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Morning Dew - 20 March 2020

FOCUS
BANK INDONESIA CUT INTEREST RATE TO 4.5%
The Central Bank of Indonesia (BI) decided to cut again the BI 7-Day Reverse Repo Rate (BI7DRR) interest rate by 25 basis points (bps) to 4.5% on Thursday (19/March/2020). The Central Bank (BI) also cut the deposit facility interest rate by 25 bps to 3.75% and the loan facility interest rate by 25 bps to 5.25%. The Central Bank (BI) previously cut the BI7DRR's rate by 4.75% on February 19, 2020, however, this intervention still has not been successful to maintain the stability of the exchange rate which has still been weakening until now. The rupiah exchange rate on the spot market closed down 50 points (-0.33%) to the level of Rp15,223/US dollar at the end of trading on Wed (18/ March/2020).
 
The Fed had already made an emergency decrease of interest rates benchmark due to the spread of the Covid-19 pandemic in the United States and other countries in the world. The massive sell-off in the capital market and a significant decrease in liquidity because many foreign investors withdrew their investment (capital out) from many developing countries including Indonesia forced BI to cut its benchmark rate again to 4.5%. This Central Bank (BI) policy is expected to maintain the banking liquidity and the Indonesia economic growth in the short term to medium term. The Indonesia Government and the Central Bank (BI) are also expected to consider other strategic policies to maintain the decline in liquidity, economic productivity and domestic economic growth because of the Covid-19 as part of an effort to global economic recovery.
 
JCI
On Thursday trading session (3/19), JCI was again under pressure as a result of massive selloff and trading was again temporarily halted for breaking the -5% threshold. The Index ended by falling -225 points (-5.2%) to 4,105.4. Transaction volume was recorded at 4.58 billion shares with Rp5.17 trillion of trading value. Foreign investors posted a net sell of Rp636 billion, resulting in the year-to-date accumulation of foreign net sell of Rp9.45 trillion.
 
All sectors retreated, led by miscellaneous industry (-6.07%), manufacturing (-5.96%), and consumer goods (-5.95%). Stocks supporting JCI were  DSSA (+10.5%), MNCN (+9.9%), and TCPI (+2.7%). On the other hand, stocks weighing the JCI down were BBCA (-7.0%), BBRI (-6.7%), and TLKM (-6.8%).
 
U.S. NEWS  
U.S. indexes finally gained after policymakers around the world had acted to minimize the impact of economic deterioration caused by global pandemic issues. Moreover, existing home sales data is expected to rise 0.7% in February, an improvement from a 1.3% decline in January. DJIA gained +0.95% to 20,089, the S&P 500 added +0.47% to 2,409 and the Nasdaq rose +2.3% to 7,151.
 
U.S. Treasury yields fell, as investors hurried to reduce their risks following global pandemic issues. In addition, the Fed, by issuing more accommodative policy, increased liquidity to the market. The benchmark 10-year notes fell 24/32, yielding 1.17%. Short-dated two-year notes increased 3/32 with a yield of 0.47% and 30-year bonds rose 2-3/32, yielding 1.8%.
 
Oil prices rose, as the U.S. President Donald Trump said that he would get involved in the oil price war between Russia and Saudi Arabia at “the right time”. However, many analysts believe that the rebound is short-lived, as weakening global demand is still expected to occur, however. Brent crude increased +13.42%, to US$28.22/barrel and WTI crude rose +24.8%, to US$25.42/barrel.
 
COMPANY UPDATE
PGAS TO COMMENCING GRESIK SEMARANG PIPE NETWORK COMMISSIONING
PT Perusahaan Gas Negara Tbk (PGAS) through its subsidiary, PT Pertamina Gas (Pertagas) that also affiliated with PT Pertamina (Persero) will conduct a commercial trial commissioning of the gas pipeline from Gresik in East Java to Semarang, Central Java along 268 km with a maximum gas flow capacity of 400 million standard cubic feet per day (MMSCFD). For additional information, the pipeline construction project was carried out by a consortium of PT Wijaya Karya Tbk-Rabana-Kelsri (KWRK) with an investment of US$ 250 Million. The Gresik-Semarang pipeline network supplies gas to PLN's Tambak Lorok gas power plant and its special industrial zones in Central and East Java.
 
PEHA RECEIVED Rp1.35T FINANCING FACILITY
PT Phapros, Tbk. (PEHA) through its parent company PT Kimia Farma (Persero), Tbk. (KAEF) received new financing facility from PT Bank Mandiri (Persero), Tbk. (BMRI), PT Bank Negara Indonesia (Persero), Tbk. (BBNI), PT Bank BRISyariah, Tbk. (BRIS), and PT Bank Maybank Indonesia, Tbk. (BNII) amounting to Rp1.35 trillion. PEHA will pay 7.65%-8.50% interest on this 12-month, revolving loan, which will be spent on working capital and business expansion.
 
WSKT FY19 RESULT
PT Waskita Karya (Persero), Tbk. (WSKT) reported a net profit of Rp938B, which plunged by -76% (Y/Y). Although WSKT’s revenue indeed declined by -35.7% (Y/Y), it was the finance costs, which rose by +47.2% (Y/Y) that had suppressed WSKT’s net profit. 
 
PTPP AIMS TO RECORD DOUBLE DIGIT GROWTH THIS YEAR
PT PP (Persero), Tbk. (PTPP) aims to record double digit growth for its revenue (+13.5% Y/Y) and net profit (+50.5% Y/Y), or equal to Rp28T and Rp1.4T of revenue and net profit, respectively. This year, PTPP also aims to acquire a new contract of Rp40T, which is expected to be supported by EPC contract of Rp13T. Moreover, this year’ capex will be at Rp5.42T. Going forward, the Company expects to reach Rp40T of equity through new shares issuance of PT PP Presisi, Tbk. (PPRE) and the IPO of PT PP Infrastruktur.
 
JCI IS NEGATIVE, WITH EXPECTED RANGE OF 3,900 to 4,100.
JCI closed lower at 4,105, declining to our next support line at 4,034. If it is breached, then our next support will be at 3,944. MACD remained at the negative side, while stochastic touched the oversold thresholds. In our view, today’s JCI may be negative.
 
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).

Thu March 19Th, 2020

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