MNCS Morning Navigator 26 October 2020

Global Market Highlight
DJIA slipped by -0.10% on Friday (23/10) followed by the rise of S&P 500 (+0.34%) and Nasdaq (+0.37%). Main indexes struggled for direction as investors fretted over an impasse in Washington on the new Covid-19 aid bill totaling USD1.9 trillion which has entered a new phase, while turning cautious ahead of the presidential election. The Dow and the Nasdaq were weighed down by a 10.8% slump in Intel Corp after it reported a drop in margins as consumers bought cheaper laptops. Moreover, the market will look forward to several data releases today, such as: 1) US Chicago Fed National Activity Index; 2) Japan Leading Economic Index; 3) Germany Ifo Business Climate.

Domestic Update
The Investment Coordinating Board (BKPM) announced the investment realization was recorded at IDR209 trillion in 3Q20, which is a positive growth of 1.6% YoY. Furthermore, Foreign Direct Investment (PMA) in the July-September 2020 period stood at IDR106.1 trillion, increased by 1.1% YoY. Meanwhile, the Domestic Investment (PMDN) reached IDR102.9 trillion, rose by 2.1% YoY.

Company News

1. ANTM IJ is considering to increase ownership on PT Weda Bay from the current 10% to 40%. The value of acquisition is estimated to reached USD300 million. Currently, Eramet Group from France and Tsinghan from China own 90% of ownership. PT Weda Bay is an ore processing company with pyrometalurgic method with capacity of 30,000 tons. The nickel reserve owned by PT Weda Bay reached 9.3 million ton which considered as the largest in the world (Investor Daily). MNCS Comment: We see that this will be a potential gain for ANTM in the future with the largest nickel reserve as an asset. This is also in line with the Indonesian Battery Holding that has been discussed lately with ANTM as one of the main nickel supplier. ANTM is currently traded at 153.70x/1.44x PE/PBV.
2. ROTI IJ posted a revenue of IDR2.4 trillion (-0.89% YoY) in 3Q20. Modern trade contributes 69.5% while general trade by 29.2%. On the other hand, ROTI record a loss from foreign exchange from a gain previously followed by other expenses that was not existing before amounting to IDR45.86 billion. Thus, net income dropped by -39.93% YoY in 3Q20 to IDR127.19 billion (Investor Daily). MNCS Comment: ROTI seems to recover in the 3Q20 compared to the 2Q20 though the bottom line is still contracted deeply. ROTI have shift their strategy to market their products online which now contributes a large portion towards revenue. ROTI is currently traded at 45.05x/2.83x PE/PBV.
3. SIDO IJ plan on distributing dividends amounting to IDR372.10 billion or equals to 12.5 per share. Dividend yield stood at 1.58% while the dividend was taken from the 1H20 net profit of IDR413.79 billion (+10.61% YoY). Cum date will be at 02-03 November 2020 while payment date falls at 18 November 2020 (Investor Daily). MNCS Comment: The current dividend amount is the smallest within 5 years although SIDO maintained their stellar performance until now. Nevertheless SIDO managed to distribute dividends periodically. SIDO is currently traded at 27.24x/7.17x PE/PBV.

IHSG Updates
JCI rose by +0.40% to 5,112.19 on Friday (23/10) followed by net foreign sell reaching IDR45.69 billion. Stock prices rise after a few days being sideways, this is supported by a positive sentiment from the increasing foreign flow recorded in September followed by the news of refusal from Minister of Industry upon the plan on tobacco tax increase of 23% next year which has uplift the tobacco stocks. Meanwhile, the Rupiah exchange rate was weakening at IDR14,660. We estimate JCI will move in the range of 5,067 – 5,135 while waiting for money supply data release. Today's recommendation: AKRA, MEDC, GGRM, BSDE.

Corporate Action
RUPS: INDY

Disclaimer On

AKRA, MEDC, GGRM, BSDE, ANTM, ROTI, SIDO