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Morning Dew 16 September 2020

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INDONESIA'S TRADE BALANCES IN AUGUST 2020 SURPLUS US$ 2.33 B

The Central Statistics Agency (BPS) noted that Indonesia's trade balance in August 2020 recorded a surplus of US$2.33 B. This realization was lower than the surplus of US$3.24 B in July 2020 and higher than the surplus in August 2019 which recorded a surplus of US$0.09 B. Broadly speaking, this surplus condition was driven by an increase in exports, which illustrates that the demand for goods from partner countries such as China, the United States, and Japan has begun to improve. However, Indonesia's imports are still experiencing a weakening, this illustrates that the industry in Indonesia is still not back to how it was before.

 

In detail, the export value in August 2020 reached US$13.07 B or decreased -4.62% (M/M) or decreased -8.36% (Y/Y). August 2020 non-oil and gas exports reached US$12.46 B, or decreased -4.35% (M/M) or decreased -7.16% (Y/Y). The largest decrease in non-oil and gas exports in August 2020 against July 2020 occurred in precious metals, jewelry/gems amounting to US$169.6 M (16.62%), while the largest increase occurred in metal ore, slag and ash amounting to US$102.2 M (50.22%). Meanwhile, the decline in oil and gas exports in August 2020 was mainly due to the decline in exports of the oil products processing industry to US$104.2 M or a decrease of -32.39% (M/M), and the export of crude oil mining products to US$108.8 M or a decrease of -9.83 % (M/M). The largest non-oil and gas exports in August 2020 were to China with US$2.46 B, followed by the United States with US$1.62 B and Japan with US$981.9 M, with the three contributions reaching 40.68%. Meanwhile, exports to the European Union (27 countries) amounted to US$1.02 B.

 

On the other hand, the import value in August 2020 was US$10.74 B, up 2.65% (M/M) or down -24.19% (Y/Y). August 2020 non-oil and gas imports reached US$9.79 B, up 3.01% (M/M) or down -21.91% (Y/Y). August 2020 oil and gas imports of US$0.95 B fell -0.88% (M/M) or decreased -41.75% (Y/Y). The largest increase in non-oil and gas imports in August 2020 compared to July 2020 was for the iron and steel group valued at US$89.2 M (23.31%), while the largest decrease was for ships,  and boats valued at US$60.8 M (40.96%).

 

JCI

On Tuesday trading (9/15), JCI declined by -61 pts (-1.2%) to 5,100.9. Total transaction volume reached 12.6 billion shares with a transaction value of Rp8 trillion. However, foreign investors still posted a net sell of Rp1.1 trillion, compounding the year-to-date foreign net sell to Rp37.4 trillion.

 

The advancing sectors were property (+2.5%), miscellaneous industry (+0.8%), and trade (+0.2%). The retreating sectors were led by finance (-2.1%), infrastructure (-1.7%), and consumer goods (-1.5%). Stocks supporting the JCI were POLL (+14.1%), UNTR (+3.8%), and SOHO (+20%). By contrast, stocks weighing down the JCI were BBCA (-3.1%), BBRI (-3.2%), and TLKM (-2.1%).

 

U.S. NEWS  

U.S. stocks closed mostly higher as technology related shares continued to make up lost ground from last week’s selloff, and helped by investor’s confidence that the Fed would stick with its supportive policy stance as the FOMC meeting got under way. The DJIA rose 0.01%, to 27,994.75, the S&P 500 gained 0.52%, to 3,401.12 and the Nasdaq Composite added 1.21%, to 11,190.32.

 

U.S. Treasury yields rose, the benchmark 10-year notes were down 3/32 lower to yield 0.678%. The 30-year bonds fell 17/32, yielding 1.429%. The 2-year notes were flattened to yield 0.141%

 

Crude oil prices rose as Hurricane Sally forced the shutdown of more than a quarter of offshore Gulf of Mexico crude production and a number of refineries. WTI crude rose by 2.76% to US$38.29/barrel, while Brent crude rose by 2.37% to US$40.55/barrel.

 

COMPANY UPDATE

WIKA’S STANCE ON FITCH DOWNGRADING

PT Wijaya Karya (Persero), Tbk. (WIKA) is still optimistic in 2H20 despite Fitch Global has just downgraded its rating from BB to BB-. Some factors contributing to the downgrade included WIKA’s 2Q20 weaker-than-expected performance, its capacity to refinancing maturing debts, and Covid-19 pandemic that slows construction industry and shifts Government’s priority on tackling the pandemic. Regarding due debts, WIKA has a global komodo bond worth Rp5.4 trillion which must be paid in January 2021. Therefore, the company plans to issue a sustainable bond (PUB) and sukuk worth Rp5 trillion.

 

WSKT BOOKED Rp1.08 TRILLION IN NEW CONTRACTS

PT Waskita Karya (Persero), Tbk. (WSKT) booked an additional new contract value of Rp1.08 trillion from three dam projects. The dams are Way Sekampung packet IV, Jragung packet I, and Sewerage Jambi B2. Currently, WSKT is also working on the development of Way Sekampung Dam packet II with progress of 92.9% as of August 2020 and is expected to finish this year. In addition, WSKT also develops nine other dam projects across Indonesia.

 

PEFINDO UPGRADED ANTM’S OUTLOOK TO POSITIVE

Indonesia securities rating agency (Pefindo) upgraded the outlook of PT Aneka Tambang, Tbk. (ANTM) and its Sustainable Bond I/2011 from negative to positive, with rating remained at idA, in line with ANTM’s improved performance in 1H20, mainly from gold and smelter and nickel segments. Despite sales dropping by -33.3% Y/Y in 1H20 to Rp9.23 trillion, the gold segment still contributed to 69% of sales with operating profit from the segment soaring by +111% Y/Y to Rp495 billion. On the other hand, operating profit from the ferronickel segment reached Rp333.6 billion, underpinned by increasing trend in prices and sales volume in 2Q20 as global trade begins to recover.

 

KAEF IS NOW ABLE TO PRODUCE FAVIPIRAVIR

PT Kimia Farma Tbk (KAEF), a subsidiary of PT Bio Farma (Persero), is now able to produce favipiravir under Avigan brand name. Favipiravir is one the medicines used to treat COVID-19 patients. As a result of the domestic producers capability to produce the medicine, dependency on imports could be lowered. Also, the government plans to produce Tamiflu and Oseltamivir, in addition to Avigan. 

 

5 SOEs CONSOLIDATED HOTEL BUSINESS LINES

PT Pertamina (Persero), PT Pegadaian (Persero), PT Garuda Indonesia (Persero) Tbk (GIAA), PT Wijaya Karya Tbk (WIKA), and PT Hotel Indonesia Natour (Persero), agreed to sign a note that stipulates their hotel business lines to be consolidated. Thus, Wika Realty, a subsidiary of WIKA, has to delay its initial public offering (IPO) this year, and IPO could be conducted in 2021 or 2023. 

 

WOOD REVISED SALES TARGET TO Rp2.6T

PT Integra Indocabinet Tbk (WOOD) revised upward its sales target to Rp2.6T from Rp2.5T. As of August 2020, WOOD has posted a sales order of Rp2.45T. The Company estimates that demand will further increase, supported by anti-subsidy duty and countervailing duty for U.S.’ wooden cabinet and millwork products. Previously, the U.S. often imported wood products from China; however, as the two countries are in a trade war, the U.S. will have to look elsewhere. An increase in the furniture segment could improve WOOD’s net profit margin, which is estimated to hover between 10% and 12% this year.

 

TECHNICAL OUTLOOK

JCI IS NEGATIVE, WITH EXPECTED RANGE OF 5,040 to 5,180

JCI closed lower to 5,100. The Support lay at 4,747 while the Resistance hanging still at 5,220/380. EMA 5&20 still in death cross pattern while PSAR green dot just appeared. MACD leaning to positive along with Stochastic still signaling positive while RSI were flatenned.

 

ADHI

Support            500

Resistance        1015

Target Price     995

 

ADRO

Support            1030

Resistance        1350

Target Price     1280

 

BBTN

Support            900

Resistance        1930

Target Price     1800

 

EXCL

Support            1,920

Resistance        2,600

Target Price     2,500

 

FAST

Support            880

Resistance        950

Target Price     950

 

HMSP

Support            1455

Resistance        1650

Target Price     1650

 

MAPI

Support            600

Resistance        710

Target Price     700

 

PTBA

Support            1930

Resistance        2500

Target Price     2280

 

PWON

Support            332

Resistance        434

Target Price     420

           

WEGE

Support            107

Resistance        290

Target Price     240

 

For a detailed explanation, please see the Morning Dew PDF full version

 

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 September 16Th, 2020

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