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Morning Dew 2 July 2020

FOKUS

INFLATION RATE REMAINS MODERATE

In June, inflation rate reached 0.18%, which added yearly inflation rate to 1.96% (June 2019 - June 2020) and YTD inflation rate to 1.09% (January - June 2020). In addition, core inflation (which excludes food and energy) in June stood at 0.02%, slightly boosting YTD core inflation to 0.86% and yearly core inflation to 2.26%. 

 

In detail, expenditure groups that inflated were led by food, beverage, and tobacco (0.47%), followed by transportation (0.41%), and restaurants (0.28%). On the other hand, groups that deflated were led by personal care and other services (-0.08%), information, communication, and financial services (-0.06%), and housing, water, electricity, and household fuel (-0.03%). 

 

By cities, 76 cities experienced inflation, while the other 14 cities experienced deflation. The highest inflation rate stemmed from Kendari at 1.33%, while the lowest inflation came from Makassar at 0.01%. By contrast, the highest deflation rate stemmed from Ternate at -0.34%, while the lowest deflation came from Padangsidimpuan at -0.02%.

 

JCI

On Wednesday's trading session (07/01), JCI rose by +9 points (+0.2%) to 4,914. The total transaction volume reached 6.7 billion shares, while the transaction value was recorded at Rp6.2T. Foreign investors booked a net sell of Rp378 billion, resulting in a net sell of Rp16T (YTD).

 

The advancing sectors were led by mining (+1.1%), finance (+1.0%), and agriculture (+0.6%). On the other hand, the retreating sectors were led by property (-1.0%), consumer goods (-0.8%), and infrastructure (-0.6%). Stocks supporting the JCI: BBCA (+1.8%), ARTO (+24.9%), and BBRI (+1.0%). By contrast, stocks weighing down the JCI: UNVR (-1.3%), DNET (-5.7%), and POLL (-5.5%).

 

U.S. NEWS   

U.S. stocks closed mostly higher after minutes from the FOMC meeting last month indicated that policy makers would aim to provide more explicit guidance on the outlook for benchmark interest rates and also bolstered by the new candidate of COVID-19 vaccine that is being developed by Pfizer and  BioNTech. The DJIA fell 0.3% to 25,735.45, the S&P 500 gained 0.50% to 3,115.89 and the Nasdaq Composite added 0.95% to 10,154.63.

 

U.S. Treasury yields rose, pushing prices lower after the Fed officials held further discussions on the potential for capping yields for certain maturities, otherwise known as yield-curve control. The benchmark 10-year notes were down 7/32, to yield 0.67%. The 30-year bonds were 11/32 lower, yielding 1.42%. Two-year notes were down 1/32 to yield 0.16%.

 

Crude oil prices closed higher after the EIA reported that U.S. crude inventories fell by 7.2 million barrels for the week ended June 26 and boosted by strong manufacturing data in China, Germany, and France. WTI crude rose by +1.27% to US$39.77/barrel. Brent futures rose by 1.72% to US$41.98/barrel.

 

MACRO UPDATE

RAPBN MACRO ASSUMPTION FOR 2021 

The House of Representatives Budget Board (Banggar) of the Republic of Indonesia and the government agreed on macro assumptions in the 2021 State Budget Draft (RAPBN) by promoting expansive and consolidative policies to restore the economy affected by COVID-19. In detail, the macro assumptions outlook on the 2021 Draft State Budget are:

  • Economic growth: 4.5% - 5.5%.
  • Inflation: 2% - 4%.
  • 10-year SBN interest rate: 6.29% - 8.29%.
  • Rupiah exchange rate to US dollar: Rp13,700 - Rp14,900.
  • Indonesian crude oil price: US$ 42-45 barrels per day (bpd).
  • Lifting oil: 690-710 thousand bpd and Lifting gas: 990-11010 thousand barrels of oil equivalent per day.
  • Open Unemployment Rate (TPT) 7.7% - 9.1%, Poverty Rate 9.2% - 9.7%, Gini Ratio from 0.377 to 0.379, Human Development Index from 72.78 to 72.95, Farmers Exchange Rate (NTP) ) 102-104, Fisherman Exchange Rate (NTN) 102-104.

 

INDUSTRY UPDATE

HIMBARA TARGES 6% BANK CREDIT GROWTH

The State-Owned Bank Association (Himbara) targets lending in 2020 to grow by no more than the realization of 2019 lending which grew 6%. This optimism is based on economic activity that has resumed after easing the Large-Scale Social Limitation (PSBB).

 

At the same time, Himbara, which received a placement fund of Rp30 trillion, consisted of PT Bank Rakyat Indonesia Tbk (BBRI), PT Bank Mandiri Tbk (BMRI), PT Bank Negara Indonesia Tbk (BBNI), and PT Bank Tabungan Negara Tbk (BBTN) committed to using these funds to increase credit expansion (leverage) up three times in 3 months to Rp90 trillion.

 

PERTAMEDIKA IHC OFFICIALLY BECOME A HOLDING OF SOE’s HOSPITALS

PT Pertamina Bina Medika IHC / Pertamedika IHC. officially took over the ownership of 7 SOE’s (BUMN) hospitals to form a holding BUMN Hospital. Erick Thohir said that, on a consolidated basis, the BUMN Hospital group was estimated to have operating revenues of up to Rp4.5 trillion and total assets approaching Rp5 trillion. With the addition of 7 hospitals, the number of hospitals that will be managed in the IHC group will increase from the previous 14 hospitals to a total of 35 hospitals.

 

The 7 BUMN Hospitals that transferred their shares to PT Pertamina Bina Medika IHC, namely:

  1. PT Krakatau Steel (Persero) Tbk (KRAS) as the shareholder of PT Krakatau Medika;
  2. PT Pelabuhan Indonesia II (Persero) as a shareholder of PT Port Hospital;
  3. PT Pelabuhan Indonesia III (Persero) as the shareholder of PT Pelindo Husada Citra;
  4. PT Perkebunan Nusantara X as the shareholder of PT Nusantara Medika Utama;
  5. PT Perkebunan Nusantara XI as the shareholder of PT Nusantara Sebelas Medika;
  6. PT Perkebunan Nusantara XII as a shareholder of PT Rolas Nusantara Medika; and
  7. PT Timah Tbk (TINS) as the shareholder of PT Bakti Timah Hospital.

 

ESDM - ELECTRICAL TARIFF WILL NOT BE UP TO THE END OF THE YEAR

The Ministry of Energy and Mineral Resources (ESDM) has determined that the basic electricity tariff (TDL) will not be adjusted until the end of 2020 so that the TDL is still the same since 2017. Electricity tariffs for 25 other subsidized customers have also not changed. Regarding subsidized tariffs, these 25 classes of customers are still given electricity subsidies, including customers whose electricity is allocated for micro, small and medium enterprises (MSMEs), small businesses, small industries, and social activities. Industrial and business customers of the 450 VA power received a stimulus in the form of an electricity bill waiver until October. Whereas 450 VA subsidized household power customers get similar assistance until next September. While subsidized 900 VA household customers get a 50% cut in assistance.

 

COMPANY UPDATE

BBRI DISBURSES THE SUBSIDY OF SME LOANS INTEREST TO 214,000 DEBTORS

PT Bank Rakyat Indonesia (Persero), Tbk. (BBRI) disburses the first phase of additional stimulus of SME interest subsidy to more than 214,000 debtors. The subsidy is the implementation of the Ministry of Economic Coordinator Number 8/2020 in order to save and support microbusiness that is hit by Covid-19 pandemic. Later on, qualified debtors will receive 6% of loans interest stimulus and an additional 3% for the next three months in this year. On the other side, BBRI projects credit to grow by 4%-5% this year.

 

MDKA TO ISSUE A BOND WORTH Rp1.4 TRILLION

PT Merdeka Copper Gold, Tbk. (MDKA) is currently in the process of book building for the issuance of its Sustainable Bond I Merdeka Copper Gold Phase I 2020. The company plans to raise in maximum Rp1.4 trillion, all of which will be used to pay off a part of the principal of its debt worth US$100 million. The bond consists of two series, i.e. the 367-day and three-year maturity, whereas the information of principal and coupon of each bond is currently unavailable to the public. Pefindo affirms an idA rating for the bond.

 

APLN BOOKED Rp267 BILLION MARKETING SALES IN 1Q20

PT Agung Podomoro Land, Tbk. (APLN) booked pre-VAT marketing sales of Rp266.7 billion in 1Q20. Three projects, i.e. Podomoro Park bandung, Podomoro Golf View, and Podomoro City Deli Medan, contributed to more than 80% of the marketing sales. Besides, APLN also posted revenue amounting to Rp1.3 trillion or jumped by +75.3% Y/Y compared to Rp754 billion in 1Q19. The detail: Rp997 billion (+139.5% Y/Y) came from property and land sales, whereas Rp324 billion (-4.0% Y/Y) originated from recurring income, i.e. rent and hotel management.

 

IMJS TO RAISE Rp577 BILLION THROUGH RIGHTS ISSUE

PT Indomobil Multi Jasa, Tbk. (IMJS) plans to increase capital by conducting a rights issue. The company has obtained shareholders permit to issue 2.88 billion new shares. With an offering price of Rp200 - Rp250 per share, IMJS can pocket between Rp577 billion - Rp721 billion fresh funds, which will be injected to its subsidiaries. Besides, one of IMJS subsidiaries, PT Indomobil Finance Indonesia, is to issue bonds worth Rp1.5 trillion in the near future.

 

PTPP NEW CONTRACT REALIZATION

As of May 2020, PT Pembangunan Perumahan (Persero) Tbk. (PTPP) realized a new contract value of Rp7.5T, which was lower than that of January - May 2019 at Rp11.4T. Cited from bisnis.com, PTPP realization is the highest among its peers: WIKA at Rp3.14T (as of May), ADHI at Rp3.2T (as of May), and WSKT at Rp4T (as of April). This year, PTPP aims to realize Rp23.57T of new contract value.

 

FITCH AFFIRMED WIKA’S RATINGS

Fitch Ratings affirmed PT Wijaya Karya (Persero) Tbk (WIKA)’s foreign denominated long-term debt and local denominated issuer default ratings at BB(idn); while WIKA’s long-term national rating remains at AA-(idn). Fitch said that WIKA remains the top choice to support the Government’s infrastructure projects and that WIKA’s possibility of default is relatively lower if compared with that of other companies. According to WIKA, operating cash flow may be better in the subsequent periods after large scale social restrictions have been eased up.

 

UNTR REVISED THIS YEAR’S CAPEX BUDGET

PT United Tractors Tbk (UNTR) revised this year’s capex budget to US$230M-US$250M from US$450M. Of the budget, 60% will be used for mining contractors, while the other 40% will be used for other business units. As additional information, as of 1Q20, UNTR has realized a capex of US$150M.

 

BBKP WILL ISSUE NEW SHARES

PT Bank Bukopin Tbk (BBKP) will issue new shares through Pre-emptive Rights (HMETD) offering to its shareholders. Kookmin Bank is expected to become the largest shareholder (37.6%) and also planned to absorb all pre-emptive rights which are not executed by other shareholders. The number of shares to be issued (class B shares) of 4.66 billion (Rp180 per share). Previously, Kookmin Bank provided USD200M to BBKP and completed additional due diligence processes. Meanwhile, Bosowa also placed its funds in the BBKP escrow account (HMETD PUT V – BBKP) in march 2020.

 

BBRI REPLACED BBNI'S POSITION AS TECHNICAL ASSISTANT FOR BBKP

According to the Financial Services Authority (OJK) policy, the position of PT Bank Negara Indonesia Tbk (BBNI) as a technical assistant for PT Bank Bukopin Tbk (BBKP) was officially replaced by PT Bank Rakyat Indonesia Tbk (BBRI) in June 2020. This technical assistance will maintain liquidity and monitor the funds distribution (Cash Flow) obtained by BBKP to pay its customer’s needs. Previously, BBNI collaborated with BBKP in managing funds for one year.

 

INALUM WILL BUY TINS’ BUSINESS ENTITY

PT Timah Tbk (TINS) will sell its business entity, Indometal Corporation (Asia Pasicif) Pte Ltd, to PT Indonesia Asahan Aluminum  (Inalum). Indometal Corporation (Asia Pasicif) Pte Ltd was registered in Singapore on November 29, 2019. It is the Company's business through Indometal London (Limited). TINS will sell 50,000 shares (100%) with a value of US$398,500. PT Inalum also indirectly controls Indometal London and keeps 65% of series B shares owned by TINS. This affiliate transaction is estimated to increase the state-owned enterprise scale (Mining sector) in the global market.

 

TBIG WILL REPAY COMPANY’S DEBT OF RP700B

PT Tower Bersama Infrastructure Tbk (TBIG) will repay its debts, Tower Bersama Infra Bonds - II Phase III Year 2017 (Rp700B) which will be due in 2Q20. The bond has a 3-year tenor (8.4%). Sources of funds for the Bonds repayment will be from internal cash and the issuance of new bonds (refinancing). TBIG confirms that it has a long-term contract and timely payment. 

 

BURLINGHAM WILL BECOME A NEW PBRX SHAREHOLDERS

PT Ganda Sawit Utama transferred its investment of 450 million shares (6.95%) to Burlingham International Limited with a nominal value of Rp288 per share. The value of the Company's investment in PT Pan Brother Tbk (PBRX) will be Rp129.6B, meanwhile, the number of shares owned by PT Ganda Sawit Utama on PBRX will be 1.04 billion shares (16%). However, PT Trisetijo Manunggal Utama still controls PBRX shares (27.98%). Burlingham is well known as a large-scale industrial multi-distribution Company located in the United States.

 

TECHNICAL OUTLOOK

FOR TODAY – OUR JCI POSITIVE, WITH EXPECTED RANGE OF 4,850 to 5,000.

JCI closed slightly higher at 4,914. The Resistance hangging at 4,980/5,130 while the Support at 4,880/745/. PSAR red dot still appeared, while EMA 5&20 still in dead cross pattern. MACD still negative but started to turn positive along with RSI and Stochastic were showing a posibility to turn positive.

Hence, according to the Technical Analysis, for this week our JCI will be NEGATIVE.

 

ADHI

Support            500

Resistance        1015

Target Price     995

 

BBTN

Support            900

Resistance        1930

Target Price     1800

 

BEEF

Support            210

Resistance        276

Target Price     260

 

DMAS

Support            102

Resistance        296

Target Price     246

 

GGRM

Support            46725

Resistance        49800

Target Price     49500

 

HOKI

Support            575

Resistance        780

Target Price     710

 

INCO

Support            2750

Resistance        3500

Target Price     3250

 

KAEF – STOP OUT

Support            1160

Resistance        1455

Target Price     1400

 

TBIG

Support            1050

Resistance        1250

Target Price     1120

 

TLKM

Support            2880

Resistance        3540

Target Price     3400

           

WEGE

Support            107

Resistance        290

Target Price     240

 

 

 

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 July 1Th, 2020

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