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Morning Dew 23 March 2020

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GLOOMY OUTLOOK FOR OIL PERSISTS

Oil prices tumbled again after trying to reclaim its heavy losses as Russia denied US-initiated intervention to ease the tension it has with Saudi Arabia. On Friday (3/20), Brent crude futures fell by -3.3% to US$27.53 per barrel, whereas WTI futures fell by -21.33% to US$19.84 a barrel. Russia’s stance prolonged the confusion of demand already brought about by the global pandemy of Covid-19.

 

As the number of identified cases ramping up very rapidly, many countries or cities enact lockdown policy, which hurts the demand for oil even deeper. Based on widespread lockdowns in Europe but more limited U.S. measures, traders and analysts see demand falling by more than 10 million barrels per day (bpd), which is equivalent to 10% of daily global consumption of crude of about 100 million bpd. Standard Chartered said it expected average demand in 2020 to fall by 3.39 million bpd, which would be a new record, exceeding the 1980 drop of 2.71 million bpd.

 

Analyst said Brent could dive to US$10, a level last seen two decades ago, due to sliding demand and record supply from Saudi Arabia, which has been chasing market share after a deal between OPEC and Russia on curbing supplies fell over how best to respond to the coronavirus, with Riyadh and OPEC seeking deeper production curbs, while Moscow resisted. Goldman Sachs, which on March 18 predicted global demand dropping by 1.1 million bpd in 2020, cut its second-quarter Brent forecast to US$20. Bank of America Global Research saw it falling below US$20.

 

JCI

On Friday trading (3/20), JCI was successfully strengthened along with the rebound of the majority of Asia Indexes. IHSG was closed at level 4,195 or increased 89.5 points (+2.2%). The transaction volume was recorded at 13.40 billion shares with a trading value amounting to Rp13.18T. Foreign investors booked a net sell amounting to Rp794.07B, resulting in an accumulation of net foreign sell on YTD amounting  to Rp10,24T.

 

All sectors strengthened except for Miscellaneous Industry (-1.61%) & Finance (-1.40%). While sectors that gained were led by: Consumer Goods (+7.79%), Infrastructure + 5.75%) & Manufacture (+5.74%). Stocks that supported the JCI were TLKM (+9.9%), HMSP (+16.5%) & UNVR (+10.2%). Meanwhile, stocks that weakened the JCI were BMRI (-6.9%), BBRI (-4.1%) & BBNI (-6.9%).

 

U.S. NEWS  

U.S. indexes fell almost -4% on Friday’s trading session amid looming fears about global pandemic issues. Despite the Fed’s action to cut interest rate in hope for spurring the economy, however, the market remained bear to have ended Wall Street’s record 11-bull run. Still, investors are anticipating how large the policymakers’ fiscal stimulus plan will be, as it stands. The DJIA was down by -4.55% to 19,174; the S&P 500 fell -4.34% to 2,305; and the Nasdaq lost -3.79% to 6,880.

 

U.S. Treasury yields fell despite the Fed’s action to add liquidity to the market, while at the same time, less short-term optimism was seen. The 2-year notes were up 5/32 to yield 0.33%, the 10-year notes rose 2-11/32 to yield 0.88%, the 30-year bonds rose 7-4/32 to yield 1.46%.

 

Oil prices rose, as global demand is expected to remain weak, at least in a short term period. Brent crude declined -3.3%, to US$27.53/barrel and WTI crude fell -21.33%, to US$219.84/barrel.

 

MARKET UPDATE

BEI GIVES EXTRA TIME FOR FINANCIAL STATEMENTS REPORTING

Following up on a letter given by the Financial Services Authority (OJK) Number: S-45 / PM.22 / 2020 dated March 19, 2020 regarding relaxation of regulations related to the obligation to submit reports by Listed Companies and Issuers, PT Indonesia Stock Exchange (BEI) provides related relief fulfillment of the obligation to submit company reports was recorded as an effort to mitigate the impact arising from the emergency conditions of COVID-19 in Indonesia. First, the extension of the deadline for submission of Annual Financial Statements, Interim Financial Statements I Year 2020 and Annual Reports for Listed Companies through SPE-IDXnet, which is for 2 (two) months from the deadline for reporting as referred to in the IDX Regulations. Second, with regard to the extension of the time limit referred to in number 1, the Exchange shall adjust the imposition of special "L" notation for the Listed Company.

 

COMPANY UPDATE 

WSKT WILL RECEIVE PAYMENT FROM LMAN  AMOUNTING TO Rp500B

PT Waskita Karya (Persero) Tbk (WSKT) will receive a receivable payment  (land bailout ) amounting to Rp500B at the end of March 2020. It will come from the State Asset Management Institute (LMAN). Previously, WSKT had received payment for the Jakarta-Cikampek II elevated toll road project amounting to Rp6.2T & the turnkey project amounting to Rp12.3T. Company's total cash inflows are targeted amounting to Rp33.2T from the turnkey Project (Rp10T) followed by the construction project (Rp18.7T) and the land bailout receivables of LMAN (Rp4.5T). As of 2019 the cash was amounting to Rp9.25T (-16.64%,Y/Y) while operating cash was amounting to Rp9.01T (+124.71% Y/Y).

 

BYAN ACQUIRED 73-79% OF FY20 TARGET

PT Bayan Resources, Tbk. (BYAN) expects to record a coal production target of 31-33 million tons this year, or higher by +3% (Y/Y) than that of 2019 at 32 million tons. Sales-wise, BYAN estimates to achieve 35-38 million tons, which rose by +31% (Y/Y) from last year’s realization at 29 million tons. However, fortunately, as of February 2020, BYAN has received a total contract value of 27.7 million tons, equal to 73-79% of FY20 target.

 

In addition, this year, BYAN aims to report a revenue and EBITDA of US$1.4-1.6B and US$320-350M, respectively. Capital expenditure figure is estimated to reach up to US$110 million for infrastructure and equipment development.

 

ARTO TO CONDUCT RIGHTS ISSUE

PT Bank Artos Indonesia, Tbk. (ARTO) plans to conduct rights issue by issuing 9.65B new shares with a nominal value of Rp100/share. 1 rights issue, which will be distributed to the shareholders on March 31st, 2020, is equal to 8 rights issues. The exercise price will be at Rp139/share and the expected proceeds will be at Rp1.34T.

 

PGAS TO SET TESTING ON OF TELUK LAMONG LNG TERMINAL IN MAY 2020

PT Perusahaan Gas Negara Tbk (PGAS) in 2020 is targeting 650 new industrial customers. Furthermore, the company in the next five years is also targeting the volume of 1,800 BBTUD for Domestic Commerce. At the same time, the company is also targeting the development of an LNG terminal in Lamong Bay with a capacity of 40 MMSCFD, which will be ready to be tested in May 2020 and will be completed permanently in the end of 2020, which will be used to meet gas needs in East Java by 180 MMSCFD in 2023, and can growing to meet all the gas needs in East Java of 600 MMSCFD. With the completion of the development of the Lamong Bay LNG, it can also optimize the domestic LNG portfolio as well as the security of gas supply for the trans Java and Trans Sumatra integrated networks going forward.

 

TECHNICAL OUTLOOK

JCI IS POSITIVE, WITH EXPECTED RANGE OF 4,050 to 4,300.

JCI closed higher at 4,195 heading to nearest Resistance at 4,330/410 while Support lay still at 3,945/4,035. Stochastic and MACD showed positive signal along with RSI. PSAR red dot still appears along with EMA 5,20 & 50 still in dead cross pattern. Hopefully today JCI continue its straightening.

 

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).

 

Sun March 22Th, 2020

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