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Morning Dew 6 February 2020

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4Q19 GDP RESULT UPDATE

In 2019, Indonesia reported a GDP growth of 5.02% (Y/Y), slower than that of 2018 at 5.17% (Y/Y). In 4Q19, the GDP growth was at 4.97% (Y/Y), but the figures actually contracted by -1.74% (Q/Q) if compared with the figures in 3Q19, which was caused by lower production from agriculture, forestry, and fishery (-20.52% Q/Q) and declining expenditure from goods and service exports (-2.55% Q/Q).

 

In detail, based on the business field, manufacturing industry contributed 0.8%, followed by automotive sales and repairing at 0.61%, construction at 0.58%, communication and information at 0.49% at 0.49%, and others at 2.54%. Based on expenditure, household consumption topped the other factors by contributing 2.73% to total GDP growth, however, as of 2019, non-profit household institution consumption grew the most with 10.62%.

 

Java Island remained the biggest contributor to the GDP with 59%, followed by Sumatra (21.32%), Kalimantan (8.05%), Sulawesi (6.33%), and others (5.30%).

 

JCI

On Wednesday trading session, JCI was closed higher by +56.2 pts (+0.95%) to 5,979. Total trading volume reached 5.9B shares, with a total transaction value of Rp7.3T. Foreign investors posted a net buy of Rp557.5B, resulting in the cumulative YTD foreign net sell of Rp746.8B. 

 

Only two sectors weakened, which were miscellaneous industry (-0.16%) and trade (-0.05%). The other sectors advanced, led by agriculture (+3.87%), basic industry (+2.29%), and mining (+1.35%). Stocks supporting the JCI were BBCA (+2.0%), CPIN (+8.4%), and UNVR (+2.9%). In contrast, stocks weighing down the JCI were HMSP (-1.4%), EMTK (-8.6%), and MEGA (-6.0%).

 

U.S. NEWS 

U.S. stocks closed sharply higher for the third consecutive day with S&P 500 posted a record closing high boosted by a robust U.S. economic data and as coronavirus fears abate after U.K. researchers had made progress in lab tests toward a vaccine for the virus that has been likened to SARS and Zhejiang University research team claimed to identify a cocktail of drugs, namely Abidol and Darunavir, that has thus far proven effective at stanching the virus in infected patients. Meanwhile, the WHO will convene hundreds of experts on two days meeting on 11-12 February 2020 a to create a plan for developing effective treatments against the disease. The DJIA rose 1.68% to 29,290.65, the S&P 500 gained 1.12% to 3,334.68 and the Nasdaq Composite added 0.43% to 9,508.68.

 

U.S. Treasury yields rose on reports of progress toward coronavirus treatment. The 10-year notes were down 16/32 to 1.65%. Two-year notes were down 2/32, yielding 1.44%. 30-year bonds were 1-11/32 lower, to yield 2.14%. 

 

Oil prices jump after a report indicates that OPEC and its allies led by Saudi Arabia were considering deeper production cuts of 800,000 Barrels to 1 Million Barrels a day to stabilize prices and after EIA data revealed a drop in both U.S. gasoline and distillate stockpiles. Brent crude was up by +2.69% to US$55.41/barrel. WTI closed higher by +2.82% to US$51.01/barrel.

 

COMPANY UPDATE

PGAS WILL EXPAND GAS INFRASTRUCTURE

PT Perusahaan Gas Negara Tbk (PGAS) will expand infrastructure development of transmission & distribution pipelines (450 km) in Sumatra & Java in 2020. PGAS currently manages LNG business lines from Pertamina, and guarantees gas supply to its customers in the future through optimization of infrastructure existing gas & build new infrastructure. PGAS has built and managed more than 10 thousand km of the national gas distribution and transmission pipeline network. As of 2019, PGAS distributed natural gas through a distribution network of 988 BBTUD & a transmission of 2,045 MMSCFD. PGAS in collaboration with the government has been reviewing the effect of gas price adjustments on the commercial aspects of the business, the company's performance, the sustainability of the natural gas business and the development of gas infrastructure until now.

 

WSKT FOCUS AND TARGET IN 2020

PT Waskita Karya (Persero) Tbk. (WSKT) set the new contract's targets in 2020 targets of Rp40-50T or an increase of 80%-100% from the realization of new contracts in 2019 which reached Rp25-26T or only by 65% from the 2019 target of Rp40T. The company also budgeted capex for 2020 in the amount of Rp18-20T, of which 60% will be allocated for the completion of toll road projects whose concessions are owned by its subsidiary, PT Waskita Toll Road (WTR). Furthermore, the Company also plans to issue bonds worth Rp3.5T.

 

SSMS EXPECTS TO SEE ITS PRODUCTION IMPROVED THIS YEAR

PT Sawit Sumbermas Sarana, Tbk. (SSMS) expects CPO production to be better as a result of benign weather expectation this year. Thus, SSMS estimates FFB production to reach 1.73 million tons, with CPO production of 600,000 tons. To support its financials, SSMS also plans to build another biogas plant and focus on downstream business.

 

TPIA WILL OFFER RIGHT ISSUE

PT Chandra Asri Petrochemical (TPIA) will add its capital with a Rights Issue scheme. TPIA will release 7.16B shares with a nominal value of Rp200/share. TPIA will give the first rights to shareholders. BRPT is the majority shareholder of TPIA (41.88%), followed by SCG Chemicals Company Ltd (30.57%), Prajogo Pangestu (14.8%), general public (7.99%) & Marigold Resources Pte. Ltd (4.75%). TPIA conducts a rights issue to strengthen the company's financial condition, develop business & increase production capacity.The Company will also increase its  capital through the Limited Public Offering III mechanism  to all shareholders.

 

BUVA TO CONDUCT PRIVATE PLACEMENT

PT Bukit Uluwatu Villa Tbk. (BUVA) will increase capital without pre-emptive rights (PMTHMETD) by releasing 10% of the outstanding shares. BUVA targeted to obtain funds amounting to Rp100-110B. The company in 2020 will target several infrastructure projects, ranging from toll roads, dams, to railroad projects.

 

MOODY’S AFFIRMED INDY’S Ba3 RATING

Moody’s Investors Service has affirmed the Ba3 corporate family rating (CFR) of PT Indika Energy, Tbk. (INDY). The rationale behind the rating is INDY’s strong balance sheet with large cash of US$611 million (9M19), which provides cushion against weakness in credit metrics resulting from declining coal prices. This is despite INDY’s primary subsidiary, PT Kideco Jaya Agung, which posted much lower EBITDA to US$188 million in 9M19, from US$430 million Y/Y. As a result, INDY’s adjusted debt/EBITDA increased to 3.5x from 2.4x. 

 

GEMS TO ALLOCATE US$20 MILLION CAPEX

Coal miner PT Golden Energy Mines, Tbk. (GEMS) will allocate US$20 million (Rp275 billion) for capital expenditure this year, all of which for mining infrastructure development. The company owns a total of 66,204 hectare coal mining area scattering in Jambi, South Sumatera, West Sumatera, South Kalimantan, and Central Kalimantan, with potential reserve up to 2.89 billion tonnes. This year, GEMS also targets coal production to hit 29 million tonnes, lower than 30 million tonnes last year. The company is optimistic regarding domestic coal prospect, even though the declining global prices trend. (-3.98% YTD, US$66.3/MT in February Newcastle contract.)

 

 

TECHNICAL OUTLOOK

JCI IS POSITIVE, WITH EXPECTED RANGE OF 5,950 to 6,050.

JCI was closed at 5,978 with the candlestick start to bounched up from lower Bbline. MACD still in negative level but started to show positive signal along with RSI and Stochastic were curled higher. Meanwhile, EMA 5,20&50 still in a dead cross pattern along with PSAR red dot still appears. The Support lays at 5,760 while the Resistance stood at 6,218. Hence, from technical analysis our JCI is POSITIVE, we except that JCI could countinue to rebound today. Hopefully, today CCI result could be a positive sentiment coupled by positive green back sentiment from U.S. – Nekkei – Hang Seng Stock.

 

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).

 

 

BBNI

Support            7200

Resistance        7750

Target Price      8150

 

BBTN

Support            1800

Resistance        2530

Target Price      2350

 

ICBP

Support            10700

Resistance        11850

Target Price      12550

 

MIKA

Support            1890

Resistance        2940

Target Price      2850

 

MYOR

Support            1800

Resistance        2100

Target Price      2150

 

 

 

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).

Thu February 6Th, 2020

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