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Morning Dew 7 November 2019

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POULTRY PLAYERS’ SUBSIDING BOTTOM LINES

Compared to 9M18, the net income of PT Charoen Pokphand Indonesia Tbk (CPIN) (-26% Y/Y), PT Japfa Comfeed Indonesia Tbk (JPFA) (-35%), and PT Malindo Feedmill Tbk (MAIN) (-12% Y/Y) have subsided as of 9M19. The exception occurred on the PT Sierad Produce Tbk (SIPD), of which the bottom line grew 246% Y/Y. Reviving top lines were seen across those companies. The rally was led by SIPD (+31% Y/Y) to Rp 2.96T, followed by MAIN to Rp 5.67T (+17% Y/Y), CPIN to Rp 43.90T (+11% Y/Y). SIPD was the only one which posted positive growth in gross profit (+21% Y/Y). CPIN and JAPFA declined by double-digit, -21% Y/Y and -16% Y/Y, respectively. Continuing oversupply kept broiler ASP remain low in 3Q19; nevertheless, the culling executed by the government is anticipated to stabilize of broiler and DOC average selling prices. As of 9M19, the average cost of goods sold of broiler at Rp 19,000/kg was greater than the average selling price at Rp 15,000/kg.

 

Across the above companies, feed sales contributions were the largest. Profitability-wise, the feed segment also contributes the largest. As part of their strategy, SIPD cut the broiler sales by 10% Y/Y, and in the opposite, boosting the feed segment by 50% Y/Y to Rp 1.68T. MAIN elevated the feed sales portion from 58.3% to 62.8% in 9M19 (+26% Y/Y), while its DOC sales went down by 11% Y/Y. The balance sheet expanded, led by JPFA of which the total assets rose by 11% from FY18 to Rp 25.59T as of 9M19, followed by MAIN's balance sheet which uprose by 10% to Rp 4.77T. SIPD and CPIN's balance sheet slightly changed by 5% and 4%, respectively.

 

M/M growth of CPIN was the highest (+38%), followed by CPIN (+34%), and JPFA (+16%). In contrast, SIPD recorded a negative change (-3%). CPIN gained by 30% Y/Y, while the others retreated. YTD, SIPD was the only one recorded the highest positive growth by 2%.

 

JCI

Yesterday, JCI declined by -0.74% or -46.61 pts to 6,217.5. Total volume transaction reached 15.1B shares, with a total transaction value of Rp9.37T. Foreign investors posted net sell of Rp401.78B, dragging down its YTD net buy to Rp47.7T.

 

Only three sectors advanced, which were led by mining (+1.0%), trade (+0.3%), and basic industry (+0.12%). The sectors dragging down JCI most severely were finance (-1.6%), infrastructure (-1.18%), and agriculture (-0.84%). Stocks supporting the gain were BYAN (+8.3%), MPRO (+24.8%), and SMMA (+4.2%). On the contrary, stocks weighing down the JCI were BBRI (-3.3%), BMRI (-3.1%), and BBCA (-1.0%).

 

U.S. NEWS

U.S. stocks ended mixed, after a report from Reuters said a long-awaited interim trade deal between the U.S. and China could be delayed until December, warning of the possibility that the two sides will not reach an agreement. The DJIA was nearly flat at 27,491.34, the S&P 500 gained 0.07%, to 3,076.74 and the Nasdaq Composite dropped 0.29%, to 8,410.63.

 

U.S. Treasury yields slipped as U.S.-China trade meeting postponed. The benchmark 10- year notes up 13/32 to yield 1.82%. Two-year notes rose 2/32 to yield 1.61%. 30-year bonds were up 29/32 to yield 2.30%

 

Oil prices fell after the EIA reported that U.S. crude supplies climbed by 7.9 Mb for the week ended Nov. 1., higher than market consensus to increase by 1.5-2.7 Mb. Brent crude rose by +1.68% to US$61.90/barrel and WTI crude up by +1.19% to US$56.55/barrel. 

 

MACRO UPDATE

RETAIL SALES REMAIN ROBUST

According to survey results from Bank Indonesia, in September 2019 Indonesia Retail Sales Index were recorded at 212.4, up 0.76% (Y/Y), or down 1.1% (M/M). Yearly, retail sales were the most bolstered by spare parts and accessories group (+19%), while the most weighed the misc. goods group (-13%).

 

COMPANY UPDATE

JSMR AIMS TO RAISE RP 3T TO PAY ITS CONTRACTORS

PT Jasa Marga Tbk (JSMR) plans to issue KIK-EBA and infrastructure investment funds (Dinfra) to raise up to Rp 3T alternative funds. The company will use the Jakarta Outer Ring Road (JORR) to back the KIK-EBA. While the Dinfra will underlie one of Trans Java toll roads. Target funds raised from Dinfra ranges from 500B-Rp 1T. Furthermore, JSMR aims Rp 2T from the KIK-EBA. The proceeds will be for turnkey project payment to its contractors.

 

WSBP'S RP 4.36T NEW CONTRACT

As of 10M19, PT Waskita Beton Precast Tbk (WSBP) has obtained Rp 4.36T new contract which includes Rp 217B Refinery Development Master Plan (RDMP) project and Rp 77B Modernland Apartment in Jakarta Garden City. The external contracts portion as of 10M19 was 52 %. The value of the external contract has reached 40% of the FY19 target.

 

DILD & TRAVELIO PARTNERSHIP

PT Intiland Development Tbk (DILD) partners with Travelio to market the rest of Praxis Surabaya Apartments (40 units). The full-furnished package price started from Rp 1.6B. To attract the overseas market, the company also collaborates withTraveloka, Pegi-Pegi, and Tiket.com.

 

APLN TARGETS TO COMPLETE RIGHT ISSUE THIS YEAR

PT Agung Podomoro Land Tbk. (APLN)  will proceed with the rights issue by issuing a maximum of 4B shares with target completion at the end of the year. The exercise price is still unknown. Two of major shareholders i.e. PT Indofica and Trihatma Kusuma Haliman has placed Rp 769.33B and Rp 30.77B, respectively for improving the company's capital.

 

TECHNICAL OUTLOOK

JCI is NEGATIVE with expected range of 6,100 - 6,300

JCI declined to 6,217. Yesterday trading session formed bearish Harami pattern, which we think, could be a sign for the start of a downtrend. Despite a continuation flag pattern yesterday, it seems that the candlestick could not get through its stronger resistance, finally dragging down the JCI. MACD was going to its neutral level, in addition to declining trading volume. Our resistance level stood at 6,300 and support at 6,000.

 

ACES   

Support            1,650

Resistance        1,850

Target Price      1,900

 

ADRO

Support            1,250

Resistance        1,475

Target Price      1,450

 

EXCL

Support            3,250

Resistance        3,600

Target Price      3,555

           

LINK    

Support            3,800

Resistance        4,250

Target Price      4,500

 

PWON

Support            600

Resistance        690

Target Price      650

           

TLKM  

Support            4,200

Resistance        4,450

Target Price      4,500

 

UNVR

Support            42,600

Resistance        48,000

Target Price      45,500

 

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 November 7Th, 2019

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