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Morning Dew 29 July 2020

FOKUS

BBCA’S 1H20 PERFORMANCE: A WARNING SIGN FOR THE INDUSTRY

The impact of Covid-19 pandemic on the banking industry begins to materialize in 1H20 results. The largest public company on the IDX and the largest commercial bank in Indonesia, PT Bank Central Asia, Tbk. (BBCA), for instance, booked a lower net profit of Rp12.24 trillion or downed 4.8% Y/Y. A significantly much higher provision of Rp6.5 trillion, which soared by +167% Y/Y compared to Rp2.4 trillion in 1H19, was held responsible for the dwindling profit. As a matter of fact, BBCA’s operating income still managed to grow by +10.3% Y/Y to Rp37.8 trillion, and combined with a slower increasing operating expenses of +3.8% Y/Y, pre-provision operating profit (PPOP) increased by +15.8% Y/Y to Rp21.5 trillion.

 

In addition to eroding bottom line, the pandemic was also responsible for shrinking the appetite for new credits due to slowing business activities, especially true in 2Q20 when the large-scale social restrictions (PSBB) was in its strictest effect. As of 1H20, BBCA’s loan channeling grew moderately by +5.3% Y/Y to Rp595 trillion. Corporate loans became the backbone with the largest share of 43% and the highest growth of +17.7% Y/Y or amounted to Rp258 trillion, whereas commercial and SME loans slightly declined by -0.9% Y/Y to Rp184.6 trillion. On the other hand, consumer loans dropped by -5.1% Y/Y to Rp147 trillion, with mortgage loans grew flattish by +0.3% Y/Y, vehicles loans slipped by -11.9% Y/Y in line with falling automotive sales, and credit card business remained under pressure by contracting -18.6% Y/Y.

 

Sluggish credit channeling was also reflected from the decrease in loan to deposit ratio (LDR) from 79% in 1H19 to 73.3% in 1H20, as Third Party Funds (TPF) increased much higher than credit by +13% Y/Y to Rp762 trillion. Besides, the risk of credit deterioration was reflected from increasing non-performing loans (NPL) which hiked from 1.4% to 2.1%. Credit restructuring has still been ongoing since March despite begins to slowing by now. As of the end of June 2020, BBCA had restructured loans of Rp69.3 trillion or was roughly equal to 12% of the Bank’s total credit portfolio. Taking into consideration the 1H20 results, BBCA revised down its projection of credit growth to a conservative 1%-2%. Hence, BBCA’s 1H20 results, which have been so far considered as both having strong liquidity and prudence, could be  a warning sign for the whole banking industry of the serious impact of Covid-19 pandemic.

 

JCI

On Tuesday trading session (7/28), JCI closed lower by -3.7 points (-0.1%) to 5,113. Total transaction volume reached 13 billion shares with a transaction value of Rp8,3T. Foreign investors recorded a net sell of Rp295,4B, collecting the foreign net sell to Rp19.1T (YTD).

 

The advancing sectors were miscellaneous industry (+1%), finance (+0.6%), and trade (+0.4%). The retreating sectors were led by agriculture (-1.7%), basic industry (-1.5%), and infrastructure (-0.8%). Stocks supported the JCI were BBCA (+1.4%), UNVR (+0.9%), and UNTR (+2.9%). By contrast, stocks weighing down the JCI were BRPT (-6.8%), TPIA (-2.2%), and GGRM (-2.2%).

 

U.S. NEWS   

U.S. stocks closed lower as investors digest latest earnings reports and disappointed in a lack of progress toward another U.S. fiscal stimulus while investors awaited a policy update from the FOMC meeting this Tuesday and Wednesday. The DJIA fell 0.77%, to 26,379.56, the S&P 500 lost 0.65%, to 3,218.48 and the Nasdaq Composite dropped 1.27%, to 10,402.09.

 

U.S. Treasury yields fell, pushing prices higher as investors eyed the result from the FOMC meeting and on COVID-19 relief package stimulus decision by Washington lawmakers. The benchmark 10-year notes fell 10/32 to yield 0.58%. The 30-year bonds slipped 26/32, to yield 1.22%. The 2-years notes were flat yielding 0.14%.

 

Crude oil prices closed lower. WTI crude down by -1.63% to US$40.92/barrel, while Brent crude down by -0.65% to US$43.13/barrel.

 

MACRO UPDATE 

DEFICIT RAPBN 2021 IS PEGGED AT 5.2% OF GDP

Along with global uncertainty due to the COVID-19 pandemic, the Government through the Minister of Finance Sri Mulyani decided that the deficit in the 2021 State Budget (RAPBN) was 5.2% of gross domestic product (GDP). The determination of the deficit was higher than the agreement with the previous DPR which was 4.17% which then narrowed to 4.7% in the last meeting. With the 2021 RAPBN deficit still high, the government will still have spending reserves of up to Rp179 Trillion, which will be prioritized to truly support national economic recovery next year.

 

COMPANY UPDATE

CTRA TO CONDUCT RIGHTS ISSUE

PT Ciputra Development Tbk (CTRA) plans to conduct rights issue of a maximum of 1.85B shares. Shareholders that do not exercise their rights will see their ownership diluted by a maximum of 10%. The Company will ask for shareholders’ consent on July 30.

 

TRANSJAKARTA, MDD, AND DMMX TO LAUNCH KASIRKU

PT Transportasi Jakarta (Transjakarta), together with PT Multidaya Dinamika (MDD) - a subsidiary of PT Distribusi Voucher Nusantara Tbk (DIVA) and PT Digital Mediatama Maxima Tbk (DMMX), will launch KasirKu, an interactive platform for prepaid card/e-money transactions. The companies aim to open 236 stores in Transjakarta terminal next month. DMMX will also connect its stores with the Advertising Exchange Hub (Adex Hub) that will facilitate advertisements. The collaboration has the potential of more than 1 million TransJakarta passengers everyday.

 

MDKA WILL ISSUE NEW BONDS

PT Merdeka Copper Gold Tbk (MDKA) will issue a new Bond, Sustainable Bonds Merdeka Copper Gold Phase I -2020, amounting to Rp1.4T. It has two series: Series A (Rp673.65B with rate 8.9% per annum) and series B (Rp726.35B with rate 10.5% per annum). The MDKA Bond received an idA rating (Single A) from PEFINDO. The bonds offering period will be from July 27, 2020 to July 28, 2020. Meanwhile, it will be listed on the Indonesia Stock Exchange (IDX) on August 3, 2020. MDKA appointed three securities companies, PT Indo Premier Sekuritas (54.68%), PT CIMB Niaga Sekuritas (8.75%) and PT Sucor Sekuritas (36.57%), as underwriters. PT Bank Rakyat Indonesia Tbk (BBRI) will be as MDKA’s trustee. All funds will be used to pay Company’s debt of US$100M to Barclays Bank Plc, several banks and other financial institutions which must pay on September 28, 2020. This bonds issuance is part of the Sustainable Public Offering (PUB) in terms of MDKA Sustainable Bonds I (Rp1, 7T).

 

BACA WILL CONDUCT RIGHTS ISSUE

PT Bank Capital Indonesia Tbk (BACA) will issue 20 billion new shares through the right issue. The new shares are equivalent to 73% of the Company's paid up capital. The nominal value of these new shares is Rp 100 per share. The right issue funds will be used for strengthening the Company's capital structure. BACA estimates to receive total funds amounting to Rp5,48T. Previously, BACA's shares dropped by 6.80% to level of Rp 274 per share with a market capitalization of Rp1.94T. BACA has 82 Operational office networks located in Jakarta, Tangerang, Bekasi, Bandung, Surabaya, Solo and Kupang. It recorded a net profit of Rp15.88B and total assets of Rp18.95T in 2019. Meanwhile, the Company’s third party funds reached Rp13.66T in 1Q20. As of March 2020, BACA's shareholders are PT Inigo Global Capital (14.73%), PT Delta Indo Swakarsa (13.98%), PT Asuransi Simas Jiwa-Simas Equity Fund (13.81%) and the public (57.48%).

 

TECHNICAL OUTLOOK

JCI IS POSITIVE, WITH EXPECTED RANGE OF 5,070 to 5,180.

JCI closed slightly lower to 5,113 with the Resistance hanging at 5,160/230 while the Support lay still at 5,030/4,980. PSAR green dot still appeared along with EMA 5&20 still in a golden cross pattern. MACD turn to negative but still in sideways movement.  RSI and Stochastic slightly curled higher.

 

ADHI

Support            500

Resistance        1015

Target Price     995

 

BBTN

Support            900

Resistance        1930

Target Price     1800

 

BEEF

Support            210

Resistance        276

Target Price     260

 

DMAS

Support            102

Resistance        296

Target Price     246

 

HOKI

Support            575

Resistance        780

Target Price     710

 

TBIG

Support            1050

Resistance        1250

Target Price     1120

 

TLKM

Support            2880

Resistance        3540

Target Price     3400

           

WEGE

Support            107

Resistance        290

Target Price     240

 

 

 

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 July 28Th, 2020

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