MNCS Morning Navigator 30 July 2020

Global Market Highlight

DJIA rose by +0.61% on Wednesday (29/07) followed by S&P 500 (+1.24%) and Nasdaq (+1.35%). The stock price movement was driven by the Fed decision to maintain rate at the range of 0% to 0.25% to promote economic recovery. The rate is expected to stay until there is a certainty that economic has successfully recovered from the pandemic. The Fed is also committed to using all available instruments to help the US by continuing to pour out liquidity to the market either through the purchase of bonds to give credit to the business world. Moreover, the market will look forward to several data releases today, such as: 1) US MBA Mortgage Application; 2) US Goods Trade Balance; 3) US Pending Home Sales.

Domestic Updates

1. Motorbike sales dropped by -56.4% YoY to 200,876 units in June 2020. The decrease beats consensus estimates of a -45% YoY drop in June 2020. The total unit sold consists of domestic which reached 167,992 units (83.63%) and export 32,884 (16.37%). Meanwhile, domestic distribution reached 1.60 million units which consist of underbone (5.9%), scooter (87.9%) and Sport (6.2%) while export distribution reached 186,080 units in June 2020.
2. The government will provide credit to corporations affected by the pandemic amounting to IDR10 billion - 1 trillion. Guarantees are provided through the Indonesian Export Guarantee Agency (LPEI) as well as 15 banks, both BUMN and Private. This program is carried out to encourage the economy of the country so that it can escape the recessionary trap and show that banks still have the liquidity to provide working capital.

Company News

1. INTP IJ will be distributing cash dividends of IDR1.83 trillion or equals to IDR500 per share, while IDR5.31 million is allocated for retained earnings. Dividend payout ratio is at a generous level of 100% from FY19 net profit with yield at 4.04%. Moreover, INTP is one of IDX20 member whose notable for distributing a dividend in generous amount (Market Bisnis) MNCS Comment: INTP payout ratio stayed at 100%, though dividend per share is lower than last year at IDR550 but the dividend yield is higher at 4.04% from around 3% in FY19. INTP is currently traded at 28.51x/1.94x PE/PBV.
2. ISAT IJ revenue grew by 9.4% YoY to IDR13.45 trillion in 1H20 from IDR12.29 trillion in 1H19. The largest contribution came from cellular income (83%) that increased 11.8% YoY, followed by MIDI (15%) that increased 2.4% YoY while telecommunication (2%) dropped by 19.8% YoY due to a lower traffic. Thus, ISAT still recorded a deeper loss of IDR341 billion in 1H20, while in 1H19 net loss reached IDR331 billion (Market Bisnis). MNCS Comment: From the operational side, ISAT still recorded a solid revenue growth. However, the increase in financial costs leads ISAT to record a big losses. ISAT is currently traded at 1.3x PBV.
3. GGRM IJ booked a slight increase in revenue of 1.72% YoY to IDR 53.65 trillion in 1H20 from IDR 52.74 trillion in 1H19. Revenue consist of SKM revenue (90.95%), SKT (7.86%), and hand rolled cigarette (0.02%). COGS also rose  by 5.16% YoY to IDR44.99 trillion. This resulted a decrease in net profit of 10.75% YoY from IDR4.28 trillion in 1H19 to IDR3.82 trillion in 1H20 (Market Bisnis). MNCS Comment: We believe GGRM still managed a good performance amid the challenging situation. However, we estimate that the sales volume probably decline along the year due to lower purchasing power. GGRM is currently traded at 12.50x/1.74x PE/PBV.

IHSG Updates

JCI slipped by -0.04% to 5,111.11 on Wednesday (29/07) followed by net foreign sell reaching IDR434.01 billion. This was caused by a negative sentiment from Moody's which estimates that Banks within the Asia Pacific area will be facing challenges as their profitability dropped. This is a result from Covid-19 pandemics which shift the business structure rapidly in every sector. Furthermore, banks and telco stock prices were weakening due to the earnings release which are below expectations. Meanwhile, the Rupiah exchange rate was weakening at IDR14,543. We estimate JCI will move in the range of 5,070-5,130 while waiting for Loan Growth and Money Supply data release.Today's recommendation: GGRM, BRPT, BTPS, INKP.

Corporate Action

Cum Dividend: SHIP

Stock Split: BELL

RUPS: CTRA

Disclaimer On

GGRM, BRPT, BTPS, INKP, INTP, ISAT