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Morning Dew 22 September 2020

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DEFLATION MAY CONTINUE IN SEPTEMBER

Bank Indonesia Price Monitoring Survey in the third week of September 2020 predicted that a deflation of -0.01% M/M may occur in September. Previously, deflations also occurred in two consecutive months, i.e. -0.10% M/M in July and -0.05% M/M in August. If BI's estimate turns into reality, Indonesia will experience a series of deflations in one full quarter (Q3).

 

In the survey, BI estimates that September deflation is still largely contributed by food commodity prices, ranging from eggs of broilers at -0.04% M/M, broiler chicken -0.03% M/M, onions -0.02% M/M, and oranges, chilies, and gold jewelry -0.01% M/M, respectively. According to data from the National Strategic Food Price Information Center (PIHPS), the prices of these commodities had indeed decreased. In traditional markets, for instance, from the beginning of August to the third week of September, prices for chicken meat and eggs had fallen by -8.3% and -5.7%, respectively; while onions and chilies had fallen by -6.2% and -15.9%, respectively.

 

Low inflation (disinflation) can actually be regarded as either the success of price control, especially for basic needs, or a reflection of decreased demand due to low purchasing power, with a greater tendency in the latter. This can be seen from the declining trend in core inflation, specifically when the Covid-19 pandemic hit Indonesia (dashed square in Fig. 1). Core inflation components usually tend to be more persistent or stable compared to those whose prices are regulated by the government or are volatile (energy and food). When core inflation rises, it indicates that consumers are still willing to pay higher prices for goods and services whose prices are difficult to increase, and is a reflection of healthy purchasing power.

 

However, concern about the phenomenon of disinflation is not national but global. A Reuters survey, as cited from CNBC, of 160 world leading economists showed more than 70% of them stated that the bigger threat when the pandemic subsides is lower prices, which if extending any longer might turn a recession into a depression.

 

JCI

On Monday trading (9/21), JCI declined by -60 pts (-1.2%) to 4,999.3. Total transaction volume reached 11.6 billion shares with a transaction value of Rp6.8 trillion. Foreign investors posted a net sell of Rp311 billion, compounding the year-to-date foreign net sell to Rp40 trillion.

 

Only the agriculture sector that advanced (+1.3%). On the other hand, the retreating sectors were led by basic industry (-2.2%), infrastructure (-2.2%), and miscellaneous industry (-1.6%). Stocks supporting the JCI were SOHO (+19.8%), AALI (+5.7%), and TBIG (+2.4%). By contrast, stocks weighing down the JCI were TLKM (-2.8%), BMRI (-1.8%), and ASII (-2.3%).

 

U.S. NEWS  

U.S. stocks plunged with the S&P 500 notched its longest losing streak since February as concerns about new lockdowns in Europe and a lack of progress toward another round of fiscal stimulus out of Washington. The DJIA fell 1.92% at 27,126.95, the S&P 500 lost 1.16% to 3,281.06 and the Nasdaq Composite dropped 0.13% to 10,778.80.

 

U.S. Treasury yields fell as investors moved into safe-haven assets amid renewed worries over the new COVID-19 restrictions in Europe. The benchmark 10-year notes were up 7/32 to yield 0.67% and the 30-year bonds rose 24/32 to yield 1.42%. The 2-year notes were flattened to yield 0.139%

 

Crude oil prices closed sharply lower as the market braced for the return of Libya oil following reports that Libyan military commander Khalifa Haftar will lift an eight-month blockage of crude exports that had shut nearly all of the country's production. The blockade slashed Libyan production to just over 100,000 BPD now from around 1.2 MBPD previously. WTI crude slipped by -3.60% to US$39.63/barrel, while Brent crude dropped by -3.24% to US$41.75/barrel.

 

COMPANY UPDATE

WSKT TO PAY SHELF REGISTRATION BONDS

PT Waskita Karya (Persero) Tbk (WSKT) plans to pay its Shelf Registration Bonds III Phase I Year 2017 Series A that will be due on October 6. That said, WSKT has prepared Rp1.36T for the payment.

 

PEFINDO AFFIRMED BNLI BONDS AT idAA+

Pefindo affirmed PT Bank Permata Tbk (BNLI)’s Subordinate Bonds II Phase I Year 2013 amounting to Rp860B at id AA+. The bonds will be due on December 24. The rating reflects the strong Company’s commitment for its long-term debt. 

 

INDY TO ISSUE GLOBAL BOND WORTH AS US$650 M 

PT Indika Energy Tbk (INDY) through its wholly-controlled subsidiary, namely PT Indika Inti Corpindo (ICC), PT Tripatra Engineering (TPE), PT Tripatra Engineers and Constructors (TPEC), and Tripatra (Singapore) Pte. Ltd (TRIS) will issue senior debt securities (Senior Notes) with a maximum amount of US$650 M or equivalent to Rp9.62 T (exchange rate of Rp14,800 / US$). The bonds will be issued in accordance with the provisions of Rule 144A and Regulation S of the Securities Act and listed on SGX-ST or Singapore Exchange Securities Trading Limited, the Stock Exchange in Singapore. The funds obtained will be used for business development, financing business diversification, repayment of company obligations, as well as corporate financing in general. The company will further disclose the plan to use the proceeds from the transaction in additional information that will be published by the company no later than 2 working days before the GMS. The GMS will be held on 26 October 2020.

 

GIAA LOOKS FOR BRIDGING LOAN Rp 2 T 

PT Garuda Indonesia Tbk (GIAA) continues to negotiate a bridging loan worth Rp2.3 T with a number of banks such as PT Bank Mandiri Tbk (BMRI), PT Bank Rakyat Indonesia Tbk (BBRI), and PT Bank Negara Indonesia Tbk (BBNI). The bridging loan is needed while waiting for the government bailout to be disbursed through the issuance of a mandatory convertible bond (MCB) worth Rp8.5 T in 4Q20.

 

At the same time, PT Pemeringkat Efek Indonesia (Pefindo) revised the KIK EBA Mandiri GIAA01 class A rating to BB from the previous CCC. The rating upgrade was caused by EBA class A amortization principal payment of Rp360 B has been carried out on September 2, 2020, from the schedule supposed to be July 27, 2020.

 

BBTN TARGETS TO ACQUIRED 25,000 EDC ACQUISITION IN FY2020

PT Bank Tabungan Negara (Persero) Tbk. (BBTN) will continue to increase the acquisition of fee-based income (FBI) and low-cost funding by continuing to acquire local and national merchants as merchants for Electronic Data Capture (EDC) machines. The company targets to acquire 25,000 EDCs up to FY2020. The acquisition step is also in line with the company's digital transformation efforts, where until the end of August 2020 the company recorded more than 132 million transactions through the electronic banking line, an increase of 29.05% (Y/Y).

 

TECHNICAL OUTLOOK

JCI IS NEGATIVE, WITH EXPECTED RANGE OF 4,920 to 5,060

JCI closed lower to 4,999 with the Support lay at 4,754 while the Resistance hanging at 5,190/380. EMA 5&20 still in death cross pattern while PSAR green still appeared. MACD still in the negative territory along with Stochastic turn to negative again and RSI was curled lower.

 

ADHI

Support            500

Resistance        1015

Target Price     995

 

ADRO

Support            1030

Resistance        1350

Target Price     1280

 

BBTN

Support            900

Resistance        1930

Target Price     1800

 

FAST

Support            880

Resistance        950

Target Price     950

 

HMSP

Support            1455

Resistance        1650

Target Price     1650

 

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).

Tue September 22Th, 2020

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