MNCS Morning Navigator

29 Juni 2020

MNCS Morning Navigator 29 June 2020

Global Market Highlight
DJIA slipped by -2.84% on Friday (26/06) followed by S&P 500 (-2.42%) and Nasdaq (-2.59%). These drops are because the US recorded 40,000 new cases in one day on June 25 becoming the highest number of cases ever recorded since the US contracted the Covid-19 outbreak. The increase in cases that occurred had to make Texas cancel its intention to reopen its economy. While in Arizona, the number of cases increased by 5.4%, exceeding the seven-day average of 2.9%. The surge in corona virus cases raises concerns that the rebound may only be temporary and that a voluntary economic closure or mandate has the potential to occur again. Moreover, the market will look forward to several data releases today, such as: 1) Japan Retail Sales; 2) Eurozone Consumer Confidence; 3) Eurozone Economic Sentiment.

Domestic Updates
BI estimates deflation in June 2020 at 0.01% MoM. This is lower than the previous month. Then, the inflation forecast for June 2020 on a calendar year is 0.90% YTD and annual basis is 1.76% YoY. The main contributors to deflation in the reporting period came from a decline in the price of garlic commodities by 0.04% MoM, reductions in the price of red chillies, oranges, and air transport rates which were respectively 0.03% MoM. In addition, deflation was also driven by a decrease in prices of cayenne pepper, sugar and gold jewelry each by 0.02% MoM, as well as a decrease in cooking oil by 0.01% MoM. The central bank also noted, if there are some commodities that have increased prices so that it is a deflation rate inhibitor, such as purebred chicken whose price rose 0.13% MoM, broiler chicken eggs rose 0.05% MoM, and tomatoes that edged up 0.01% MoM.

Company News
  1. MYOR IJ will be distributing cash dividends amounting to IDR670.76 billion in FY20E, equivalent to 33.70% of 2019 net profit of IDR1.99 trillion. Dividend per share is at IDR30 / share with 1.33% yield. The company will start distributing dividends on July 30. Meanwhile, the company will retain the remaining profits to face the risk of 2020 due to the Covid-19 pandemic. (Market Bisnis) MNC Comment: MYOR will distribute a higher dividen per share (+3.44%) compared to last year, which we believe its become more attractive for investor. MYOR is currently traded at 13.53x/4.77x PE/PBV.
  2. PWON IJ posted revenue of IDR1.65 trillion in 1Q20, down 3.5% YoY from the previous year IDR1.71 trillion. the composition of income in 1Q20 consisted of 54% recurring income and 46% development income. This is in line with the company's strategy to grow with a balanced revenue composition between recurring and development revenue. Meanwhile net profit decreased -85.59% YoY to IDR128.39 billion in 1Q20 from IDR860.85 billion in 1Q19. (Market Bisnis) MNC Comment: The decrease in net profit was due to the loss of the rupiah exchange rate, where in the 1Q20 report, the conversion rate was at IDR16,367/USD. PWON is currently traded at 1.48x PBV.
  3. ADHI IJ recorded a new contract worth IDR3.2 trillion, which was dominated by construction and energy contracts. New contracts in May was dominated by Irrigation Development in Cipelang, West Java amounting to IDR308.1 billion and Landfill Development in Jombang, Central Java reaching IDR168.7 billion. This year the company is aiming for new contracts amounting to IDR35 trillion. Meanwhile, revenues and profits are targeted to reach IDR22.7 trillion and IDR704 billion in FY20E. (Market Bisnis) MNC Comment: The achievement of new contracts only reached 9.14% of the FY20E target. ADHI is currently traded at 38.13x PE.

IHSG Updates
JCI was flat, only rose by -0.15% to 4,904.09 on Friday (26/06), although followed by a net foreign sell reaching IDR697.71 billion. This flat movement occurred amid the weakening on Regional Asia and Global indices, while the market is still waiting for the next domestic data release. Furthermore, there is an addition of 1,198 Covid-19 Cases in Indonesia making the total reached 54,010 cases. Meanwhile, the Rupiah exchange rate against the USD was weakening at IDR14,220. We estimate JCI will move in the range of 4,880-5,020 while waiting for Money Supply as of May 2020. Today's recommendation: CTRA, GGRM, TLKM, AALI.

Corporate Action
Cum Dividend Date: SMGR, TLKM

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