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Morning Dew 9 October 2019

FOKUS

CULLING IMPACT TOWARDS POULTRY PRODUCTION AND POPULATION

BI forecasted that the inflation in the first week of October was around 0.02%. One commodity experiencing advance in prices was chicken meat (0.03%). As additional info, in September 2019 the average selling prices of LB & DOC experienced decline compared to August to around Rp 15,000 and 4,000, respectively. Therefore, the government had urged the poultry players through the circular letter number: 10301 / SE / PK.230 / F / 09/2019 to cull starting from 23-29 September & the second round from 30 September – 6 October 2019.

 In September 2019, the PS & FS broiler production decreased significantly to 99,574 kg and 8,663 tons, respectively. While for the layer counterparts, the production plunged to 45,672 kg and 0, respectively.  In September, almost all GPS and PS population declined. The highest decline was experienced by PS broiler (-1.25%), followed by PS layer (-0.50%), and GPS broiler (-0.10%). The GPS layer remained unchanged at 67,120. In our view, the price will be better in October compared to September due to lower supply. Although the price is improving, the price this year will not surpass last year price due to lingering oversupply.  Yesterday, poultry stocks were closed mixed, CPIN and MAIN advanced by 1.96% and 0.58% to 5,200 and 870, respectively. In contrast, JPFA plunged by 0.33% to 1,500.

 

JCI

JCI was closed higher by +39 points or +0.62% to 6,039.6. Total transaction volume reached 14.7B shares, equaling to transaction value of Rp7.8T. Foreign investors recorded net sell of Rp185.8 B, resulting in YTD foreign net buy of Rp51.7T. 

 

All sectors strengthened, except for infrastructure (-0.23%), while the strengthened were led by consumer goods (+1.35%), manufacture (+0.95%), and finance (+0.92%). Stocks supporting the gain include BMRI (+2.4%), UNVR (+1.6%), and HMSP (+1.9%). On the contrary, stocks weighing down the JCI were BRPT (-3.1%), INTP (-3.0%), and TLKM (-0.5%).

 

U.S. NEWS

U.S. stocks closed sharply lower battered by the news that the U.S. was imposing visa restrictions on Chinese officials after they have expressed reluctance to hammer out a broad agreement when they meet U.S. counterparts in Washington this Thursday & Friday. Cited from Bloomberg, the Trump administration is moving ahead with discussions around possible restrictions on capital flows into China, with a particular focus on investments made by U.S. government pension funds.

 

Moreover, the U.S. blacklisted 28 Chinese companies, including artificial intelligence firms, because of their alleged role in human-rights violations against the Uighur Muslim minority. The DJIA fell 1.19% to 26,163.43, S&P 500 lost 1.56% to 2,892.99 and the Nasdaq Composite dropped 1.67% to 7,823.78.

 

U.S. Treasury yield curve steepened driven by a falling short dated treasury yield after Jerome Powell announced the U.S. central bank would increase the size of its balance sheet soon. At the same time, The U.S. Federal Reserve releases minutes from its September 17-18 policy meeting. The Fed voted 7-3 to cut interest rates for the second time this year at that meeting. The 2-year notes were up 3/32 to yield 1.42%. The Benchmark 10-years notes rose 5/32 to yield 1.54%  and the 30-year bonds rose 4/32 to yield 2.03%.

 

Oil prices fell as tensions grow ahead of U.S.-China trade talks. Moreover, the U.S. EIA cut its expectations for global oil demand growth and lowered 2020 price forecasts on West Texas Intermediate and Brent crude oil prices. Brent crude down by -0.62% to $57.99/barrel and WTI crude went down -0.80% to $52.33/barrel.

 

MACRO UPDATE

MINISTRY OF INDUSTRY SET FIVE INDUSTRIAL PRIORITY SECTORS 4.0

The Ministry of Industry has managed five industrial priority sectors in the road map for the application of industry 4.0 in Indonesia, namely: food and beverage, chemical, textile, electronics and automotive. The five sectors were picked because it contributed by 65% to national GDP. The Ministry of Industry believes that the application of Industry 4.0 can increase productivity and efficiency in each sector.

 

COMPANY UPDATE

INTA OPENED TATA MOTORS DEALER

PT Intraco Penta, Tbk. (INTA) has officially opened 3S dealer (Sales, Service, Spare parts) in East Kalimantan. Currently, the company is planning to support sales through product diversification amid weak mining and coal price environment. The dealer will have a 1,000 m2 workshop, which is situated in 3,000 m2 of land. 

 

ANTM TO RENEW IUP

PT Aneka Tambang, Tbk. (ANTM) will renew Pongkor mine’s mining business permit (IUP) for another 10 years. In addition, the company plans to conduct mining block test on Papandayan’s IUP, which could produce between 700 kg - 800 kg per year, if succeeds. Going forward, ANTM expects to be able to produce 2 ton of gold by the end of this year.

 

TBIG TO CONDUCT STOCK SPLIT

PT Tower Bersama Infrastructure, Tbk. (TBIG) is now ready to conduct stock split with 1:5 ratio, implying change in shares’ face value from Rp100/share to Rp20/share. The proceeds will be used for debt repayments and business expansion, while at the same time, TBIG plans to issue US$650M of global notes. The 10-year global notes will be listed in Singapore Stock Exchange (SGX), with 6% of interest paid semiannually. The company will ask for shareholders’ consent during Extraordinary General Meeting (EGM) on Oct. 30, 2019.

 

WSKT WILL RECEIVE TURNKEY PAYMENT OF RP 2.5T

PT Waskita Karya Tbk (WSKT) targets to obtain turnkey payment from 4 projects amounting around Rp 2.5T. Those four projects include: LRT Sumatera Selatan (Rp 500B),  Kunciran-Parigi Toll (Rp 700B), Cileunyi-Sumedang-Dawuan Toll (Rp327 B), dan Cinere-Serpong  Toll (Rp1T). At the end of the year, the company will do billing over Trans Sumatera Toll (Rp 13T) dan Tol Jakarta - Cikampek II Elevated Toll (Rp 4.5T). 

 

WSBP EXPECT PLANT IN PENAJAM PASER TO FINISH IN 1Q20

PT Waskita Beton Precast Tbk. (WSBP) expects plant with a capacity of 250 thousand tons/year in North Penajam Paser, East Kalimantan, will finish in 1Q20. It is also expected to support the company’s plan to focus on new capital city next year. If the plants are finished, the company will have a total of 12 plants with a total capacity of 3.7M tons/year. While at the same time, WSBP is building workshop 5 in Bojonegara’s plant with 11,340 m2 of width and it produces spun pile with 800 mm, 1,000 mm, and 1,200 mm of diameters.

 

PEFINDO AFFIRMED IDAA- RATING FOR TPIA BONDS

Pefindo affirmed PT Chandra Asri Petrochemical, Tbk. (TPIA)’s Bonds I 2016, shelf registration I 2017 - 2018, and shelf registration II 2018 -2019 with idAA- rating with stable outlook. For bonds that are due in December 22, 2019 worth Rp361.4B, the company will pay by using internal cash.

 

TNCA WILL CONDUCT RIGHT ISSUE

PT Trimuda Nuansa Citra, Tbk. (TNCA) will conduct right issue by issuing maximum 632.46M shares with a face value of Rp100 and strike price of Rp344, which equals to Rp217.5B. Existing shareholders will receive 3 rights issues, which reflect rights to buy another 3 shares. The proceeds will be used for PT Asuransi Staco Mandiri (ASM) acquisition amounting to Rp85.2B and increasing capital injection on ASM worth Rp126.8B and working capital of Rp2.5B.

 

BRMS WILL CONDUCT COMMISSION PLAN ON POBOYA GOLD MINE IN DECEMBER 2019

PT Bumi Resources Minerals, Tbk. (BRMS) allocated capital expenditures of US$12M for Poboya gold mine in Palu, Central Sulawesi. The initial development will be focusing on surface mining in a few years ahead. Next, commission plan will be executed by the latest December 2019. Next year, the company expects to produce 100,000 tons of gold and will increase the production capacity to 180,000 tons for 2021-2027.

 

TECHNICAL OUTLOOK

JCI is POSITIVE with expected range of 5,980 - 6,080

JCI inched higher to 6,039. White body candlestick just bounced up from lower BB line toward MA line. EMA 5, 20 50 still in death cross pattern, just waiting confirmation to form golden cross pattern, while Parabolic Stop and Reversal red dot still appear. MACD start to positive coupled with RSI curled higher. Stochastic still flattened and still in overbought area. Support lays at 5,767 while the resistance hangs at 6,086/230. Hence, we are Negative on today’s trading session, as tensions grow ahead of U.S.-China trade talks.  Hopefully, today retail sales result could be a positive catalyst.

 

ACES   

Support            1,650

Resistance        1,850

Target Price      1,900

           

LINK    

Support            3,800

Resistance        4,250

Target Price      4,500

           

TLKM  

Support            4,200

Resistance        4,450

Target Price      4,500

 

BSDE

Support            1,300

Resistance        1,400

Target Price      1,440

 

PTBA

Support            2,120

Resistance        2,500

Target Price      2,410

 

TKIM

Support            9,700

Resistance        10,750

Target Price      10,500

 

PGAS

Support            1,955

Resistance        2,290

Target Price      2,200

 

EXCL

Support            3,250

Resistance        3,600

Target Price      3,555

 

 

           

 

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).

 

Wed October 9Th, 2019

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