Global Market Highlight
DJIA rose by +0.54% on Monday (24/05) followed by S&P 500 (+0.99%) and Nasdaq (+1.41%). Wall Street closed higher, as tech continued its rebound and reopening stocks rallied amid easing pandemic restrictions as Covid-19 cases in the US hit their lowest since the pandemic began. Also contributing to positive sentiment on the reopening, New York City will allow all public school children to return to in-school learning in September. Moreover, the market will look forward to several data releases today, such as: 1) US CB Consumer Confidence; 2) Germany GDP Growth Rate; 3) Germany Ifo Business Climate.
Domestic Update
• The Minister of Finance applies 35% PPH for individuals earning IDR5 billion per year. The implementation of this policy is targeting high wealth individuals (HWI), where the people of this group are considered not affected by the pandemic. The PPh OP regulation is contained in Law (UU) Number 36 of 2008 concerning Income Tax where previously Article 17 of the Law stipulates that there are four layers of individual tax rates based on annual income (Kontan).
• The Minister of Finance also stated that the APBN deficit increased by 85.5% YoY to IDR138.1 trillion. State revenues until the end of Apr-20 amounted to IDR585 trillion (+6.5% YoY) or 33.5% of the APBN. This figure is up 6.5% compared to last year. Meanwhile, budget financing reached IDR392.2 trillion (+74.2% YoY) or 39% of the APBN (Bisnis.com).
• Furthermore, there was an addition of 819 new Covid-19 cases in Jakarta yesterday.
Company News
1. ERAA IJ posted revenue of IDR10.84 trillion in 1Q21, which increased 38.97% YoY (vs IDR7.80 trillion in 1Q20). However, COGS also increased from IDR7.02 trillion in 1Q20 to IDR9.64 trillion in 1Q21. ERAA posted a net profit of IDR278.19 billion in 1Q21 which increased 170.87% YoY (vs IDR102.70 billion in 1Q20) (Bisnis Indonesia). MNCS Comment: The solid performance will continue in 2H21E, supported by sales increase in all segments, especially IoT products which offer higher margins. In addition, the balance sheet is healthy with a leveraged position close to 0. ERAA is trading at 8.96/1.77x PE/PBV.
2. GOOD IJ posted revenue of IDR7.71 trillion in FY20, which decreased 8.54% YoY (vs IDR8.43 trillion in FY19). However, COGS also decreased from IDR5.91 trillion in FY19 to IDR5.56 trillion in FY20. GOOD posted a net profit of IDR259.41 billion in FY20 which decreased 37.77% YoY (vs IDR416.86 billion in 1Q20) (IQ PLUS). MNCS Comment: The decline in sales during the pandemic put pressure on GOOD's performance mainly due to the halt of business activities such as events and educational activities at schools. Management hopes that sales will start to recover in 2Q21, supported by the penetration of seasonal food and beverage products in the month of Ramadan and taking advantage of distribution through e-commerce. GOOD is currently trading at 46.37/4.68x PE/PBV.
3. SAMF IJ will distribute FY20 cash dividends of around IDR17.42/share or IDR89.2 billion of the total net profit of FY20 of IDR117.8 billion (Emiten News). MNCS Comment: The dividend distribution ratio of SAMF is 75% of FY20 net income, while the dividend yield offered is 0.91%, this value is lower than the FY19 yield of 2.78%. Currently SAMF is trading at 131.92x/12.51x PE/PBV.
IHSG Updates
JCI slipped by -0.16% to 5,763.63 on Monday (24/05) while net foreign buy reached IDR362.73 billion. JCI fell as most sectors weakened with transportation and basic industry leading. On the other hand, technology, finance and energy sectors still manage to rise. Statements provided by the Financial Minister seemed to have weighed on JCI. Meanwhile, the Rupiah exchange rate was flat at IDR14,355. We estimate JCI will move in the range of 5,735-5,850 while waiting for the 7DRR Interest Rate Decision which is expected to stay at 3.50%. Today's recommendation: INTP, BFIN, JSMR, WIKA.
Corporate Action
Pubex: MDKA, ERAA, SAMF
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