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Morning Dew 26 March 2020

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BEARISH MARKET MAY ONLY BE STARTED

As a result of global pandemic issues, in China, people’s domestic and international movements have been limited, which resulted in a drop in airlines and hotels demand - or to be specific, a blow to the tourism industry. Becoming a domino effect, slower mobility, it seems, would cause the manufacturing sector to take a hit as well, as production will be halted, while at the same time, workers are obliged to stay at home. Barclays economists, as cited from Bloomberg, estimated China’s services to plummet by 40-45%, worse than that of manufacturing at 30-35%. In order to alleviate the pain China is experiencing, the Chinese’s policymakers, instead of issuing a massive easing monetary policy, have started to lend money to businesses in need, however. In fact, The People’s Bank of China (PBOC), China’s Central Bank, has injected money into the financial system and cut banks’ reserve requirement, boosting liquidity. Fiscal-wise, cutting taxes and spending money on infrastructure have become the Government choices to avoid major lay-offs and spur the economy through the sale of infrastructure special bonds, respectively. Still, Bloomberg Economics predicted that getting back to the workplace too soon may, by any chance, cause a second wave of infection, a not-so-much anticipated scenario after the growth rate of new cases in Mainland China has finally flattened.

 

As it stands, a supply and demand crisis has become global, but the shocks could worsen in the wake of the market's consensus estimate of underestimating the hit. On the one hand, as cited from Bloomberg, cuts on forecasts have been starting and those may keep lingering, as China’s economic data, including retail sales, industrial output, and fixed-asset investment issued last week showed an historic slump, much worse than consensus’ estimates. On the other hand, in February, the IMF unchanged its global growth forecast at 3.3%, from previously 2.9% in 2019. In a nutshell, a recovery - not only in China but also in other countries, may be slower than expected; thus, continuously monitoring the global economy development, without overestimating, may be the best approach now.

 

JCI

On Tuesday trading session, the JCI closed lower by -51.9 pts (-1.3%) to 3,938. Total trading volume reached 6.4B shares, with a total transaction value of Rp7.8T. Foreign investors recorded a net sell of Rp631B, again, weighed down the YTD foreign net sell to Rp10.8T.

 

Two sectors advanced, which were agriculture (+1.06%) and mining (+3.64%). The retreating sectors were led by miscellaneous industry (-4.57%), property (-2.92%), and infrastructure (-2.1%). Stocks supporting the JCI were BBCA (+1.6%), HMSP (+2.8%), and BNLI (+10.6%). In contrast, stocks weighing down the JCI were BBRI (-6.9%), BMRI (-7.0%), and ASII (-6.8%).

 

U.S. NEWS  

U.S. stocks closed mixed, scoring their first back-to-back gains since February as stimulus hopes outweighs virus fears. The lawmakers and the White House reached an agreement on a roughly US$2 trillion coronavirus rescue package, helping to reignite buying on Wall Street for the moment, after lawmakers on Monday (23/3) twice failed to reach an agreement. The DJIA was up 2.33% at 21,187.29, while the S&P 500 jumped 1.15% to 2,475.56. The Nasdaq Composite fell 0.45% to 7,384.30.

 

U.S. Treasury yields rose as demand for safe-haven assets cooled after the U.S. Congress reached an agreement on a stimulus package. The benchmark 10-year notes were down -10/32 to yield 0.84% and the 30-year bonds fell 1--40/32, yielding 1.14%. Meanwhile, the two-year notes were up +3/32, to yield 0.32%.

 

Oil prices rose buoyed by the U.S. stimulus package fueled investors optimism while on the other hand, the EIA data revealed a smaller-than-expected weekly climb in U.S. crude inventories. Brent crude rose +1.95%, to US$27.68/barrel and WTI crude rose +2.04%, to US$24.50/barrel. 

 

MACRO UPDATE

THE GOVERNMENT POLICY TO OVERCOME THE IMPACT OF COVID-19

In order to mitigate the impact of COVID-19, on Tuesday, March 24, 2020, President Joko Widodo gave some easing to micro, small and medium enterprises (UMKM), to motorcycle taxi drivers and taxi drivers.

For motorcycle taxi drivers, taxi drivers, and fishermen who currently have credit installments, will get easing for the next 1 year for the payment of interest or installments.
For UMKM, OJK has provided some credit relaxation for credit values ​​below Rp10 billion both for bank loans and the non-bank financial industry, delays in installments of up to one year and an interest rate reduction

 

Furthermore, the government in the near future will implement additional social assistance in the 6-month Basic Needs Card for a period of 6 months to 200,000 Beneficiary Families (KPM) will also be launched with a budget of Rp4.5 trillion with no exception, with the implementation of the Pre-Work Card to anticipate workers who were fired from work, daily workers who lost their income and micro-entrepreneurs who lost their turnover, with a budget of Rp10 trillion.

 

Previously, on March 19, 2020, the OJK also provided stimulus for Indonesian banks consisting of:

Assessment of the quality of credit/financing/provision of other funds based only on the prompt payment of principal and/or interest for loans up to Rp10 billion; and
Restructuring by improving the quality of credit/financing smoothly after restructuring. The terms of this restructuring can be applied by banks without credit ceiling limits.

 

BI CONDUCTING FURTHER INTERVENTIONS

In order to mitigate the impact of COVID-19, on Tuesday, March 24, 2020, Bank Indonesia (BI) intervened through the spot market, DNDF (Domestic Non-Delivery Forward) and on the SBN secondary market. Furthermore, BI will continue to inject liquidity on the foreign exchange market so that it can safeguard the availability of rupiah. Previously, BI had relaxed its net foreign exchange provisions so that hedging could be carried out. In addition, BI also relaxed export-import funding. For the payment system sector, banknotes are also provided at the ATM sufficiently. BI also conducts cleaning so that the money supply is also hygienic and able to mitigate the spread of the virus.

 

COMPANY UPDATE

WEGE WORKING ON TWO COVID-19 HOSPITALS

Amidst Covid-19 pandemy, PT Wijaya Karya Bangunan Gedung, Tbk. (WEGE) acquires orders of two hospitals for caring for the victims of the virus. First is the renovation and refunctioning of Pertamina Jaya Hospital in Jakarta Pusat as Covid-19 specific hospital. Besides, WEGE will build a 90-bed-capacity hospital by applying its modular system. Second, WEGE is currently working on Karantina Corona Modular on Galang Island, Kepulauan Riau, with 360 beds capacity. On the same site, WEGE is also renovating ex-Vietnam refugees camp in 1979 to be the housing for medical personnels. 

 

BANK BTPN RECORDED NET PROFIT AMOUNTING TO Rp 2,6T IN 2019

PT Bank BTPN Tbk recorded credit amounting to Rp141,8T (+10%,Y/Y) and profit after tax (NPAT) amounting  to Rp 2,6T (+40%,Y/Y) with NPL ratio by 0,8% in 2019. Throughout 2019 BTPN’s lending was supported by corporate financing amounting  to Rp75,7T (+15%, Y/Y), Small & Medium Business financing (SME Loan) as well as productive underprivileged group financing (BTPN Syariah). It also finances syndicated projects (energy & food security, and infrastructure). BTPN also provides bilateral  loans for national private companies, state-owned enterprises (BUMN), automotive industry & export import companies. BTPN and Sumitomo Mitsui Banking Corporation (SMBC) have led syndicated financing OF 18 banking & global financial institutions in 2019. It also funded the Jambaran-Tiung Biru gas field project (PT Pertamina EP Cepu) with 12 national & foreign banks. Company's digital banking services (Jenius) increased by 97,8% (Y/Y) until the end of 2019. It managed to increase its current account savings account (CASA) by 28% and liquidity coverage ratio (LCR) by 219%. While the net stable funding ratio (NSFR) was by 113% and the CAR was by  24,2%. 

 

BIRD WILL APPLY THE STERILIZATION PROCESS

PT Blue Bird Tbk (BIRD) will implement a spraying sterilization process for its drivers and employees through regular disinfecting booths at all pools and Bluebird Group offices to anticipate the COVID-19 spread. BIRD has also implemented a series of preventive measures to ensure the safety and comfort of its passengers. The Company also provides food stamps and JPK3  free facilities at each pool clinic to provide first-hand treatment for Bluebird drivers. 

 

TCPI WILL ESTABLISH FIVE SUBSIDIARIES

PT Transcoal Pacific Tbk (TCPI)  through its two subsidiaries,  PT Kanz Gemilang Utama & PT Sentra Makmur Lines, will establish new subsidiaries (5 Subsidiaries) in shipping services. TCPI will deposit authorized capital of Rp100M/subsidiary and paid up capital amounting to Rp25M. The names of the five newly established shipping companies are PT Energi Lautan Kencana, PT Karya Samudera Insani, PT Bahari Maritim Energi, PT Sari Samudera Gemilang and PT Transportasi Lautan. It is formed in line with the ministry of trade regulation (Number 82/ 2017) concerning about two obligations: the coal and CPO exporters obligation and rice & goods  importers obligation must use local sea transportation 

 

MPRO WILL POSTPONE SEVERAL PROJECTS BECAUSE OF COVID-19 SPREAD

PT Maha Properti Indonesia Tbk (MPRO) projected Company’s revenue will decrease by 31% to 50% and decided to postpone several projects. The project that was postponed is the second tower town house offices in Solo. The Kahyangan project in Solo will be on an area of  70.134 square meters (2 apartments, 2 offices, housing & shop houses). While The Simprug Signature (51.676 square meters in Ciledug Raya), Maja project (offices & shop houses covering an area of 283 hektare), and Tanjung Layar Beachfront City (housing area of 73.196 square meters) are still continued. The ongoing project is Apsara apartment  (32 floors and 439 units).

 

XL AXIATA DATA TRAFFIC INCREASED BY 15%

PT XL Axiata Tbk. (EXCL) recorded an increase in data traffic (10% - 15%) due to the work from home/WFH and the study from home/SFH policy (03/24). The traffic came from learning applications & video on demand service. While telpon & SMS traffic increased by 2% and 3% respectively. The highest usage occurs in the  morning (between 09.00 AM and 12.00 PM). The learning access that is widely used: Google Classroom (200%) and Ruang Guru (50%). The use of social media (Whatsapp & Facebook) are 10% and 11% respectively.While the biggest contributors to the surge in XL data traffic were video on demand (VoD) Netflix (50%) followed by gim Mobile Legend (10%) and video Youtube streaming (5%). The increases in data traffic by location are: West Java (67%), Tasikmalaya (14%), DKI Jakarta (6%), Banten (6%), Aceh (5%), North Sumatera Utara (6%), Riau & the Riau islands (9%), South Sumatra (7%), West Sumatera (2%), Babel (12%), Lampung (6%), West Kalimantan (2%)). East Kalimantan (4%)), Central Java (8%), South Kalimantan & Central Kalimantan (4%- 5%), East Java (12%), Bali (22%), West Nusa Tenggara (21%), South Sulawesi (13%) and North Sulawesi (13%).

 

TECHNICAL OUTLOOK

JCI IS POSITIVE, WITH EXPECTED RANGE OF 3,850 to 4,150.

JCI closed lower at 3,938 breaching its nearest Support at at 3,945, so the next Support lay at 3, 845/775 while the Resistance hangging still at 4,330/410. Stochastic, MACD, and RSI trun negative again. PSAR red dot still appears along with EMA 5,20 & 50 still in dead cross pattern.

Hence, today our JCI is POSITIVE due to the the possibilty to rebound after weakened for two weeks in a row and POSITVE SENTIMENT from the U.S. stock market

 

ICBP

Support            8150

Resistance        11100

Target Price     10500

 

SIDO

Support            900

Resistance        1280

Target Price     1200

 

KAEF

Support            540

Resistance        990

Target Price     1050

 

INAF

Support            480

Resistance        850

Target Price     850

 

BBNI

Support            2700

Resistance        7900

Target Price     7100

 

BBTN

Support            660

Resistance        1930

Target Price     1800

 

WEGE

Support            107

Resistance        290

Target Price     240

 

DMAS

Support            102

Resistance        296

Target Price     246

 

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 March 25Th, 2020

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