MNCS Morning Navigator 26 November 2020

Global Market Highlight

DJIA fell by -0.58% in Wednesday (25/11) followed by S&P 500 (-0.16%). DJIA slipped after breaching 30,000 for the first time as market concern by hopes for Covid-19 vaccines and mixed economics data. US jobless claims rose for a second consecutive week, to 778,000 a sign that resurging Covid-19 cases are taking a toll on the labor market. Furthermore, US consumer spending rose 0.5% in Oct-2020 while incomes fell 0.7%. Moreover, the market will look forward to several data releases today, such as: 1) US FOMC Minutes; 2) Germany Gfk Consumer Confidence; 3) ECB Monetary Policy Meeting Accounts.

Domestic Update

President Joko Widodo provide the Ministries and Institutions’ Budget Implementation List (DIPA) which emphasizes four focuses on the use of the budget. 1) Handle health regarding to Covid-19, mainly prioritizing on preparation of the vaccine and to strengthen and develop health facilities and infrastructures; 2)Provide social protection for those affected by Covid-19; 3) Economic recovery program to support MSMEs and business sector; 4) The budget is also expected to be used for structural reforms to build strong foundation in various sector. The government spending for 2021 of IDR2.750 trillion will be allocated to IDR1.035 trillion for K/L expenditure and IDR795.5 trillion for TKDD. Meanwhile DIPA will be allocated greatly to education (IDR550 trillion), infrastructure (IDR417.17 trillion), social protection (IDR408.8 trillion), health sector (IDR169.7 trillion), food security (IDR99 trillion) and IT development (IDR26 trillion).

Company News

1.       UNTR IJ reported a decrease in coal production volume of 12.7% YoY to 94.8 million for 10M20. However, the coal sales volume increased 9.25% YoY to 7.65 million. The overburden (OB) removal volume fell by 16.47% YoY to 698.7 bcm. Although the heavy equipment sales volume increased slightly to 154 unit in 10M20 (vs 184 in 9M20), the total sales decreased 50.8% YoY. Moreover, the gold sales is also contracted by 19.76% YoY (Market Bisnis). MNCS Comment: The decline in heavy equipment is quite expected as mine operations slowed down, though we believe UNTR will still maintain it's performance until the end of FY20E as it did as of 9M20. UNTR is currently traded at 12.07x/1.49x PE/PBV.
2.        DMAS IJannounced to distribute interim dividends of IDR1.2 trillion for 48.2 billion shares of the company. Dividend per share is IDR25 with dividend yield of 9.25%. The cum date will be at 02 December 2020 (Kontan). MNCS Comment: Although the industrial land business has not yet recovered, DMAS is brave enough to pay dividends also with a high yield which is quite appealing for investors. This illustrates that DMAS cash flow is still quite good in the midst of today's tight business. DMAS is currently traded at 31.79x/2.26x PE/PBV.
3.        TOTL IJ booked IDR826 billion new contract as of 11M20 consists of 50% office, 30% apartment and the rest are school, hotel, factory and stores. With this TOTL has realized 27.53% of maximum target (before Covid-19) i.e. IDR3 trillion in 2020. Moreover, TOTL also became the contractor leader in apartment building SQ Res in South Jakarta. (Market Bisnis). MNCS Comment: The recent contracts obtained by TOTL from property development indicate improvements and hopes that the property construction sector can recover in the near future. TOTL is currently traded at  10.27x/1.04x PE/PBV.

IHSG Updates

JCI dropped by -0.38% to 5,679.25 on Wednesday (25/11) followed by net foreign buy reaching IDR580.59 billion. We believe the drop was due to profit taking done by local investors as they dominate the market by 76% while foreign investor still recorded a quite large amount of net buy. The largest drop came from miscellaneous industry while trade sector still going green. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,144. We estimate JCI will move in the range of 5,520 – 5,750 while waiting for motorbike sales data release. Today's recommendation: SMGR, BSDE, INCO, BBCA.

Corporate Action

RUPS: INCF, BDMN

Disclaimer On

SMGR, BSDE, INCO, BBCA, UNTR, DMAS, TOTL