Logo Minnapadi
aboutusmpi.png
<< Back To Daily Report

Morning Dew 27 March 2020

FOCUS

U.S. SENATE WILL PASS COVID-19 RELIEF PACKAGE TO SUPPORT THE U.S. ECONOMY

Stock movements have decreased because of the spread of the coronavirus (COVID-19) since December 2019. Many countries have carried out lockdowns (isolation) to reduce the spread of the virus. However, these isolations have suppressed the regional economic growth, including Indonesia. The Indonesian government responded to the decline in domestic purchasing power by increasing the Direct Cash Assistance funds (Bantuan Langsung Tunai/BLT) amid the COVID-19 spread days ago. The Fed previously cut its benchmark interest rate (0.25%). The US Central Bank also stated to buy corporate debt amounting to US$10B and to protect its mutual funds market. For the first time the European Central Bank (ECB) bought mutual funds and debt securities from non-financial institutions, and it was followed by the Central Bank of Japan (BOJ). Several countries and central banks have also provided economic stimulus, including Australia (12/3), Hong Kong (26/3), the Central Bank of China, South Korea (3/3), the Bank of England (11/3), Canada, Germany (3/17) and Italy (11/3). However, these economic stimuluses have not been able to calm the market.

 

According to Johns Hopkins University information, there are more than 65,000 cases and 900 deaths due to COVID-19 in the United States (26/3). The country is also experiencing a shortage of masks and ventilators. The US Government closed businesses and schools to reduce the virus spread as well as the high rate of unemployment. The national government of the United States declared “the economic stimulus policy” to minimize the impact of the COVID-19 on its economy. This stimulus will be in the form of cash to more than 90% of Americans and businesses in the United States. The chamber of the United States Congress (U.S. Senate) passed a US$2T coronavirus relief package late Wednesday night and the vote result was 96-0. The global stock market surged up to 11% and the Jakarta Composite Index (JCI) rose more than 7% on the beginning of Thursday's trade (26/3) after the news was published. The increase in the JCI index is in line also with foreign investors' action to buy two shares that have big market capitalization in Indonesia Stock Exchange (IDX). The two shares, BCA and BBRI, were corrected in recent times. The next step is that the U.S. House will vote on the stimulus bill on Friday (3/27). House Speaker, Nancy Pelosi, also made clear in her statement that Democrats will support the aid bill. 

 

The stimulus package is pointed as the largest emergency aid package not only in modern history but also in the United States history (about 10% of US GDP) to help Americans, hospitals and businesses which delayed the spread of the COVID-19. Here are the bill details from the U.S. government:

  1. There are direct payments of up to $1,200 for individuals and US $2,400 for couples, and additional payment amounting to US$500 for children based on 2019 tax returns for those who filed them and 2018 information, if they have not. The benefit would be started for incomes above US$ 75,000 for individuals and amounting to US$150,000 for couples. pair. The tax will be removed for income amounting to US$ 99,000 and US$ 198,000. It would be away completely at the $99,000 and $198,000 thresholds, respectively
  2. The national government of the United States will add unemployment insurance amounting to $600/week for up to four months on top of what beneficiaries normally receive from states. It will be eligible to self-employed people and independent contractors
  3. It will also provide to make loans, loan guarantees or investments to or in businesses, states and municipalities damaged by the crisis amounting to US$500B from pool of taxpayer money
  4. The federal government of the United States will give an amount of US$25B in grants to airlines and amounting to US$3B to cargo carriers to be used exclusively for payments of employee wages, salaries and benefits. While another is amounting to US$25B and respectively US$4B for loans and loan guarantees 
  5. The national government of the United States will provide amounting to US$17B in loans and loan guarantees for unspecified businesses critical to maintaining national security
  6. The national government of the United States also will put fund (US$117B) into hospitals and veterans’ health care
  7. There is amounting to US$16B for the national pharmaceutical and medical supplies
  8. It also will amount to US$350B in loans for small businesses to cover salary, wages and benefits (250% of an employer payroll/month), with a maximum loan amounting to US$10M
  9. The stimulus is also including a tax credit for retaining employees (max 50% of wages paid during the crisis) and for businesses which are forced to suspend operations or gross income fall by 50% from the previous year
  10. The federal government of the United States is will pan group health plans and insurance providers to cover preventive services related to COVID-19 without cost sharing
  11. The national government of the United States will defer the employer’s payroll taxes, requiring the half of the deferred tax must be paid by the end of 2021 and the other half must be paid by the end of 2022 
  12. There is a ban for companies that take the government loans through buying back stock until a year after the loan is paid back
  13. The federal government of the United States will limit a salary increase of employees or executives who made at least US$425,000 in 2019
  14. President Donald Trump’s business and his family members’ businesses, Vice President Mike Pence’s business, and heads of executive department’s business will stop receiving emergency taxpayer relief. It applies to Congress members & their family members’ business.
  15. The national government of the United States will suspend the federal student loan payments until September 30, with no accrual of interest on those loans 

*Source: Bloomberg, CNBC, CNN, U.S Treasury, Indonesia Ministry of Finance, Yahoo Finance

 

JCI

On Thursday trading session (3/26), JCI rallied and soared after the US government's US$2 trillion economic stimulus eased the market nerves. The index closed by gaining +401.27 points (+10.2%) to 4,338.9. Trading volume reached 11.15 billion shares with a total transaction value of Rp12.74 trillion. Foreign investors posted a net buy of Rp662.26 billion, easing the year-to-date foreign net sell to Rp10.17 trillion.

 

All sectors rose, with the biggest gain secured by consumer goods (+13.00%), finance (+12.96%), and infrastructure (+11.43%). Stocks supporting the JCI were BBCA (+17.3%), BBRI (+20.5%), and UNVR (+19.4%). In contrast, stocks weighing down the JCI were RMBA (-6.6%), MAPA (-6.9%), and CTRA (-5.0%).

 

U.S. NEWS  

U.S. stocks rose for a third consecutive day as investors focus on the US$2 trillion stimulus package outweighs the COVID-19 outbreak and data from the U.S. Labor Department that showed unemployment claims soared to a record 3.28 million for the week ending March 21. According to the Johns Hopkins Coronavirus Map, as of Friday, 5:45 AM. ET., The U.S., surpasses China, Italy as the country with the most coronavirus cases, with total global confirmed cases of 529,093 people. The U.S. took the first place of confirmed cases by 83,507, followed by China with 81,782, and Italy with 80,589.

 

The DJIA added 1,351.62 points, or 6.38%, to close at 22,552.17 on Thursday. The S&P 500 rose 154.51 points, or 6.24%, to end at 2630.07, and the Nasdaq Composite jumped 413.24 points, or 5.60%, to close at 7797.54.

 

U.S. Treasury yields slid, with two-years Treasury yields hitting more than six-year low as unemployment claims soared to a record 3.28 million last week. The benchmark 10-year notes were down 5/32 to yield 0.84% and the 30-year bonds down 2/32, yielding 1.41%. Meanwhile, the two-year notes were down 2/32, to yield 0.29%.

 

Oil prices down after strengthening for four consecutive sessions as rekindled fears spark over the COVID-19 outbreak. Brent crude down-2.56%, to US$26.63/barrel and WTI crude slipped -5.51%, to US$23.14/barrel.

 

MACRO UPDATE

MORGAN STANLEY CUT ECONOMIC GROWTH TO +0.3%

The Covid-19 pandemic is believed to put pressure on the global economy as more and more developed countries impose lockdown (quarantine) policy. Combined with social distancing, this could damage household consumptions as one of the key pillars sustaining the economy (GDP). Morgan Stanley has revised down its estimate on global GDP growth to only +0.3% in 2020 and -2.1% for pessimistic scenarios, from previously +0.9% and -0.6% (pessimistic). Should the situation be under control soon, the economy is expected to start the relieving process by 3Q20.

 

INDUSTRY UPDATE

CORONA EFFECT, NO REVISION ON COAL PRODUCTION YET

The fast-spreading Covid-19 has already put pressure on coal prices and export volume, and therefore is feared to affect the production as well. So far, though, no mining companies have yet to revise their work plan and budget (RKAB). However, the Chinese government plan to open the lockdown in Wuhan on April 8 is expected to bring the prospect of coal back to life. Production target was set at 550 million tonnes this year, while last year's realization hit 610 million tonnes, surpassing the 489 million tonnes target.

 

LPS CUT DEPOSIT RATE 25 BPS TO 5.75%

The Indonesia Deposit Insurance Corporation (LPS) cut 25 basis points (bps) of its deposit rate for Rupiah-denominated savings in conventional banks to 5.75%, whereas the rate for forex-denominated savings was left unchanged at 1.75%. Besides, LPS also cut 25 bps of the rate for Rupiah-denominated savings in BPR to 8.25%. The newly-issued policy was based on the current condition of savings rate, banking liquidity, financial system stability, and economy, and will be in effect on March 26 - May 29, 2020.

 

COMPANY UPDATE

MEDC REVISED ITS 2020 TARGET

Amid weak oil price outlook, PT Medco Energi Internasional, Tbk. (MEDC) revised its 2020 target, including cutting its capital expenditure to US$240 million from US$340 million, operation expenditure by 15%, and production target to 100 - 105 thousand boepd from 110 thousand boepd. The capex will be allocated to the oil & gas segment (US$240 million) and electrical segment (US$60 million). MEDC said that it will continuously study its target according to oil price movements this year. FOr additional information, Moody’s recently changed its MEDC outlook rating to negative from stable, while the rating remained at B1. 

 

FITCH DOWNGRADE BBCA RATINGS

PT Bank Central Asia Tbk (BBCA) received a rating downgrade from Fitch Ratings Indonesia for the long-term Issuer Default Rating (IDR) of PT Bank Central Asia Tbk (BBCA) to 'BBB-' from 'BBB'. Furthermore, Fitch also downgraded BCA's National Long-Term Rating and its financial subsidiary, PT BCA Finance (BCAF) to 'AA + (idn)', from 'AAA (idn)' with a stable outlook. The downgrade was caused by a weaker operating environment for banks in Indonesia as a result of the COVID-19 pandemic. At the same time, in order to cut the COVID-19 outbreak, since Monday (3/23) the company began to impose limited operating hours from 08.15 - 14.00 for all their branch offices in Indonesia. Furthermore, the company, starting from March 24 to April 2, 2020, also decided to suspend operations in more than 30% of its branch offices in Jakarta, Bogor, Depok, Tangerang, and Bekasi (Jabodetabek).

 

TOTO CUT ONE OF ITS SANITARY WARE PRODUCTION LINES

As a result of declining local and export demand, PT Surya Toto Indonesia, Tbk. (TOTO) cut one of its sanitary ware production lines, which, the company said, would result in higher cost of goods manufactured and cost of goods sold. To combat the rising costs, TOTO did efficiency efforts to reduce operational costs and negotiated with international buyers to boost exports.

 

BMRI TO ISSUE A RELAXATION OF POLICY

PT Bank Mandiri (Persero), Tbk. (BMRI) plans to issue a relaxation of policy for installments and loan period for small medium enterprise (SME) players, including interest rate readjustment. In addition, BMRI will offer early credit restructuring and lower provision & administration fees. Moreover, 20% of additional credit facilities will also be offered to good profiles. As additional information, BMRI’s SOE credit portfolio reached Rp103T (+10.9% Y/Y) in February 2020. 

 

TBIG ISSUED Rp1.5T BOND

PT Tower Bersama Infrastructure Tbk (TBIG) has issued Phase III Tower Bersama Infrastructure Sustainable Bonds Phase IV in 2020 with a total value of Rp1.5T consisting of Rp633B with a fixed coupon of 6.25% and a period of 370 days, and Rp867 B with a fixed coupon of 7.75% and a 3-year tenor. The funds obtained will be used to pay a portion of the financial obligations of the subsidiary, specifically the Revolving Loan Facility of US$ 375M from the existing credit facilities. The bonds received an AA- rating from Fitch Indonesia.

 

JSMR RECORDED A DECREASE IN VEHICLES VOLUME

PT Jasa Marga Tbk. (JSMR) recorded a decrease in volume of more than 20% in a number of toll roads due to social distancing and work from home to cope with the spread of the COVID-19 virus. The toll roads that experienced the most significant decrease in vehicle volume were experienced by the Bali-Mandara toll road, the Sedyatmo Airport toll road section and also the Kunciran-Serpong toll road. Going forward, by looking at the decline in the volume of this toll road which will impact directly to the company's revenue, the company will review the structure and budget, as well as improve efficiency on all lines.

 

TECHNICAL OUTLOOK

JCI IS POSITIVE, WITH EXPECTED RANGE OF 4,200 to 4,550.

JCI closed higher at 4,338 breaching its nearest Resistance at 4,330/410, so the next Resistance hanging at 4,410/545, while the Support lay at 3,920/845. Stochastic, MACD, and RSI suddenly turn positive. PSAR red dot hit the candlestick, so hopefully turn into green in today trading, while EMA 5, 20 & 50 still in a dead cross pattern.

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

 

ICBP

Support            8150

Resistance        11100

Target Price     10500

 

SIDO

Support            900

Resistance        1280

Target Price     1200

 

KAEF - Achieved

Support            540

Resistance        990

Target Price     1050

 

INAF - Achieved

 

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).

 

Fri March 27Th, 2020

Disclaimer

En Lorem Ipsum In Eiusmod.

EN HOME LOREM IPSUM EU NISI NISI LABORE ANIM REPREHENDERIT ADIPISICING SED LABORE QUIS UT TEMPOR ESSE QUIS CILLUM VENIAM CILLUM SUNT NISI CILLUM UT FUGIAT FUGIAT UT OFFICIA ET QUIS.

En Lorem ipsum Velit sit magna adipisicing laborum eu voluptate exercitation minim sit ex incididunt exercitation ut in sunt culpa quis magna sed dolor in et amet sunt id fugiat sint laboris sed officia est id officia eiusmod eu reprehenderit ullamco sed esse aliquip ex minim occaecat amet ad nulla voluptate do officia in reprehenderit quis officia dolore pariatur in quis consectetur ut nostrud aliqua sed officia fugiat nisi incididunt anim in laborum.

Lorem ipsum Dolor dolor dolore quis magna nulla aute ea sed velit id amet ut id minim proident cupidatat anim pariatur ex do dolore ut sit mollit ex voluptate consequat sit eu esse cillum exercitation eu dolore pariatur sunt et ut est Ut dolore id voluptate qui Ut in fugiat non exercitation Excepteur sunt magna ullamco sint do quis laboris dolore dolore pariatur laboris nulla mollit nisi laboris magna in aute Ut enim Excepteur est culpa in enim officia enim ea cillum fugiat dolore proident officia eiusmod pariatur in elit et aliquip esse culpa sint in fugiat aliquip cupidatat non id aliquip sit ad reprehenderit mollit dolor aliqua Duis in amet exercitation ut ut cillum et adipisicing qui aliqua.