MNCS Morning Navigator 27 July 2020

Global Market Highlight

DJIA fell 0.68% on Friday (24/07) followed by S&P 500 (-0.62%) and Nasdaq (-0.94%). Stock fell as tech shares struggling, disappointing result of 2Q20 performance and US-China tensions rising. Leading stocks such as Apple and Microsoft fell 4% at the end of last week. However, this weakening is still considered a reasonable correction. Investors are also still watching the development of positive cases in the US which continues to increase. Moreover, the market will look forward to several data releases today, such as: 1) US Durable Goods Orders; 2) China Industrial Profit; 3) Japan All Industry Activity Index.

Domestic Updates

BI release the periodical development of inflation stability which is at a low and controlled level. BI expects a deflation of 0.03% MoM in July while on a yearly basis inflation is at the level of 1.06% YTD/ 1.61% YoY. BI will continue to strengthen coordination with the government to closely monitor the dynamics of Covid-19 spread and its impact towards the economy from time to time as well as to expanse policies that needs to be taken to maintain macroeconomic and financial system stability.

Company News

1. UNVR IJ recorded an increase in sales of 1.5% YoY to IDR21.77 trillion in 1H20. While sales for 2Q20 reached 10.6 trillion, dropped by 1.6% YoY/4.8% QoQ. Revenue was supported by the 1.6% growth in domestic sales. Furthermore, UNVR also will be distributing final dividends of IDR107/share or equals to IDR4.1 trillion. Interim dividends had been distributed on December 2019 prior to stock split. Dividend payout ratio is at a generous level of 100% from the FY19 net profit with yield at 1.33%. Distribution date will be no later than August 2020. MNCS Comment: We see that UNVR increase their dividend payout ratio, as the only distributed 75% of the FY18 net profit last year. UNVR is currently traded at 41.28x/42.59x PE/PBV.
2. AKRA IJ booked a revenue of IDR10 trillion in 1H20, grew by 2.9% YoY. Largest contribution came from trade and distribution sector which edged up to IDR9.17 trillion, followed by logistic revenue at IDR410 billion. Meanwhile AKRA managed to keep cost low at IDR29 billion (-18.77% YoY). Despite the fall of oil price in early FY20, AKRA still recorded a growth in net profit of 10% YoY to IDR431.5 billion. MNCS Comment: AKRA successfully maintain their performance in the 1H20 even though the company itself is hit by many obstacles. AKRA is currently traded at 12.28x/1.25x PE/PBV.
3. ITIC IJ revenue grew by 27.39% YoY to IDR100.92 billion in 1H20. The climb in sales volume by 16% YoY to 1.26 million kg contributed to revenue. Selling price also increased due to the exempt tax impose in FY20. Moreover, net profit increase substantially by 160% YoY to IDR4.2 billion in 1H20 from IDR1.6 billion in 1H19. MNCS Comment: ITIC’s performance seems to not be affected by the tax exemption and the pandemic as seen on the other tobacco companies. ITIC is currently traded at 2.35x PBV.

IHSG Updates

JCI dropped by -1.21% to 5,082.99 on Friday (24/07) followed by net foreign sell reaching IDR739.71 billion. The weakening was in unison with the global and regional Asia indices as the market keeps on observing the growth of Covid-19. Furthermore, the Indonesia Stock Exchange has announced LQ45 list for the period of August 2020 until January 2021 with new entrants namely MDKA, MIKA and SMRA which are replacing the stocks that are dropped from the list (BRPT, LLPF and WSKT). Meanwhile, the Rupiah exchange rate was weakening at the level of IDR14,610. We estimate JCI will move in the range of 5,030-5,150 while waiting for Money Supply data release. Today's recommendation: BMRI, ASII, CPIN, PTBA.

Corporate Action

Cum Dividend: POWR

Ex Dividend: LSIP

RUPS: WIIM

Disclaimer On

BMRI, ASII, CPIN, PTBA, UNVR, AKRA, ITIC