploration for additional resources beyond the area that have obtained permits covering until March 2021 (Emiten News). MNCS Comment: PTBA’s export decrease must be due to the import limitation on several countries, but with the latest cooperation with Pelindo which will expand PTBA’s distribution through the rivers and seas it will be an advantage for coal transport to increase. PTBA is currently traded at 6.37x/1.17x PE/PBV.
2.       CSRA IJ managed to record a decent sales growth of 22.31% YoY to IDR273.33 billion in 1H20. Sales from palm oil grew by 6.87% YoY, fresh fruit bunches increased by 65.13% while sales of palm kernel were recorded at IDR19.65 billion followed by other sales at IDR255.87 million. CSRA managed to reap a staggering net profit of IDR43.04 billion or rose 871.56% YoY in 1H20 (Kontan). MNCS Comment: Even amid the pandemic, CSRA’s performance were brilliant as their bottom line sky rocket. CSRA is further benefitted from the gain on foreign exchange as well as the uptrend on CPO price. CSRA is currently traded at 8.05x/1.24x PE/PBV.
3.       TOTO IJ net sales reached IDR763.96 billion in 1H20 which decreased by 21.78% YoY. The fitting sales segment decline of 25.95% YoY, sanitary ware segment also recorded a decline in sales of 11.11% YoY to IDR368.80 billion while the deepest sales decline occurred in the kitchen system equipment segment, which fell by 51.75% YoY. Thus, TOTO recorded a net loss of IDR12.31 billion in 1H20 (Kontan). MNCS Comment: TOTO’s performance were badly impacted as all of the segments were recording a decline, this is due to the large scale social distancing, forcing people to only prioritize basic needs while avoiding unnecessary activity, resulting in TOTO’s decline. TOTO is currently traded at 1.09x PBV.

IHSG Updates

JCI slipped by -1.31% to 4,934.09 on Tuesday (22/09) followed by net foreign sell reaching IDR632.50 billion. JCI continues to drop amid the weakening on Regional Asia Indices still due to the major bank scandal. While all sectors are decreasing in the JCI, this is due to a negative sentiment from the domestic side when the Ministry of Finance ensured that Indonesia will enter a recession in the 3Q20 and downgrade their economic projections. Meanwhile, the Rupiah exchange rate was weakening at IDR14,785. We estimate JCI will move in the range of 4,920-5,187 while waiting for Money Supply data release. Today's recommendation: BBCA, AKRA, MAIN, BEST.

Corporate Action

RUPS: BRPT, KJEN, CMPP

Disclaimer On

PTBA, CSRA, TOTO, BBCA, AKRA, MAIN, BEST