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Morning Dew 29 June 2020

FOKUS

REALIZATION OF KPR FLPP DISTRIBUTION ACHIEVED 68.62% OF 2020 TARGET

The realization of KPR FLPP (Housing Financing Liquidity Facility) in June 2020 recorded disbursement of 670,335 units or valued at Rp7.11 Trillion or has reached 68.62%. So that the total FLPP distribution from 2010 to June 26, 2020, reached Rp51.48 Trillion for 725,937 units.

 

For 2020, PPDPP cooperates with 42 implementing banks, consisting of 10 national banks and 32 Regional Development Banks (ASBANDA). As of June 26, 2020. BBTN led the total number of FLPP distribution at 44,193 units, followed by ASBANDA at 9,992 units. For BBNI it is 6,794 units and BBRI is 5,033 units

 

For 2020, the government raised the FLPP KPR distribution target from Rp7.1 Trillion in 2019 to Rp11 Trillion and allocated 102,500 units. Optimism towards the target is based on several policies implemented by the government such as housing finance schemes for ASN, TNI, or Polri for those who have income above Rp8 million. Furthermore, from Bank Indonesia (BI) which made adjustments to the limits of the Loan to Value Ratio (LTV) for Financing to Value (FTV), property credit (KP), or property financing (PP) for environmentally friendly properties.

 

JCI

On Friday trading session (6/26), JCI strengthened by +7.4 points (+0.15%) to 4,904. Total transaction volume reached 6.1 billion shares with a transaction value of Rp5.7 trillion. Foreign investors, again, recorded a net sell of Rp698 billion, compounding the year-to-date foreign net sell to Rp14.6 trillion.

 

The retreating sectors were led by basic industry (-0.7%), agriculture (-0.4%), and trade (-0.3%). The advancing sectors were led by infrastructure (+1.1%), property (+1.0%), and consumer goods (+0.5%). Stocks supporting the JCI were SMMA (+14.0%), TLKM (+0.9%), and ICBP (+2.8%). By contrast, stocks weighing down the JCI were BBCA (-1.4%), BBRI (-1.0%), and DNET (-6.0%).

 

U.S. NEWS   

U.S. stocks closed sharply lower as rising COVID-19 cases halted business reopening plans by some U.S. states, Texas and Florida both ordered the closure of bars on Friday (26/06), raising doubts over investors’ assumption that state and local governments wouldn’t reinstate lockdown measures. Those moves followed earlier COVID-19 restrictions by New York, New Jersey and Connecticut announced 14-day quarantines on Wednesday on visitors from states with high COVID-19 infection rates. The travel advisory, which impacts residents of nine states (Alabama, Arkansas, Arizona, Florida, North Carolina, South Carolina, Washington, Utah and Texas). 

 

Moreover, those current situations were exacerbated by the result report from the Federal Reserve's annual bank stress tests, that required banks to preserve capital by suspending share repurchases and cap dividend payments in the third quarter based on average net income over the past four quarters. 

 

The DJIA fell 2.85% to 25,012.63, the S&P 500 lost 2.43% to 3,008.86 and the Nasdaq Composite dropped 2.58% to 9,758.08.

 

U.S. Treasury yields fell, dragging prices higher as rising COVID-19 cases drove investors' appetite to buy safe-haven assets. The benchmark 10-year notes were up 10/32, to yield 0.64%. Two-year notes rose 1/32, yielding 0.17%. 30-year bonds were 1-1/32 higher, to yield 1.37%

 

Crude oil prices closed lower as rising COVID-19 cases dented hopes for fuel demand recovery. WTI crude down by -1.27% to US$38.23/barrel. Brent futures down by -0.71% to US$40.76/barrel.

 

MACRO UPDATE

GOVERNMENT CUT CORPORATE INCOME TAX, TERMS AND CONDITIONS APPLY

The government through Government Regulation (PP) Number 30/2020 officially reduced corporate income tax by 3% to taxpayers in the form of public companies. On Article Number 2 of the Regulation, it is stated that the tariff of corporate income tax for domestic taxpayers is 22% in the fiscal years of 2020 and 2021, and 20% in 2022. However, domestic taxpayers in the form of public companies with a minimum of 40% of outstanding shares and meet several conditions, are eligible to obtain a 3% discount of the tariff mentioned in Article Number 2. The conditions include the ownership of the shares by a minimum of 300 parties, with each party owning less than 5% of the issued and fully-paid shares. Besides, the conditions should be complied in 183 days in a fiscal year period.

 

COMPANY UPDATE

FITCH REVISED WIKA’S RATING

Fitch Ratings revised PT Wijaya Karya Tbk (WIKA)’s rating to negative from stable. On the other hand, Fitch affirmed WIKA’s long-term debt and local currency issuer default ratings at BB and revised WIKA’s standalone credit profiles (SCP) to b from bbb+(idn), which reflects weakening WIKA’ financials. Fitch estimates that WIKA will be negatively affected by the coronavirus pandemic this year; but next year, the Company could thrive, supported by economic recovery and a strong pipeline, albeit high leverage. WIKA’s capex and investment may remain high at 11-12% of revenue to execute the Government’s infrastructure projects in 2021.

 

WSKT REALIZED NEW CONTRACT VALUE OF Rp3.2T

As of 1Q20, PT Waskita Karya Tbk (WSKT) realized a new contract value of Rp3.2T, 61% of which from infrastructure, while the other 21% stemmed from building projects and other civil projects. Thus, WSKT’s total order book reached Rp54.4T. Also, WSKT expects Rp4 - 5T of other turnkey payments by the end of this year. In addition, WSKT plans to divest several toll roads, which are included in Trans Java toll roads.

 

INDONESIA EXIMBANK AND BMRI COLLABORATE IN CREDIT GUARANTEE

The Indonesia Eximbank or LPEI collaborates with PT Bank Mandiri (Persero), Tbk. (BMRI) in providing guarantee services to banks credit. It is expected to boost export financing and to support national economic recovery from the impact of Covid-19 pandemic. Some clauses included in the agreement are credit guarantee and insurance, various banking services from BMRI, and socialization and education. The collaboration is also a manifestation of Eximbank’s function as the guarantor for banks which become partners in providing export financing, as mandated in the Eximbank’s Act Number 2/2009.

 

NFCX ALLOCATES US$10 MILLION TO INVEST IN ENTERTAINMENT BUSINESS

The digital company, PT NFC Indonesia, Tbk. (NFCX) through its subsidiary Ideosource Entertainment is to invest in GoPlay and some films, series, and other intellectual property. The total investment amounts to US$10 million (Rp142 billion) which comes from internal cash and strategic partners. Ideosource will invest in at least 15 films from multiple production houses, including the box office like Keluarga Cemara and Gundala which managed to book 1.7 million viewers. NFCX believes Indonesia’s content market has huge potential to reach a market value of US$1 billion in the next three years, mainly from theatrical release and streaming.

 

BRMS WILL FINALIZE THE CAPEX VALUE OF ZINC MINE PROJECT

PT Bumi Resources Minerals (BMRS) is still negotiating the final investment value (CAPEX) for the construction of lead and zinc processing plant (smelter facility) in Dairi, North Sumatra with its business partners (NFC China). This mining project will be managed by BMRS subsidiary, PT Dairi Prima Mineral. The ownership of BMRS in PT Dairi Prima Mineral will be valued at 49% after the Company sold its remaining shares (51%) to NFC China in 2018. However, BRMS will give its asset as guarantee to its creditors. This project is targeted to operate commercially in 2022. NFC China will become an EPC Contractor (engineering, procurement, construction). Previously, BMRS allocated CAPEX (US$10M) from its internal cash to build a gold ore processing plant (smelter facility) into a dore bullion (500 tons/ day) located in Poboya, Palu, Central Sulawesi (85,180 ha). It is operated by BMRS subsidiary, PT Citra Palu Minerals (CPM). This project was completed in 1Q20. It produced more than 10 kg of dore bullion through this new production facility in 1Q20, and sent the production to PT Aneka Tambang Tbk (ANTM) smelter facility. BMRS targets to produce 100,000 tons of ore and 180,000 tons of ore between 2020 and 2021, respectively.

 

GIAA AND ITS SUBSIDIARY RECEIVED ADMINISTRATIVE SANCTIONS

PT Garuda Indonesia (Persero) Tbk (GIAA) and its subsidiary, PT Citilink Indonesia, were officially convicted by the Competition Supervisory Board (KPPU) for violating Law Number 5/1999 - article 5 (Monopolistic Practices & Unfair Business Competition). Three important decisions from KPPU in case number 15 / KPPU-I / 2019 dated June 23, 2020, namely: (1) GIAA & PT Citilink Indonesia are found guilty of violating Article 5 of Law Number 5/1999; (2) GIAA & PT Citilink Indonesia are not proven guilty of violating Article 11 of Law Number 5/1999 (cartel effort); (3) GIAA & PT Citilink Indonesia are required to notify in writing (administrative sanctions) before deciding any policies related to business competition & ticket prices which will paid by consumers and the public. However, this sanction will not affect the operational, legal & financial conditions/ business continuity of the two airlines. Previously, seven airlines (Garuda Indonesia, Citilink, Sriwijaya Air, NAM Air, Batik Air, Lion Air & Wings Air) did cartel activities on ticket prices. According to article five of the law, it states that business players are prohibited from making agreements with competitors to set prices for goods/ services which must be paid by consumers. Meanwhile, article 11 of the law explains the prohibition for businesses to make agreements with competitors to influence prices by regulating the production and marketing of goods and services (monopolistic practices or unfair business competition).

 

TECHNICAL OUTLOOK

JCI NEGATIVE, WITH EXPECTED RANGE OF 4,850 to 5,000.

JCI closed slightly higher at 4,904. The Resistance hanging still at 5,018/130/5,230 while the Support lay still at 4,740/475. PSAR red dot still appeared, while EMA 5&20 just crossed and turned into dead cross pattern. MACD turns into negative along with RSI and Stochastic were curled higher to negative.  Hence, according to the Technical Analysis, our JCI will be NEGATIVE.

 

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

 

GGRM

Support            46725

Resistance        49800

Target Price     49500

 

HOKI

Support            575

Resistance        780

Target Price     710

 

INCO

Support            2750

Resistance        3500

Target Price     3250

 

KAEF

Support            1160

Resistance        1455

Target Price     1400

 

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).

 

 

 

 

 

Sun June 28Th, 2020

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