MNCS Morning Navigator 24 November 2020

Global Market Highlight

DJIA increase by +1.12% on Monday (23/11) followed by S&P 500 (+0.56%) and Nasdaq (+0.22%). Global stocks strengthened, followed by the development of the Covid-19 vaccine, including Pfizer, owned by BioNTech, Moderna and Gamaleya, with an effectiveness level of 90% - 95%. The vaccine will soon be endorsed by US and EU health officials so it is hoped vaccination can start before the end of the year. On the other hand, JPMorgan economists predict that US GDP will fall by -1% in 1Q21 due to the increase in Covid-19 cases in several US states which triggered social restrictions and put the economy back on hold. Moreover, the market will look forward to several data releases today, such as: 1) US CB Consumer Confidence; 2) Germany GDP Growth Rate; 3) HK Balance of Trade.

Domestic Update

Indonesia is selected to host the G20 Summit in 2022, accelerated by 1 year (previously in 2023). Based on that decision, Indonesia will soon join the Troika of the G20 Summit in 2021. The current G20 Summit presidency is Saudi Arabia and for 2021, it will be held by Italy.

Company News

1.       UNVR IJ announced to distribute interim dividends of IDR3.31 trillion for 5.73 billion shares of the company. This brings out the dividend payout of 91.6% of the company’s net profit. Dividend per share is IDR87 with dividend yield of 1.12%. The cum date will be at 30 November 2020 (Market Bisnis). MNCS Comment: UNVR managed to maintain it's performance therefore a dividend distribution is still expected amid the hard time as many blue chip companies choose not to distribute dividends. UNVR is currently traded at 41.17x/46.03x PE/PBV.
2.        SAME IJplanned to acquire Elang Medika Corpora (EMC) amounting to IDR1.25 trillion amidst the loss experienced since FY19 to 9M20. Management viewed that the expansion could boost future performance of the company. Even though other revenue segments experienced a growth, the service segment fell by 13.35% YoY to IDR343.12 billion resulted in net loss of IDR457.66 billion in 9M20 (Market Bisnis). MNCS Comment: The acquisition will complement SAME's beauty line of business.  that way, SAME has the potential to become a hospital specializing in beauty in the Indonesian hospital industry. SAME is currently traded at 2.02x PBV.
3.        ZINC IJ reported a decrease in revenue of -41.09% YoY to IDR380.46 billion, mainly due to delay in shipping caused by flood disaster in June 2020. ZINC booked net profit of IDR27.66 billion. Supported with increase in iron ore prices of 34.7% in 2020, the management targeted 30.000 ton of sales per month. ZINC has 23 billion ton of unexplored mineral reserve of iron ore and thus viewed potential of 23.33 billion ton of mineral reserves as reported in August 2020 (Market Bisnis). MNCS Comment: Though the coal business was on an downtrend demand, ZINC is still supported by other metal revenue. ZINC is currently traded at  93.77x/4.41x PE/PBV.

IHSG Updates

JCI rose by +1.46% to 5,652.76 on Monday (23/11) followed by net foreign buy reaching IDR325.24 billion. JCI rise again strongly backed by basic industry especially as cement stocks increased due to a positive outlook from hard infra construction next year, this is followed by mining from coal stocks as outlook from gasification project is coming clear and lastly infrastructure following the 5G network expansion next year. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,149.We estimate JCI will move in the range of 5,520 – 5,715 while waiting for motorbike sales data release. Today's recommendation: ACES, MIKA, WTON, PGAS.

Corporate Action

RUPS: SAME, KRAS, BBSI

Disclaimer On

ACES, MIKA, WTON, PGAS, UNVR, SAME, ZINC