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Morning Dew - 03 February 2020
THE STORM IS NOT OVER YET
Amidst challenging market conditions along 2019, JCI closed the year by increasing slightly +1.7%. Numerous local and global economic and political events keep uplifting or dragging JCI movement. Presidential Election effect, which normally has had positive impact on the market as to boost investors optimism, only lasted for a while. On the other side, the Sino-American tug of war regarding their trade agreement remained to cast a dim light on the market.
New year brings new hope and optimism after the Presidential Election ended and Trade War subsided. Still, challenges facing the market seem to persist as the outbreak of coronavirus, which originated from Wuhan, China, and has turned to global pandemic, poses threat to investor guts. As of 3 February 2020, the new virus has claimed 362 death toll from 16,814 confirmed cases in no less than 27 countries. The World Health Organization has declared the disease as global emergency.
Investors reaction were manifested on the last week of January trading sessions when JCI dropped by-4.87% in a week and almost lost -2% of its value on Friday (01/31) to hit below 6,000 level. Foreign investors posted a huge sell up to Rp1.85 trillion, wiped out the YTD net buy accumulation to a tiny Rp33.6 billion. However, JCI does not walk alone as the other major Asian indices experienced the collapse. Nikkei 225 and Hang Seng fell by -2.6% and -5.8% in the week, respectively. Thus, it is likely that the storm clouded the market is not over yet.
On Friday trading session, JCI was closed lower by -117.5 pts (-1.9%) to 5,940. Total trading volume reached 9.2B shares, with a total transaction value of Rp8.1T. Foreign investors posted a net sell of Rp1.85T, resulting in the cumulative YTD foreign net buy of Rp33.6B.
All sectors retreated, which were led by miscellaneous industry (-3.32%), finance (-2.35%), and consumer goods (-2.10%). Stocks supporting the JCI were BRPT (+5.2%), MEGA (+10.5%), and ACES (+9.9%). In contrast, stocks weighing down the JCI were BBCA (-3.9%), BBRI (-2.6%), and ASII (-4.2%).
U.S. stocks significantly dipped as a result of fears over Coronavirus outbreak, coupled with sluggish economic data and mixed earnings results. On the one hand, the Commerce Department showed a widened goods trade deficit of US$68.3B in December. While on the other hand, the U.S. Labor Department is estimated to release an increased nonfarm payroll by 163,000 jobs in January, higher than that of December. The DJIA plunged -2.09% to 28,256; S&P 500 fell 1.77% to 3,225; and Nasdaq dropped -1.59% to 9,151.
U.S. treasury yields fell, as trepidation caused by coronavirus outbreak resulted in investors being more risk averse and in changing their preferences in safe-haven instruments. Still, the details of how much the impact of the virus, in addition to timeline and vaccine, are currently unknown, as cited from Thomsonreuters. The 10-year notes were up 13/32 to yield 1.51%; two-year notes rose 4/32 to yield 1.33%; and the 30-year bonds rose 22/32 to yield 2%.
Oil prices dropped because of soaring fears about coronavirus outbreak that could lower demand. However, it is reportedly that Russian Energy Minister is thought to be holding meeting with OPEC and its members regarding this matter in February, from previously March. The outbreak, unfortunately, is estimated to cut China’s oil demand by more than 250,000 bpd. Brent crude was down by -0.17% to US$58.19/barrel. WTI crude closed lower by -1% to US$51.62/barrel.
JCR UPGRADED INDONESIA’S RATING TO BBB+
Japan Credit Rating (JCR) has upgraded Indonesia’s rating to BBB+ with stable outlook from previously BBB with positive outlook in April 2019. The upgrading was underpinned by at least five supporting factors, i.e. relatively stable economic growth sustained by strong domestic consumption, manageable fiscal deficit and government debts (1.76% and less than 30% of GDP in 2020 State Budget, respectively), sufficient foreign exchange reserves, various infrastructure development projects, and bureaucratic reformation through the implementation of Omnibus Law to attract Foreign Direct Investment (FDI) to temper Current Account Deficit (CAD).
BALI WILL ISSUE 800 BOND
PT Bali Towerindo Sentra Tbk (BALI) will issue Bali Tower I Sustainable Bonds (Phase 1) amounting to Rp800B: series A with a coupon of 9.2%-9.8% (3 years) & series B with a coupon of 9,7% -10.3% (5 years). It will be used to pay Company’s debts (80%): Bank Mandiri (Rp173.95B), Bank Sinarmas (Rp159.22B & Rp306.8B). The remaining funds will be used for investment in Microcell Pole (MCP) development & FTTX network expansion (15%), and operational costs, network maintenance & equipment installation to customers (5%). Debt securities received RATING A from Pefindo. BALI will also apply the Express Wi-Fi platform from Facebook to provide faster internet access at an affordable price in 2020. In addition, BALI will also strengthen and support Wi-Fi hotspot points that is currently available in more than 100 commercial buildings & 3,000 microcell telecommunication towers in Jabodetabek & Bali. This partnership also helps BALI to expand its service coverage throughout Indonesia. BALI will build around 300-400 towers by 2020. The number of towers that BALI has owned last year are 3,600 towers with 1,700 tenants. The company targeted to get 500 - 700 new tenants and will provide CAPEX amounting to Rp300B-Rp500B to build new towers in 2020.
PPRE WILL BUYBACK Rp293B
PT PP Presisi Tbk (PPRE) will allocate funds amounting to Rp293B to buy back its shares circulating in public through transactions on the Indonesia Stock Exchange (IDX) in the regular market from February 6, 2020 - July 30, 2021 (18 months). This action was taken because the PPRE share price did not reflect strong fundamental & liquidity condition. The Company will manage cash flow, EPS and return on equity. The PPRE buyback stock price will refer to prices in the last 90 days on the market. The Company will take advantage of internal cash in the implementation of the buyback. For additional information, PPRE expects to acquire new contract worth Rp7T or grew 20% (Y/Y) in 2020, underpinned by allocated capital expenditure of around Rp1T, which will be used mainly for investment in heavy machineries.
MPMX CAPEX IS AMOUNTING TO Rp600B IN 2020
PT Mitra Pinasthika Mustika Tbk. (MPMX) has allocated CAPEX in the amount of Rp600B-Rp700B in 2020. This fund will be used for infrastructure & rental fleet units development, especially in East Java and East Nusa Tenggara area, and is targeted to increase its revenue by 5% - 10%. MPMX will also use it to buy car units in MPM Rent. MPMX will focus on developing its organic business in 2020. The Company income increased by 7.31% (Y/Y) in 2019, and the largest revenue (92%) came from the motor vehicle segment (681,658 units) & spare parts (452,374 units).
PTBA NEW FACTORY WILL OPERATE IN 2023
PT Bukit Asam Tbk. (PTBA) is developing a coal gasification & Air Products downstream plant. The investment for the new plant is amounting to US$ 3.2B. PTBA plans to operate it by the end of 2023. It will produce 1.4MT of DME, 300,000T of Methanol and 250,000T of MEG. PTBA will collaborate with Air Products & Chemicals, Inc. to process final products such as DME, Methanol & MEG. The Coal downstreaming is believed to reduce the value of Indonesia's gas imports amounting to US$1B/year.
DSNG CPO SALES VOLUME ROSE BY DOUBLE DIGIT
Last year, PT Dharma Satya Nusantara Tbk. (DSNG) posted CPO sales volume of 666,000 tons or rose by +46% (Y/Y). Also, the CPO production increased by +25% (Y/Y) to 610,000 tons, which was underpinned by production from two newly acquired CPO producers back in 2018. However, for engineered flooring sales, the sales volume figures declined by around -15% (Y/Y) to 932,000 m2 because of lower export demand. Still, the company believes agribusiness to remain strong on the back of soaring CPO price.
JCI IS NEGATIVE, WITH EXPECTED RANGE OF 5,900 to 6,000.
JCI was closed at 5,940, fell by -2% in Friday trading session. The bearish long body candlestick touched our support line at 5,940, and it could rebound today, as its MACD is already in its negative level, coupled with RSI and Stochastic in both respective oversold thresholds. Still, apart from the technical side, the U.S. stocks continued its drop, which could result in investors looking for safe-haven instruments. Hence, we stood at our resistance at 6,218 and support at 5,940.
This research report is prepared by PT MINNA PADI INVESTAMA SEKURITAS Tbk. for information purposes only and is not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities or other financial instruments. The report has been prepared without regard to individual financial circumstance, need or objective of person to receive it. The securities discussed in this report may not be suitable for all investors. The appropriateness of any particular investment or strategy whether opined on or referred to in this report or otherwise will depend on an investor’s individual circumstance and objective and should be independently evaluated and confirmed by such investor, and, if appropriate, with his professional advisers independently before adoption or implementation (either as is or varied).
Mon February 3Th, 2020