MNCS Morning Navigator 25 November 2020

Global Market Highlight

DJIA increase by +1.54% on on Tuesday (24/11) followed by S&P 500 (+1.62%) and Nasdaq (+1.31%). The "green light" of the US administration's transition from Trump to Biden prompted the stock to rally. Various administrative resources and facilities have been opened up indicating that US political turmoil is starting to subside. In addition, Biden also formed a cabinet with a focus on building a sustainable economy rather than aggressive regulation. This was responded positively by market players. On the other hand, the US PMI data for November continued to improve. The Manufacturing PMI was at 56.7 (previously 53.4) and the Service PMI was at 57.7 (previously 56.9). Even though the Covid-19 case is still on the rise, investors are more focused on future economic recovery in line with the presence of various vaccines such as Pfizer, Moderna and most recently Sputnik V (Russia). Moreover, the market will look forward to several data releases today, such as: 1) US GDP Growth Rate QoQ 2nd Est; 2) US Core PCE Price Index YoY; 3) US Michigan Consumer Sentiment Final.

Domestic Update

LPS lowered the guarantee interest rate at commercial banks and rural banks (BPR) by 50 basis points (bps) or 0.5% for deposits denominated in rupiah. Meanwhile, deposits in foreign currency fell 0.25%. With this decrease, the LPS guarantee interest rate in the banking sector will become: 1) The rupiah deposit guarantee interest rate in commercial banks from 5% to 4.5%; 2) Interest rate for guaranteeing foreign currency deposits at commercial banks from 1.25% to 1%; 3) The interest rate for guaranteeing rupiah deposits at BPRs has decreased from 7.50% to 7%.

Company News

1.       BRIS IJ was officially upgraded as a BUKU III commercial bank after recording a core capital of IDR5.057 trillion in September 2020. BRIS recorded a revenue growth of 238% YoY to IDR109.5 billion in 3Q20 with DPK growth of 78% YoY and financing growth of 57% YoY (Market Bisnis). MNCS Comment:  We believe that this is a very good catalyst for BRIS, becoming the first sharia bank in Buku III as well as the largest sharia bank. This will contribute to another sentiment from sharia banks merger. BRIS is currently traded at 51.62x/2.48x PE/PBV.
2.        WSBP IJrevenue experienced a significant decrease of 73.86% YoY to IDR1.436 trillion. The COGS fell by 61.92% to IDR4.509 trillion resulted in a gross profit of IDR281.09 billion (vs IDR985.077 billion in 3Q19). As the result, the company reported a net loss of IDR1.14 trillion in 3Q20 (Market Bisnis). MNCS Comment: The decline occurred due to the lack of tenders and delays in payments, which resulted in a net loss experienced by WSBP in 3Q20. WSBP is currently traded at 1.02x PBV.
3.        SMSM IJ aims to distribute IDR115.17 billion of interim dividend for 5.76 billion outstanding shares. Dividend per share equivalent to IDR20 with dividend yield of 1.45%. The cum date will be at 01 December 2020 (Emiten News). MNCS Comment: SMSM seem to maintain their performance as of 9M20 though car sales demand dropped and we assume parts will followed suit. While the dividend distribution is a solid statement to make amid the pandemic stricken economy. SMSM is currently traded at  16.90x/3.58x PE/PBV.

IHSG Updates

JCI rose by +0.85% to 5,701.03 on Tuesday (24/11) although followed by net foreign sell reaching IDR150.06 billion. JCI still standing strong, in line with the strengthening on the Regional Asia and global indices. JCI is still supported by all sector except mining due to the drop on gold price. While the increase was led by property, trade and basic industry. Meanwhile, the Rupiah exchange rate was weakening 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: UNTR, BBRI, BRPT, PTBA.

Corporate Action

RUPS: UNVR, SIDO, ESSA

Disclaimer On

UNTR, BBRI, BRPT, PTBA, BRIS, WSBP, SMSM