MNCS Morning Navigator 28 July 2020

Global Market Highlight

DJIA rose by 0.43% on Monday (27/07) followed by S&P 500 (+0.74%) and Nasdaq (+0.74%). Stocks rose on Monday as investors bet that the largest technology firms will power ahead in an uncertain economic environment, Amazon.com and Apple led the major indexes higher. Furthermore the new stimulus proposed by the Republican House of Representative amounting to USD1 trillion which means direct cash assistance will be USD200 from USD600 and gradually increased to USD1,200 per household. While the Democrat proposed the stimulus to be increased up to USD3 trillion until the end of the year. There will also be a financial aid for small businesses and schools. Moreover, the market will look forward to several data releases today, such as: 1) US CB Consumer Confidence; 2) Spain Unemployment Rate; 3) UK Distributive Trades.

Domestic Updates

Government has allocated funds of IDR11.5 trillion to seven Regional Development Banks (BPD). The aim of this policy was to boost the economy in the regions. The seven BPDs are as the following: 1) Bank DKI (IDR2 trillion); 2) Bank BJB (IDR2.5 trillion); 3) Bank Jawa Tengah (IDR2 trillion); 4) Bank Sulutgo (IDR1 trillion). While the remaining three other BPDs are still being evaluated for the placement of these funds, namely BPD Bali and DIY BPD with a budget of IDR1 trillion each followed by Bank Jatim with IDR2 trillion.

Company News

1. BBCA IJ recorded a drop in net profit by 4.8% YoY to IDR12.24 trillion in 1H20. Credit was also impacted by the pandemic, which only grew by 5.3% YoY to IDR595.1 trillion, supported by the growth in corporate credit (+17.7% YoY) while Commercial and consumer credit slumped by -0.9%/5.1% YoY. BBCA still focuses on supporting various segments of customers by selectively restructuring their loan. (Analyst Meeting). MNCS Comment: BBCA still show a solid performance during the pandemic, whereas the decline on net profit is not as deep as expected, but slightly above the consensus estimates 53% while reaching 50% of MNCS Estimates. BBCA is currently traded at 4.38x PBV.
2. UNTR IJ sales of heavy equipment dropped by 55% YoY from 1.917 units in 1H19 to 853 unit in in 1H20. From the total of 307 units, 36% were sold to mining sector, 30% sold to construction sector, 22% sold to foresty sector, and 12% sold to agribusiness sector. Moreover, UNTR will be launching their financial report of 1H20 on the next 29th July (Kontan). MNCS Comment: UNTR was affected by the temporary business discontinuation during the pandemics, while we are still expecting a recovery in the next quarter. UNTR is currently traded at 10.74x/1.24x PE/PBV.
3. KINO IJ booked a revenue of IDR2.19 trillion in 1H20, slipped by 1.3% YoY from IDR2.22 trillion in 1H19. Following the decrease, the purchasing profit for Morinaga & CO Ltd amounting to IDR264.21 billion also slash the profit margin. Though COGS already dropped by 8.54% YoY to IDR1.1 trillion, net profit is still decreased by 67.52% YoY to IDR118.64 billion (Market Bisnis). MNCS Comment: Unlike other consumer companies, KINO seems to be affected by the pandemic. Meanwhile we are still waiting for the full financial statement to be released. KINO is currently traded at 20.43x/1.75x PE/PBV.

IHSG Updates

JCI increased by +0.66% to 5,116.67 on Monday (27/07) although still followed by net foreign sell reaching IDR444.73 billion. The strengthening is in line with the increase on the US indices while regional Asia indices were closed in various positions. Meanwhile, the stimulus from the government towards the regional development banks and the development from the Covid-19 vaccine brought out positive sentiments in the market. This is also followed by the strengthening in the Rupiah exchange rate which is at the level of IDR14,490. We estimate JCI will move in the range of 5,030-5,150 while waiting for Loan Growth and Money Supply data release. Today's recommendation: TLKM, TINS, BBRI, BRPT.

Corporate Action

Cum Dividend: AMAG

Ex Dividend: POWR

RUPS: INTP

Disclaimer On

TLKM, TINS, BBRI, BRPT, KINO, UNTR, BBCA