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Morning Dew 13 February 2020

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CORONA VIRUS AND ASIAN STOCK MARKET PERFORMANCES

Coronavirus was first identified in China in December 2019. It has spread to 28 other countries in Asia and Europe to this day. For Southeast Asia (ASEAN) there are 6 countries that confirmed the existence of the coronavirus: Malaysia, Singapore, Thailand, Vietnam, Cambodia & the Philippines. According to the World Health Organization (WHO) until 12/Feb/2020, the coronavirus cases (45,171): patients who died (1,115) & Healthy patients (4,831). While the latest data in China (12/02/2020): death (1,000), positive infected with coronavirus (44,360), critical condition (7,345) and patients who recover (4,536). This number mostly has occurred (83%) in the family while the rest has been in hospitals, schools and shopping centers since December 2020.

 

The performance of stock markets in many countries in Asia were affected by the CoronaVirus. JCI also showed the same phenomenon (-3%). But market players believe that the impact of the corona virus will not be as long-term as the two previous epidemic events (SARS and MERS). Asian markets are predicted to improve. Market optimism is also influenced by the Redemsivir vaccine that it has used to fight the Ebola virus since a year ago. The South China Morning Post also stated that China will submit a patent for the coronavirus vaccine which is developed by the Wuhan Virology Institute using remdesivir and the malaria chloroquine. Hong Kong's Hang Seng Index even led the positive performance of Asian markets yesterday. Moreover, China also looks to try to provide stimulus to boost its country’s economic growth. The People's Bank of China is also predicted to reduce its benchmark lending rates and bank reserve ratios. 

 

JCI

On Wednesday trading session, JCI was closed lower by -41.3 pts (-0.69%) to 5,913. Total trading volume reached 4.7B shares, with a total transaction value of Rp7T. Foreign investors posted a net buy of Rp477.7B, resulting in the cumulative YTD foreign net buy of Rp1.21T. 

 

All sectors weakened except for finance (+0.03%), while the retreating sectors were led by consumer goods (-2.44%), miscellaneous industry (-1.86%), and manufacturing (-1.76%). Stocks supporting the JCI were TLKM (+0.8%), BBRI (+0.4%), and BBCA (+0.3%). In contrast, stocks weighing down the JCI were UNVR (-3.2%), ICBP (-6.3%), and INDF (-8.8%).

 

U.S. NEWS 

U.S. stocks closed sharply higher buoyed by signs of a slowdown in the number of new cases of coronavirus. China’s National Health Commission reported that 2,015 new cases of the disease caused by the new viral infection had been reported over the last 24 hours, declining for a second day. The DJIA rose 0.94% to 29,550.66, the S&P 500 gained 0.64% to 3,379.38 and the Nasdaq Composite added 0.9% to 9,725.96.

 

U.S. Treasury yields rose as worries of coronavirus ease. The 10-year notes at a high yield of 1.622%. The bid-to-cover ratio was 2.58. The two-year notes were 1/32 lower, yielding 1.44%. The 30-year bonds were down 26/32 to yield 2.09%.

 

Oil prices continue to rise as worries ease over coronavirus and coupled by investors optimism that OPEC and its allies would agree in deeper production curbs after the spreading coronavirus outbreak hit demand in China. WTI closed higher by +3.06% to US$51.47/barrel, while Brent crude was up by +3.76% to US$56.04/barrel. 

 

COMPANY UPDATE

 SMGR TO ALLOCATE CAPEX OF Rp2T THIS YEAR

PT Semen Indonesia Tbk. (SMGR) plans to allocate capital expenditure of Rp2T this year, which stems from internal cash. The capex will be used for regular maintenance and downstream product development, which is aimed to reduce oversupply. As a result, SMGR hopes that it will be able to not only produce cement, but also supply innovative building materials.

 

EXCL TO ALLOCATE CAPEX OF Rp2.5T FOR NETWORK DEVELOPMENT

PT XL Axiata Tbk (EXCL) allocates capital expenditure amounting to Rp7.5T, lower than that of 2019 at Rp8T, but higher than that of 2017 at Rp6.8T. 80% of the amount will be used for network development, 60% of which will be used for adding radio and LTE. The Company is hopeful that the telecommunication industry will be more benign and expects the industry to grow +5%.

 

WSKT PLANS TO DIVEST 5-6 TOLL ROADS THIS YEAR

PT Waskita Karya, Tbk. (WSKT) plans to divest 5-6 toll road sections of Trans Java, although the target amount remains to be disclosed. Moreover, WSKT expects to utilize Limited Participation Mutual Fund (RDPT) scheme for the divestment.

 

ICBP IS IN THE DUE DILIGENCE PROCESS OF ACQUIRING PINEHILL GROUP

PT Indofood CBP Sukses Makmur, Tbk. (ICBP) is reportedly in the due diligence process of acquiring 100% of Pinehill Corpora Limited and Steele Lake Limited. Pinehill group produces instant noodles, using Indomie brand, in Saudi Arabia, Nigeria, Turkey, Egypt, Kenya, Morocco, and Serbia.

 

DSNG TO ALLOCATE UP TO Rp1 TRILLION FOR CAPEX

Plantation firm PT Dharma Satya Nusantara, Tbk. (DSNG) will allocate between Rp800 billion to Rp1 trillion for capital expenditure this year, which will be spent on developing new oil palm mill and biogas facility, new planting, infrastructure, and machinery. Internal cash and bank loans will be the source of funds. In line with the expansion plan, DSNG targets Crude Palm Oil (CPO) sales to grow moderately by +5.1% Y/Y to 700,000 tonnes this year from 666,000 tonnes in FY19.

 

ADRO TO FINISH STEAM POWER PLANT PROJECT SOON

PT Adaro Energy, Tbk. (ADRO) will soon finish its Bhimasena Power Indonesia (BPI) steam power plant project as targeted this year. The construction progress of the 2 x 1,000 MW-capacity power plant, which is located in Batang Regency, Central Java, already reached 90% as of December 2019. 

It is estimated to consume up to 7-8 million tonnes of coal annually, 60%-65% of which will be supplied by ADRO. Additionally, ADRO has also owned and operated two other steam power plants, i.e. Makmur Sejahtera Wisesa (MSW) with 2 x 30 MW capacity (2013) and Tanjung Power Indonesia (TPI) with 2 x 100 MW capacity (2019).

 

BWPT TO FOCUS ON DOMESTIC AND INDIAN MARKETS

Amidst the fear of global pandemic from coronavirus in China, PT Eagle High Plantation, Tbk. (BWPT) is optimistic to be immune to this threat since the majority of demand for its products comes from domestic and India, which is the largest CPO importing country in the world. China’s demand for CPO was high in 2002-12, but faded thereafter. As of 9M19, BWPT posted Rp1.73 trillion revenues, fell -26.6% Y/Y, which mostly came from CPO sales, plus kernel and Fresh Fruit Bunch (FFB) sales.

 

UNTR’S DIVERSIFICATION STRATEGY

Amidst pressured conditions in coal prices, PT United Tractors, Tbk. (UNTR) seeks opportunity through diversification to other mining businesses, including gold and nickel. Coal-specific, UNTR is to balance its portfolio between thermal (low calories) and non-thermal coals. As of 9M19, the firm’s top line was still dominated by coal-related business, i.e. coal mining contractor (which contributed to 51.7% of revenue) and coal mining (15.5%). Heavy machinery business posted 43.3% share, while gold mining reached 8.95% of revenue.

 

Furthermore, UNTR is determined to finish its steam power plant project, PLTU Jawa 4 - Tanjung Jati B Unit 5&6 in Jepara, with 2 x 1,000 MW capacity. The US$4.2-billion (Rp57.4 trillion) project is projected to start commercial operation by 2021. This year, UNTR is to allocate up to US$450 million (Rp6.1 trillion) for capital expenditure, mainly for adding heavy machinery of its subsidiary PT Pamapersada Nusantara and for Martabe gold mining activities.

 

CSAP ALLOCATES CAPEX Rp600B

PT Catur Sentosa Adiprana Tbk (CSAP) has budgeted a capex of Rp600B which will be used to add five Mitra 10 outlets in several locations such as Lombok in April, Balikpapan in July, Bekasi in August, Kalimantan in September and Central Java, Semarang in October. The company will use internal cash and loans from banks to fund the capex. As additional information, the company currently has 34 Mitra 10 outlets.

 

DGIK - NEW CONTRACT TARGET 2020 UP 78% (Y/Y)

PT Nusa Konstruksi Enjiniring Tbk. (DGIK) recorded the realization of the new 2019 contract amounting to Rp1.12T or reaching 112% of the target set. For 2020, the company is targeting a new contract of Rp2T, up 78% from the realization of 2019.

 

TECHNICAL OUTLOOK

JCI IS POSITIVE, WITH EXPECTED RANGE OF 5,870 to 6,000.

JCI was closed lower at 5,913 with the Support lays still at 5,870/760 while the Resistance stood at 6,218/330. PSAR green dot still appears along with MACD still on negative level but started to show positive signals. RSI and Stochastic curled lower along with EMA 5,20&50 still in a dead cross pattern while. Hence, from technical analysis our JCI is POSITIVE, we except that JCI could rebound today followed a positive sentiment from Coronavirus update.

 

DISCLAIMER

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).

 

 

ADRO

Support            1010

Resistance        1587

Target Price      1500

 

ASII

Support            6025

Resistance        6550

Target Price      6650

 

BBNI

Support            7200

Resistance        7750

Target Price      8150

 

BJBR

Support            960

Resistance        1650

Target Price      1400

 

BRPT

Support            1200

Resistance        1510

Target Price      1480

 

HEAL

Support            3190

Resistance        3500

Target Price      3600

 

ICBP

Support            10700

Resistance        11850

Target Price      12550

 

MIKA

Support            1890

Resistance        2940

Target Price      2850

 

MYOR

Support            1800

Resistance        2100

Target Price      2150

 

PTPP

Support            1350

Resistance        1850

Target Price      1750

 

 

 

DISCLAIMER

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).

Wed February 12Th, 2020

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