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Morning Dew 8 July 2020

FOKUS

OFFICIAL RESERVE ASSETS IN JUNE 2020 INCREASED BY US$1.2 BILLION

Bank Indonesia recorded the official reserve assets (foreign exchange reserves) in June 2020 at US$131.7 billion, increased by US$1.2 billion compared to US$130.5 billion at the end of May. When compared to the position at the end of March 2020 (1Q20) at US$121.0 billion, the official reserve assets had improved significantly by US$10.7 billion.

 

The official reserve assets in June was equivalent to finance 8.4 months of imports or 8.1 months of imports and servicing government's external debts, and was well above the international adequacy standard of 3 months of imports. Besides, the increase in official reserve assets in June was mainly underpinned by the government's global sukuk issuance.


Previously, the government had issued again US dollar-denominated global sukuk (sharia bond or SBSN) amounting to US$2.5 billion. The detail: the one worth US$750 million with 2.3% coupon and 5 years maturity, US$1 billion with 2.8% coupon and 10 years maturity, and another US$750 million with 3.8% coupon and 30 years maturity. The global sukuk was issued in wakalah scheme and dual listed at the Singapore Stock Exchange and NASDAQ Dubai. Each series of the sukuk has obtained the ratings of Baa2 from Moody's Investors Service, BBB from S&P Global Ratings, and BBB from Fitch Ratings.

JCI

On Tuesday’s trading session (7/7), JCI weakened by -1.8 points (-0.04%) to 4,987.1. The total transaction volume reached 8.3 billion shares, while the transaction value was recorded at Rp7.9T. Foreign investors booked a net buy of Rp377.4B, resulting in a net foreign sell of Rp16.3T (YTD).

 

The sectors advanced, which were infrastructure (+0.7%), agriculture (+0.4%), and finance (+0.1%). The retreating sectors were led by consumer goods (-0.4%), property (-0.4%), and manufacturing (-0.4%). Stocks that supported JCI's performance were TLKM (+2.3%), BBCA (+0.9%), and INKP (+6.0%). On other hand, the stocks that weighed on the JCI performance were HMSP (-1.8%), CPIN (-2.3%), and EMTK (-6.9%).

 

U.S. NEWS   

U.S. stocks closed sharply lower as investors assessed the economic impact of rising COVID-19 pandemic in the U.S. after the Fed officials expressed concern about it. Furthermore, the White House added to those concerns Tuesday when Vice President Mike Pence’s top aide said the Trump administration wants Congress to cap on an upcoming fiscal stimulus package for COVID-19 at US$1 trillion or less. To limit the spread of COVID-19 in the U.S. New York extended its travel quarantine for visitors from three more states, while Florida's greater Miami area rolled back it's reopening. The DJIA fell 1.51%, to 25,890.53, the S&P 500 lost 1.08%, to 3,145.32 and the Nasdaq Composite dropped 0.86%, to 10,343.89.

 

U.S. Treasury yields fell, pushing prices higher as fears spark over the rising COVID-19 pandemic in the U.S. The benchmark 10-year notes rose 15/32, to yield 0.64%. The two-year notes were flat to yield 0.16%. The 30-year bonds were 55/32 higher, yielding 1.37%.

 

Crude oil prices closed lower as demand remained uncertain amid rising global COVID-19 pandemic cases. WTI crude down by -0.71% to US$40.34/barrel. Brent crude down by -0.72% to US$42.79/barrel.

 

INDUSTRY UPDATE

RESTRUCTURING OF BANKING CREDITS REACH Rp740.8 T

The Financial Services Authority (OJK) as of June 29, 2020, recorded that the restructuring of credit from banks to their customers affected by the COVID-19 pandemic since the implementation of OJK Regulation (POJK) No. 11 of 2020, has reached 6.56 M debtors with an outstanding value of Rp740.79 T implemented by 100 banks. Of this amount, outstanding restructuring of Micro, Small and Medium Enterprises (MSMEs) amounted to Rp317.29 T with a total of5.29 M debtors.

 

COMPANY UPDATE

INDIHOME USERS NOW CAN ACCESS NETFLIX

Indihome users can now access Netflix, which has agreed to comply with regulations set by TelkomGroup. Also, Netflix agreed to comply with the Self Regulatory Code for Subscription Video on Demand Industry in ASEAN, which stipulates Netflix to not show prohibited contents.

 

PEFINDO DOWNGRADED WSKT RATINGS

Pefindo downgraded PT Waskita Karya Tbk (WSKT), Shelf Registration Bonds I Year 2015, II Year 2016, and III Year 2017’s ratings to idBBB+ from idA-, as WSKT’s financial leverage remained high as a result of mounting debts for working capital. The Company was assigned a negative outlook, reflecting the impact coronavirus pandemic that could delay contract tender. As additional information, WSKT’s bonds amounting to Rp2.5T will be due in October 2020.

 

IDX TEMPORARILY SUSPENDED MDLN’S STOCKS

Indonesia Stock Exchange (IDX) temporarily suspended PT Modernland Realty Tbk (MDLN)’s stocks, as the latter had delayed its bond principal payment that was due yesterday. As additional information, the bond was amounting to Rp150B, with an interest rate of 12.5% per year.

 

MOODY’S DOWNGRADED PBRX RATING

Moody's Investors Service again cut PT Pan Brothers Tbk (PBRX) corporate family rating (CFR) and PB International B.V. senior unsecured notes (due in 2022) from B2 to B3. It is caused by uncertainty of refinancing which will be due between 2021 and 2022, including all revolving credit facilities that have withdrawn. PBRX debts are a revolving credit facility amounting to US$138.5M (February 2021) and senior unsecured notes amounting to US$171M (January 2022). PBRX liquidity is predicted to be negative between 2021 and 2022. Previously, PBRX liquidity only reached US$39B in 1Q20. It is also estimated to experience late payment of receivables from its customers which will reduce the Company's liquidity. Moody's predicts PBRX's revenue will stagnate throughout 2020 due to a decrease in sales from fashion products to masks and personal protective clothing (PPE). Debt to EBITDA (5.2x) and EBITDA to interest expense (1.8x) are also estimated to be high due to working capital needs. Meanwhile, the leverage ratio is also high (6.5x).

 

DOID WILL ISSUE NEW BONDS FOR REFINANCING

PT Delta Dunia Makmur Tbk (DOID) will issue foreign currency bonds (US$750M) with a maturity in 2027. It will be listed on the Singapore Exchange Securities Trading Limited (SGX-ST) without Company’s collateral and coupon is maximum 10% every 6 month. These funds will be used to pay the Company's Debt (US $465.6B) and the remaining is for working capital. The total debt consists of debt securities of 2022 (US$350M), MUFG facility agreements & syndicated loans (US$115.6M). Previously, the Company's total liabilities reached US$901.34M: short-term liabilities (US$257.34M) and long-term liabilities (US$643.99M). Meanwhile, Company recorded cash & cash equivalents of US$ 87.48M (+31.3%, Y/Y) in 2019.

 

KOREAN DEVELOPMENT BANK WILL DOMINATE TIFA SHARE

The Korea Development Bank (KDB) will be as the majority owner (80.65%) of PT Tifa Finance Tbk (TIFA) shares, which will cause TIFA to follow the laws of the Republic of Korea. After this acquisition news, TIFA shares in the first trading session, on Tuesday (7/7), increased by 18.85% to Rp 290 / share, meanwhile, transaction value and trading volume reached Rp551.94M and 1.90 million shares, respectively. Previously, TIFA's shareholders were PT Dwi Satrya Utama, Singapore's Tan Chong Credit Pte Ltd, and public investors. The acquisition value of TIPA is estimated to reach Rp208B. Meanwhile, Tifa Finance's assets reached Rp1.19T with equity of Rp377.38B in 1Q20. In the same period TIFA recorded revenues was Rp41.06B and profit amounted to Rp6.67B.

 

PGAS WILL EXPAND TO PETROKIMIA

PT Perusahaan Gas Negara Tbk (PGAS) states that the company will expand its business into the petrochemical sector so that the gas products produced by the company can be utilized directly into methanol to DME (Dimethyl Ether) which can replace LPG and so on and then ammonia with its derivatives. At present, the process has only reached the stage of study targeted to be completed in 2022 or 2023. PGAS will also limit portfolios in this business between 5-10% or a maximum of 15%, so as not to change the company's core business.

 

For additional information, PGAS from 2009 to 2019 has built 537,936 household connections (SR) spread across 17 provinces, in 60 districts/cities with a length of infrastructure network built 3,838 km. Furthermore, the realization of development progress in 2020 covered 23 regencies/cities totaling 127,864 SR from the planned 316,000 SR. The decrease was caused by the transfer of the budget from jargas to the handling of the COVID-19 pandemic.

 

TECHNICAL OUTLOOK

JCI NEGATIVE, WITH EXPECTED RANGE OF 4,950 to 5,050.

JCI closed slightly hlower at 4,987. The Resistance hanging at 5,018/130/230 while the Support lay still at 4,880/745. PSAR red dot still appeared and hit the candlestick along with EMA 5&20 just forming a golden cross pattern. MACD leaning to positive along with Stochastic were curled higher. Only RSI showed a negative signal. Hence, our JCI remains in sideways movement with negative outlook.

 

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

 

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 7Th, 2020

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