MNCS Morning Navigator 27 January 2021

Global Market Highlight

DJIA was flat by -0.07% on Tuesday (26/01) followed by the weakening on S&P 500 (-0.15%) and Nasdaq (-0.07%). Investors paused to wait and see on the busiest week of earnings. On the economic front, there are signs the stimulus package is having the desired impact, as consumer confidence bounced back to 89.3 in Jan-21 from 87.1 in Dec-20. Investor focus also shifted toward monetary policy, with the Fed expected to leave its benchmark rate and pace of bond purchases unchanged. Moreover, the market will look forward to several data releases today, such as: 1) US Durable Goods Orders; 2) Germany Consumer Confidence; 3) France Unemployment Benefit Claims.

Domestic Updates

•        Indonesia's Covid-19 cases have reached more than one million as of Tuesday (26/1). On the other hand, President Joko Widodo will receive a second dose of Covid-19 vaccine on Wednesday (27/1). The Covid-19 vaccine produced by Sinovac requires two injections, each of 0.5 milliliters with an interval of 14 days. Meanwhile, the Ministry of Health is optimistic that it can complete Covid-19 vaccination for around 1.4 million health workers by the end of February 2021.
•         Furthermore, there was an addition of 2,314 new Covid-19 cases in Jakarta yesterday.

Company News

1. BSDE IJ recorded marketing sales of IDR 6.5 trillion FY20. The residential segment, particularly landed houses, was the highest contributor to BSDE marketing sales with a contribution of 65% or IDR 4.2 trillion. Marketing sales for FY20 reached 90% of the IDR 7.2 trillion target set at the beginning of the year before the pandemic and were not revised (Kontan). MNCS Comment: This achievement is quite good, this is an improvement in sales in 2H20 due to improvements in people's purchasing power, as well as the high housing backlog in Indonesia. Currently BSDE is trading at 37.87x/10.79x PE/PBV.
2. BNLI IJ officially became a group of commercial banks for business activities (BUKU) IV after receiving confirmation from the Financial Services Authority (OJK) on January 20, 2021. With a core capital of more than IDR30 trillion FY20, the company has met the minimum threshold to become a BUKU IV group. On the other hand, in 3Q20, BNLI recorded a growth in operating income before provision of IDR2.6 trillion or +20.4% YoY  (Investor Daily). MNCS Comment: We believe this is proof that BNLI is increasingly able to record stronger assets and capital. In addition, the digital transformation that is being carried out is BNLI's effort to increase the efficiency and growth of TPF. BNLI is currently trading at 47.29x/7.87x PE/PBV.
3. AKRA IJ will provide capital expenditure of around IDR250 - IDR300 billion in FY21E. Part of the AKRA capex will be used for the development of the petroleum and basic chemical trading and distribution business. In addition, capital expenditure will be used for logistics infrastructure needs. AKRA targets fuel sales volume growth of around 10% - 12% in FY21E (Emitennews). MNCS Comment: AKRA's business development is quite good at a time when world oil prices are likely to be relatively stable in FY21F. AKRA is trading at the level of 13.30x/1.39x PE/PBV.

IHSG Updates

JCI dropped by -1.89% to 6,140.17 on Tuesday (26/01) though followed by net foreign buy reaching IDR346.55 billion. JCI kept on declining as Covid-19 cases rose to hit one million in Indonesia. However, we see that the foreign investors are still on the buy mode while domestic investors are on the profit taking stance. All sectors dropped quite deep, but we see this as an opportunity to buy for the high prospect sectors such as banking, mining and plantation. Meanwhile, the Rupiah exchange rate was weakening at IDR14,065. We estimate JCI will move in the range of 5,980 – 6,300 while waiting for PMI Markit Manufacturing data Release. Today's recommendation: LINK, MEDC, EXCL, PGAS

Disclaimer On

LINK, MEDC, EXCL, PGAS, BSDE, BNLI, AKRA