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Morning Dew 13 September 2019

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EIA AND OPEC REVISED DOWN OIL OUTLOOK

Starting from the ongoing slowdown in the US and the Euro-zone, growing possibility of a no-deal Brexit, and escalating US-China trade dispute may serve as leading economic indicators to set off alarm bells for investors that a new global economic crisis could be on the cards. As a result, the market consensus trimmed its forecast for global economic growth, which was down to ±3.0% - 3.1% in 2019 and to ±3.1% - 3.2% in 2020. Ergo, both the Organization of the Petroleum Exporting Countries (OPEC) and the U.S. Energy Information Administration (EIA) lowered its 2019 and 2020 crude oil forecast.

 

In a closely-watched monthly report on Wednesday (11/09), the OPEC revised down its forecast for global oil demand growth this year by 80,000 bpd to 1.02 mb/d in 2019 and by 60,000 bpd to 1.08 mb/d in 2020. OPEC also increased its assessment of non-OPEC oil supply growth to 1.99 million barrels, including U.S., Brazil, China, U.K., Australia and Canada. Both OECD (The Organisation for Economic Co-operation and Development) and non-OECD demand growth forecast was revised lower by 0.03 mb/d and 0.05 mb/d, respectively. In 2020, world oil demand is estimated to increase by 1.08 mb/d.

 

While at the same time, the EIA slashed its 2019 and 2020 price forecast. WTI price is seen to be going down to US$56.31/barrel, down 2.7% from the forecast issued in August. The price could slip to $56.50/barrel next year, down 5% from the previous forecast. The EIA also cut its average Brent forecast by 2.7% to US$63.39/barrel this year, and by 4.6% to US$62/barrel in 2020.

 

JCI

On Thursday trading session, the JCI ended lower by -0.62% or -39.8 points to 6,342.2. Total trading volume reached 14B shares, with trading value of Rp8.8T. Foreign investors recorded net sell of Rp494.2B, resulting YTD foreign net buy to Rp56.9T.

 

All sectors retreated, except for property which gained +0.12%. On the other hand, miscellaneous industry lost -2.03%, infrastructure fell -1.37%, and mining lost -1.09%. Stocks supporting the JCI were HMSP (+1.4%), BBRI (+0.7%), and POLL (+8.0%). On the contrary, stocks weighing down the JCI were BBCA (-1.3%), TLKM (-1.9%), and ASII (-2.5%).

 

U.S. NEWS

U.S. stocks rose boosted by positive developments on the U.S.-China trade front, China’s renewed purchases of U.S. farm goods after Trump’s initiative to delay tariff hike from 25% to 30% that was scheduled to take effect Oct. 1, until Oct.15. Moreover, the ECB announced fresh stimulus measures, including an interest-rate cut that moved a deposit rate from -0.4% to -0.5%, and a renewal of €20 billion in monthly bond-buying that will continue indefinitely, will add further pressure on the Federal Reserve to cut interest rates when it meets next week. The DJIA rose 0.17% to 27,184.15, the S&P 500 gained 0.29% to 3,009.70 and the Nasdaq added 0.30% to 8,194.47.

 

U.S Treasury yield rose, pushing prices lower following a report that the White House had discussed the possibility of a limited trade agreement with Beijing, sparking a selloff in haven assets like government bonds. The benchmark 10-year notes fell 14/32 to yield 1.78%. 30-year bonds fell 42/32, yielding 2.27%. Two-year notes were down 3/32 to yield 1.72%.

 

Oil prices fell after OPEC and its allies reiterated their commitment to current output cuts at least until OPEC+ would discuss the possibility of deepening the existing output cut deal when the group meets on December, 5-6. On the other hand, Donald Trump discussed easing sanctions on Iran in a move to ensure a meeting with Hassan Rouhani, Iran’s president, later this month. Brent down by -0.76% to $60.35/barrel and WTI slip by -1.26% to $55.05/barrel.

 

MACRO UPDATE

MINISTRY OF TRADE ENSURES IA-CEPA TO BE RATIFIED THIS YEAR

The Ministry of Trade ensures that the Indonesia Australia Comprehensive Economic Partnership (IA-CEPA) will be ratified this year. The ministry is still waiting for the ratification from the House of Representatives. IA-CEPA is expected to boost trade and investment between the two parties. As of 2018, Indonesia and Australia trade value reached US$8.5 billion. Since the beginning of 2019, trade value was recorded at US$3.6 billion. Indonesia’s main products exported to Australia include wood (US$124.7 million), new pneumatic types of rubber (US$60.7 million), reception app for television (US$52.4 million), footwear (US$52.1 million). On the other hand, top imported products include wheat and meslin (US$1.2 billion), live bovine animals (US$521.5 million), coal (US$417 million), sugarcane (US$291.3 million).

 

COMPANY UPDATE

PEFINDO MAINTAINED idA RATING FOR SMRA

Pefindo maintained idA rating for PT Summarecon Agung Tbk (SMRA) Shelf Registered Bonds I Phase II Year 2014, Shelf Registered Bonds II Year 2015, Shelf Registered Bonds II Phase II Year 2017, and Shelf Registered Bonds III Year 2018, as well as Sukuk Ijarah I Phase II Year 2014. Pefindo also affirmed a stable outlook for the Company. The rating was given by considering the Company’s strong position in the property industry, adequate recurring income, and excellent asset quality. The risks included were relatively inadequate cash flow coverage, new property development in new areas, and aggressive capital structure.

 

SMBR EXPECTS DEMAND TO PICK UP IN 3Q19

PT Semen Baturaja (Persero) Tbk (SMBR) believes to achieve its sales target albeit demand declines. In August 2019, SMBR recorded sales of 222,097 ton (10.5% M/M). The highest sales volume was recorded in South Sumatra (12% M/M) which signaled that demand started to recover in 3Q19. This is also supported by ongoing infrastructure projects in the area, such as South Sumatra-Lampung toll road section, as well as the allocation of village funds. With strong sales volume, total sales in August 2019 grew 10% (M/M) to Rp209 billion.

 

MDLN INDUSTRIAL SEGMENT SALES JUMPED IN 1H19

Unlike its peers, PT Modernland Realty Tbk (MDLN) stated that the national election had helped to boost demand for industrial land. As of 1H19, industrial segment contribution increased significantly to Rp899 billion or 47% of total marketing sales. Moreover, residential segment contributed Rp953 billion or 50% while recurring income contributed Rp48 billion or 2.5% of 1H19 marketing sales. Currently, the Company owns 305 hectares land bank for industrial remaining. 

 

MTLA ALLOCATES Rp110 BILLION FOR NEW HOTEL

PT Metropolitan Land Tbk (MTLA) allocates Rp110 billion for new hotel development in Majalengka. With 110 rooms, the four-star hotel building is expected to complete in April 2020. Under the second phase, the number of rooms will be added to 200. Built nearby the airport, the management is optimistic on the prospect of the business. Currently, the Company owns four operating hotels and other two hotels which are under-construction.

 

TECHNICAL OUTLOOK

JCI is NEGATIVE with expected range of 6,250-6,400

JCI was closed lower to 6,342 breaching it’s nearest Resistance at 6,400 and forming black body hammer candle stick. The next Resistance hangs at 6,580 and support lays at 6,240/160. MACD is still in positive side but leaning to negative along with RSI curled lower. Stochastic crossed down and signaling down.  EMA 5&20 still on golden cross pattern along with Parabolic Stop and Reversal green dot still appears. Hence, for today trading session we are negative.

 

ACES   

Support            1,650

Resistance        1,850

Target Price      1,900

           

ASII

Support            6,590

Resistance        7,090

Target Price      7,025

           

BTEK   

Support            71

Resistance        91

Target Price      82

           

HMSP  

Support            2,700

Resistance        2,880

Target Price      2,820

           

KAEF   

Support            2,830

Resistance        3,200

Target Price      3,110

           

LINK    

Support            3,800

Resistance        4,250

Target Price      4,500

           

PPRE   

Support            340

Resistance        390

Target Price      390

           

PTPP   

Support            1,750

Resistance        1,810

Target Price      2,000

           

PWON 

Support            620

Resistance        640

Target Price      700

           

TLKM  

Support            4,200

Resistance        4,450

Target Price      4,500

           

TSPC   

Support            1,545

Resistance        1,700

Target Price      1,650

 

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).

Fri September 13Th, 2019

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