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Morning Dew 2 December 2019

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NOVEMBER INFLATION IS STILL MANAGEABLE

National Statistics Board (BPS) is about to announce the November inflation next week, yet there have been some forecasts about the inflation circulating in the media, most of which are issued by banks. The majority of the forecasts sees a potential of higher month-to-month inflation, ranging from 0.08% to 0.22% with the median 0.2%. (Compared to October at 0.02%.) On the other hand, year-on-year inflation is expected to be lower with the median 3.06%. (Compared to October 2018-October 2019 at 3.06%.)

 

The higher expectation on November inflation is due to the increase in prices of some daily need products, i.e. onions, garlic, chickens, eggs, rice, vegetable oil, sugar, filtered clove-cigar, and toll tariffs. The lower inventories of some agricultural commodities caused by the longer-than-usual dry season has negatively affected sow and harvest time, and finally pumping the prices up. A deflation did occur for chili, mangoes, and tomatoes, though.

 

For year end, Bank Indonesia (BI) forecasts a manageable inflation at about 3.1%, whereas in 2020 the central bank will set inflation target at 2%-4%. As inflation has been relatively stable, BI will have ample room for conducting accomodative monetary policy. This is essential as to anticipate the current and future events in the national and global economy, including the stance that will be taken by The Fed.

 

JCI

On Friday trading session (29/11), JCI was closed lower by 58.7 points (-1.16%)  (+0.99%) to 6,011. Total transaction volume reached 10.7B shares, with transaction value of Rp7.2T. Foreign investors posted a net sell of Rp219.03B, dragging down YTD foreign buy Rp41.2T.

 

Only one sector declined slightly, i.e. mining sector (-1.73%). The advance was led by infrastructure (+2.28%), followed by finance  (+1.53%) and miscellaneous industry  (+1.27%). Stocks supporting the gain were LKM (+2.9%), BMRI (+3.0%), and MAYA (+13.6%). Stocks weighing down the JCI were BYAN (-8.0%), FREN (-4.6%), and BSDE (-3.8%).

 

U.S. NEWS

U.S. stocks ended Friday's shortened session lower for Black Friday as worries spark over the US-China trade tensions after Beijing warned Washington that would take countermeasures in response to US legislation that signed by Donald Trump supporting the Hong Kong’s protesters. In response China summoned the U.S. ambassador to protest and warned the move would undermine cooperation with Washington. A trade deal with China needs to be signed before the Dec. 15 deadline for a new round of import U.S. tariffs on Chinese goods.

 

U.S. Treasury yields inched higher on U.S.-China trade worries and buoyed by corporate underwriters sold Treasurys in anticipation of heavy corporate debt issuance in December. The benchmark 10-year notes fell 3/32 to yield 1.77%, two-year notes rose 1/32 to yield 1.60%, while 30-year bonds fell 7/32 to yield 2.20%, as of 0100 pm ET.

 

Oil prices fell as escalating U.S.-China trade tensions and exacerbated by more doubtful on the result from OPEC meeting on the next 5-6 December due to Saudi Arabia probably will indicate it’s no longer willing to compensate for excessive production by other members of the OPEC. Brent crude fell by -2.19% to US$62.47 /barrel. WTI crude down by -4.46% to US$55.52 /barrel.

 

MACRO UPDATE

CHINA MANUFACTURING IN NOVEMBER ROSE FOR THE FIRST 6 MONTHS

According to National Bureau of Statistics of China, China's manufacturing PMI index rose to 50.21 in November Vs 49.3 in October, the first reading above 50 since April, and beating market expectation of 49.3-49.8. Those unexpectedly jumped China's manufacturing PMI index were signaling a recovery in activity and continued expansion in the construction and services sectors amid government support and a stabilizing global economy. 

 

COMPANY UPDATE

BBCA TO DISBURSE RP100 INTERIM DIVIDEND

PT Bank Central Asia Tbk (BBCA) will pay interim dividend in December 20, 2019. The dividend is equal to 11.78% of 9M19 net profit, which amounted to Rp20.9 trillion. Hence, the total dividend will be Rp2.46 trillion or Rp100 per share. Cum and ex dividend for regular and negotiation markets will be on December 5 and 6, respectively, whereas that of cash market is on December 9 and 10.

 

FITCH REVISED GEMS’ OUTLOOK

Fitch Ratings revised PT Golden Energy Mines Tbk GEMS’s outlook from positive to stable, while its National Long-term Rating was affirmed at A(idn) and the outlook again was changed from positive to stable. The revision was due to Fitch’s expectations on GEMS’s EBITDA to be sluggish on the back of soft coal price outlook. Yet, Fitch believes that GEMS has relatively low default risk.

 

PSSI CAPEX AMOUNTING TO US$30 MILLION IN 2020

PT Pelita Samudera Shipping Tbk. (PSSI) planned to buy mother vessel fleets from its CAPEX amounting to US$30M in 2020. PSSI also targeted to increase its income proportion of non-coal hauling business segment  (70%) and non-coal hauling services segment (30%). PSSI has been studying three new medium-term contracts (from 3 years to 5 years) to send coal, nickel, iron and cement for domestic markets until now. PSSI revenue increased by 22% from an increase of time charter revenue (+253%), it is from the mother vessel segment (+18%), floating loading facility segment (+32%) and barges (+50%) until October 2019. The spending of the company’s CAPEX amounting to US$45.8M (75%) to purchase 4 MV ships, 1 tugboat and 2 barges until 3Q19. Meanwhile, ship utilization reached by 94% until the end of October 2019.

 

SAPX TO ALLOCATE RP20B

PT Satria Antaran Prima Tbk. (SAPX) allocates Rp20B for expansion in 2020. Going forward, the company plans to open new stores up to 54 offices. In addition, the company expects to add more fleets, which require Rp7-8B; while on the other hand, the company also aims to develop IT worth Rp3B. That being said, SAPX expects to record Rp100B of revenue in 4Q19, and grow +50% - 60% next year.

 

ASTRA INFRA OFFICIALLY ACQUIRED 55% OF CIPALI TOLL ROAD

Astra Infra concluded acquisition 55% of PT Lintas Marga Sedaya (LMS) shares, the owner of Cikopo - Palimanan concession right. As of now, LMS is owned by Astra Infra (55%) and the Canada Pension Plan Investment Board (CPPIB, 45%).

 

TECHNICAL OUTLOOK

JCI is POSITIVE with expected range of 5,980-6,090

JCI rose to 6,011. Yesterday trading session formed bearish long white body pattern. Almost indicator suddenly became positive . PSAR red dot still appears, and EMA 5&20 still in dead cross pattern. But on the other side, MACD start to positive along with RSI and Stochastic. So the next support lays at 5,760 while the resistance hanging at 6,060/160

 

ACES   

Support            1,650

Resistance        1,850

Target Price      1,900

           

LINK    

Support            3,800

Resistance        4,250

Target Price      4,500

 

BSDE

Support            1,300

Resistance        1,400

Target Price      1,440

 

PTBA

Support            2,120

Resistance        2,500

Target Price      2,410

 

EXCL

Support            3,250

Resistance        3,600

Target Price      3,555

 

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).

Mon December 2Th, 2019

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