MNCS Morning Navigator 25 August 2020

Global Market Highlight

DJIA climbed +1.35% on Monday (24/08) tailed by S&P500 (+1%) and Nasdaq (+0.60%). Global stocks rallied again, driven by rising technology shares. In addition, efforts in developing  vaccines and new cases of Covid-19 patients in the US are increasingly boosting market players' optimism.  Even the Food and Drug Administration (FDA) allows plasma therapy which is able to reduce the death rate of Covid-19 patients by up to 35%.  Meanwhile, investors are also still awaiting Powell's speech on the Fed's efforts to improve the economy at the Wyoming conference on Thursday. So far, Powell has been working optimally so that the inflation rate will return to "healthy" and the number of unemployed continues to decrease in addition to the massive stimulus that is still ongoing today. Moreover, the market will look forward to several data releases today, such as: 1) US CB Consumer Confidence; 2) US New Home Sales; 3) Germany GDP Growth.

Domestic Updates

Only little of the National Economic Recovery program has been used at IDR174.79 trillion, or 25.1% of the ceiling of IDR695.2 trillion. The minister of Finance said that the budget used is tiny because the program is very new, so there is no data available, and the distribution mechanism is not ready. Besides, it also clashes with various other regulations. The proposed program needs to be more comprehensive before the ministry of finance will disburse more budget. Meanwhile, distributing salary subsidies and productive social assistance is much easier and will be distributed again this week. The salary subsidy of IDR600,000 for four months will be given to 15.7 million workers, with the requirement of earning less than IDR5 million per month. Meanwhile, productive social assistance will be given to 12 million micro-businesses, receiving IDR600,000 per month for four months.

Company News

1. BRIS IJ has a positive performance amid the pandemic, earning IDR117.2 billion in 1H20, a 229.6% YoY increase. This growth is above the average national growth and banking industry. This is in line with the growth increase in CASA or low-cost funds, which made the cost of funds lower. In other words, BRIS loans grew by 55.92% YoY to IDR37.4 trillion, due to an increase in the retail segment (SME, micro, and consumer).  A driver for this growth is the digitization of the loan process through the i-Kurma application (Kontan). MNCS Comment: We note that asset quality improvement remains on track. BRIS currently trades at 1.37x P/BV, slightly higher than the average small-mid bank peer valuation of 0.9x. BRIS is currently traded at 23.55x/1.37x PE/PBV.
2. TBLA IJ will distribute cash dividends of IDR132 billion from FY19 net profit, and this is equivalent to IDR25 per share. The dividend payout is 19.91% of last year’s profit, which reached IDR662.83 billion. The recording date is 31 August 2020, and the dividend payment will be made on 16 September 2020. At the current price of IDR825 per share, the dividend yield will be 3.03% (Kontan).  MNCS Comment: We believe fundamentally, the TBLA’s internal conditions are improving. Various sites and productivity enhancement efforts are being continuously implemented. The dividend provide by TBLA is still interesting as the dividend yield will be 3.03%. TBLA is currently traded at 6.79x/0.77x PE/PBV.
3. ASRI IJ will issue a maximum of USD485 million or IDR6.74 trillion (exchange rate of IDR13.901/USD 1) worth of senior debt securities. The bonds will be issued in two series, in which the first will have a tenor of 3 years and 6 months, and the second will have a tenor of 5 years. The bonds have a maximum interest rate of 13% per year, and will be paid every semester. The bonds will be used to pay off the remaining 2021 notes and 2022 notes, including interest fees (CNBC). MNCS Comment: This additional funding is part of ASRI's plan to maintain the company's cash flow amidst a challenging business in the property sector. ASRI is currently traded at 0.26x PBV.

IHSG Updates

JCI rose by +0.08% to 5,277.04 on Monday (24/08) followed by net foreign sell reaching IDR638.68 billion. JCI was flat amidst the rising Regional Asia Indices due to lack of domestic sentiment as US-China tension eases. Furthermore, Indonesia is currently developing our own vaccine called Merah Putih and not only relying on China's Sinovac, this may uplift the market in the future. Meanwhile, the Rupiah exchange rate was weakening at IDR14,670. We estimate JCI will move in the range of 5,220-5,330 while waiting for Loan Growth data release. Today's recommendation: ACES, SMRA, MEDC, ADRO.

Corporate Action

Cash Dividend Date: MREI, MOLI

RUPS: PWON

Disclaimer On

ACES, SMRA, MEDC, ADRO, BRIS, TBLA, ASII