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FULL REPORT & UPDATE

  • ADHI - 3Q19 Result Update
    WORRIES ARE NOW SEEN
    ADHI registered revenues of Rp8.9T (-5.2% yoy), lower than Rp9.4T in the same period last year, which represents 51.4% of our full year forecast. Net profit was seen to grow (+4.7% yoy), reflecting 46.4% of our estimate. As of 3Q19, ADHI GPM/NPM stood at 15.6%/3.9% from 15.8%/3.6% last year.
     
    FALLING WELL BELOW TARGET
    As of 9M19, ADHI registered new contract of Rp7.6T, which was mostly originated from construction & energy business (81.7%), followed by property (17.9%), and others. However, such figure is still well below the Company’s full year target of Rp30T (25.3%, as of 9M19). Based on the result, the annual run rate would translate to Rp10.1T of value, but it is important to note that it is often the case contractors to receive a large chunk of its projects by the end of year, which may spur the aforementioned figure above.
     
    CASH INFLOWS ARE HIGHLY ANTICIPATED
    In October 2019, ADHI received the fourth LRT payment worth Rp1.4T (after tax) for progress between October 2018 – March 2019, translating to a total payment of Rp8.3T, which should reflect in 4Q19 result. The management expects additional payments to occur by the end of the year, which should boost ADHI’s cash level and DER, both recorded at Rp1.46T and 1.7x respectively, as of 3Q19.
     
    CONCERNS REMAIN
    Construction services dropped -9.3% (yoy) to Rp7.1T, while EPC also plunged by more than half from Rp707B to Rp351B. However, property sales and infrastructure investment supported ADHI’s top line with both posted Rp1T (+76% yoy) and Rp445B (+51% yoy), respectively. The financials though, were underpinned by positive other income if compared with negative income in the same period last month as well as lower tax expenses, leading ADHI to post a moderate +4.7% (yoy) of net profit growth to Rp351B. Going forward, we should brace for sluggish result in the 4Q19 quarter, despite the conclusion of the presidential election, if new project tender will be deferred to next year.
     
    VALUATION
    As we rollover our base year, we reiterate our BUY recommendation with lower 12-month target price of Rp1,425/share (previous TP: Rp1,780/share), given sluggish new contract achievement. The implied target price is based on average historical 5-year P/E multiple target of 5.1x at -2SD. 12-month target price reflects forward P/B of 0.7x. Key risks include: soft new contract achievement due to possibility of tender deferral, late LRT disbursement, and squeezing interest expenses.
    Thursday October 31Th, 2019
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  • SMRA - 3Q19 Result Update
    HAPPY MOMENTS
    SMRA recorded revenues of Rp4.4T (+9.6% yoy) as of 3Q19, on the back of robust housing sales (+40.2% yoy) and commercial building. However, apartment sales plummeted to Rp343B. GPM slightly slipped to 46.5%, but NPM went up to 7.1% from previously 5.1%, as a result of lower minority interest contribution to the parent company. Top line result represents 70.8% of our FY19 estimate (Rp6.23T) and bottom line result reflects 73.6% of our Rp428B of FY19 target. 
     
    CREEPING HIGHER
    As of 8M19, marketing sales figure reached Rp3T, which covers 76% of the company’s FY19 target. Karawang (107%), Makassar (96%), Serpong (80%), and Bekasi (78%) spurred the good result. Seen from July – August period, SMRA was able to add ~Rp400B of marketing sales per month, in our view, should continue until the end of the year, given benign environment following post-presidential election, coupled with dovish interest rate outlook.
     
    IT MAY EXCEED OUR EXPECTATION
    Revenues was seen to hit Rp4.4T (+9.6% yoy), as the company successfully added Rp1.7T (+7.2% qoq, +27.8% yoy) in 3Q19. Housing sales (+40.2% yoy) and commercial building pushed top line higher, while on the other hand, apartment sales dragged down the revenues. Operating expenses were up by +10.7% (yoy), but seen quarterly, it actually declined by -9.7% (yoy). Bottom line, net profit jumped +54.7% (yoy) to Rp315B vs. Rp203B, resulting a net profit margin improvement from 5.1% to 7.1%. According to the annualized run rate, SMRA net profit will be slightly below our initial estimate of Rp428B. However, 3Q19 result gave us hint that demand is now picking up, which we believe, if the Company continues its robust 3Q result in the 4Q19, then SMRA may indeed be able to exceed our expectation.  
     
    VALUATION
    As we rollover our base year, we upgraded our HOLD to BUY recommendation. We arrive at 12-month target price of Rp1,330/share (previous TP: Rp1,280/share, 2-year -2SD at 65% discount to RNAV, WACC: 11.1%, LTG: 3.0%). The target price increase is fueled by optimism regarding strong marketing sales achievement, coupled with Indonesia cabinet establishment and dovish interest rate outlook. The implied target price reflects 12-month forward P/E of 33x and P/B of 1.9x. Key risk to our forecasts includes: soft 4Q19 demand that would result in SMRA’s top line falling below our expectation.
    Thursday October 31Th, 2019
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  • TLKM - 3Q19 Result Update
    NO WORRIES
    TLKM revenues were up by +3.5% (yoy) to Rp102.6T (72.8% of our FY19 forecast). Interest expense rose by +23% (yoy); however, the Company’s bottom line remains strong at Rp16.5T (+15.6% yoy), in line with our estimate (75.5%).
     
    FY19 RESULT: IN LINE WITH FULL YEAR ESTIMATE
    As seen only from 3Q19, data and internet as the biggest source of TLKM’s revenues, slipped by -1.0% (qoq) to Rp20.1T. Legacy business, given lesser customers dependency going forward, dropped by -2.8% (qoq), coupled with interconnection (-13.0% qoq) and network & others (-20.6% qoq). In addition, interest expense went up by +10.9% (qoq), but lower operational and costs has resulted in hefty growth of net profit (+10.9% yoy). EBITDA also grew by +8.4% (qoq, +2.0% yoy). Top line is slightly below our estimate (72.8%) of Rp141T, but bottom line is in line with our estimate of Rp16.5T for FY2019. EBITDA was registered at Rp50T (74.1% of our estimate at Rp67.4T).
     
    BALANCE SHEET REMAINS HEALTHY
    We see TLKM consolidated balance sheet remains healthy, suggested by the fact that DER is still below 1.0x at 0.44x, as of 3Q19 vs. 0.38x in FY18. It is important to note that TLKM interest-bearing debt position stood at Rp50.8T vs. Rp44.1T, an additional ~Rp6.8T of debt. In terms of profitability margin, as 3Q19, EBITDA margin had a turnaround at 48.7%, after posting downtrend result at 50.3% and 47.8% in 1Q19 and 2Q19, respectively. Net profit margin remains solid at 16.0%, unchanged from 16.0% in 2Q19.
     
    GETTING MORE RESOURCEFUL
    As of 15 Oct., Mitratel, as a subsidiary of TLKM, agreed to purchase 2,100 towers from ISAT with a transaction value of Rp4.4T, implying purchase price of Rp2.1B each. The transaction would also add its already-abundant assets to more than 15,800 units. In turn, ISAT would like to lease back its towers to continue its expansion. For TLKM, we think the tower acquisition will surely benefit the Company, given relatively high tenancy ratio, as well as widen network coverage to support 5G technologies when it has been ready to implement in Indonesia, the Company said. 
     
    VALUATION
    As we rollover our base year, we upgraded our HOLD to BUY recommendation with 12-month target price of Rp4,600/share (previous TP: Rp4,300/share). We arrive at the TP by utilizing both DCF (WACC: 12.2%, LTG: 3.5%) and EV/EBITDA (+1.5SD at 7.3x) multiple approaches. 12-month target price reflects forward P/E and P/B of 18.9x and 3.6x, respectively. Key risks include: slower synergy realization from tower acquisition and narrowing legacy business that has acted as buffer.
    Thursday October 31Th, 2019
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  • SMGR - 3Q19 Result Update
    THE TIME IS NOW
    SMGR booked a satisfying 3Q19 result. In 3Q19 alone, revenues were registered at Rp11.8T (+43.1% qoq, +44.5% yoy), underpinned by bulkier cement sales. We note ASP has recovered, suggested by improving GPM to 30.1% from 29.5% in 1H19. Again, bottom line could not find its way to prevail in the wake of rising finance costs arising from SBI acquisition. Revenues are slightly below our FY19 estimate (69.5%) as well as bottom line (60%), but 3Q19 result reassured us that the company will be able to fill the remaining gap in 4Q19.
     
    CUTTING THE GAP
    Year-to-date, domestic cement sales were recorded at 48.8 million tons vs. 49.8 million tons (-2.1% yoy). The softening result was mostly due to wait & see stance by developers amid presidential election period, but now, demand should start picking up. Overall cement sales (including domestic and export) remain lower than last year, but the spread is now tightening, as implied at the 1H19 change of -1.57% (yoy), but the gap was cut in 9M19 at -0.71% (yoy). 
     
    TURNING POINT
    In September 2019, SMGR’s cement sales had a turnaround by booking a positive growth of +3.3% (yoy) vs. -4.0% (yoy) in August, underpinned by strong exports (+39.4% yoy) and flattish domestic sales (+0.3% yoy). Year-to-date, however, its overall sales remained fallen behind by -3.4% (yoy). On top of that, the recently acquired SBI posted sluggish results of both domestic (-2.6% yoy) and exports (-5.4% yoy). Going forward, we expect 4Q19 result could become catalyst for the soft result.
     
    BRUISED, BUT SHOULD BE OKAY
    A rise in ASP, coupled with strong sales volume have resulted in strong top line result for SMGR. However, operating expenses rose by +46.2% (yoy), which we believe, as a result of the SBI acquisition after-effect. Still, we highlighted its rising finance cost at Rp875B (+10.3% qoq, +250% yoy), in 3Q19 alone.  Going forward, we are confident that the Company will be able to close the gap based on two factors: 1) the reignition of property industry amid bearish interest rate environment and 2) Indonesia cabinet establishment that should provide much clearer outlook. Moreover, 3Q19 result gave us a sense of relief that demand is now picking up, in addition to its recovering ASP, should act as buffer facing its rising interest expenses.
     
    VALUATION
    As we rollover our base year, we reiterate our HOLD recommendation with higher 12-month target price of Rp12,900/share (2-year +1 STD EV/EBITDA target of 13.7x, previous TP: Rp12,000 /share). The implied target price reflects 12-month forward P/E of 42.5x and P/B of 2.3x. Key risks to our forecasts include: operational inefficiency that would rise operating expenses and higher interest expenses post-SBI acquisition.
    Thursday October 31Th, 2019
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  • JSMR - 3Q19 Result Update
    WAITING FOR THE SPOTLIGHT
    As of 3Q19, JSMR posted toll and other revenues of Rp7.96T vs. Rp7.13T (+11.6% yoy) in the same period last year. However, operating profit (EBIT) was down to Rp4.18T vs. Rp4.21T (-0.7% yoy), as last year’s gain on divestment had made a difference. Finance cost rose by ~Rp200B to Rp1.69T from Rp1.49T. Bottom line, net profit dropped to Rp1.5T vs. Rp1.77T (-15.2% yoy), which is in line with our full year estimate of Rp2T (9M19 result is 75.1% as of FY19 estimate).
     
    IT IS ACTUALLY STRONGER
    In 3Q19 alone, JSMR registered a solid toll & other revenue of Rp7.3T (+6.1% qoq, +19.6% yoy) on the back of hefty growth from subsidiaries. In fact, three biggest contributors that stemmed from Surabaya – Mojokerto (Rp336B, +53% yoy), Medan – Kualanamu (Rp245B, +84% yoy), and Ulujami – Kebon Jeruk (Rp230B, +16% yoy), all posted double digit growth rates, while on the other hand, toll roads from parent company moderately grew +6% (yoy). The newly-released figure is slightly below our full year estimate at Rp11.4T (70.1%).
     
    FINANCE EXPENSE ROSE, AS EXPECTED…
    Finance income rose to Rp1.69T from Rp1.49T, which is in line with our initial estimate. JSMR’s interest bearing-debt stood at Rp34.8T (+19% yoy), resulting in a slightly increase in DER to 1.56x in 3Q19 vs. 1.55x in 3Q18, given higher equity level.
     
    …FOLLOWED BY MUTED BOTTOM LINE
    As a result of rising finance expense, coupled with lower gain on divestment (Rp111B vs. Rp877B last year) as a one-time transaction, net profit plunged by -15.2% (yoy) to Rp1.77T, although it is in line with our expectation (75.1%). Going forward, we are still confident JSMR to close the remaining gap, as Jakarta – Cikampek II Elevated toll road that is expected to fully operate in December, should be able to spur traffic volume.
     
    ALL EYES ON THE PROGRESS
    The 36.5-kilometer Jakarta - Cikampek II elevated toll road is now in finishing phase, as it is targeted to fully operate in December. If JSMR is able to finish the schedule on time, then we believe it could become strong catalyst for the company, given the additional capacity that it would provide should greatly reduce traffic congestion – resulting higher traffic volume.
     
    VALUATION
    As we rollover our base year, we reiterate our BUY recommendation with slightly higher 12-month target price of Rp6,300/share (previous TP: Rp6,100/share). The implied target price is based on DCF approach (WACC: 9.1%, LTG: 3.0%). The 12-month target price reflects forward P/E and P/B of 23.7x and 1.9x, respectively. Key risks include: late Jakarta – Cikampek II Elevated toll road operation and rising finance expenses.
    Thursday October 31Th, 2019
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  • UNTR - Initiate Coverage

    DECISIVE MOMENTS THE FURNACE IS BURNING WEAKER

    Large portion of global coal demand stems from China, which is accounted for more than 50% of the proportion. However, escalating trade war conflict has resulted in slower economic growth, affecting coal consumption as well. Indeed, softening coal price may no longer be avoided. In fact, global coal price has been plummeting ~30% YTD after reaching its recent heights back in 2018. We express our concerns over UNTR’s coal-related business lines, including: construction machinery and coal mining amid price trepidation. Worth noting however, that UNTR’s mining contracting business charges flat fee to its clients, which we think, could serve as a cushion. 

    LITTLE BUT GOLD

    On Oct. 4, 2018, UNTR officially acquired 95% stake of PT Agincourt Resource (PTAR), which operates Martabe Gold Mine in South Tapanuli, North Sumatra. The gold mine has 8.1M oz of resources and 4.5M oz of reserves. Gold price has inverse relationship with US Dollar (USD), as the former will be stronger should the latter weaken. In our view, USD could depreciate in light of the Fed’s dovish stance, hence boosting the price of gold. We expect UNTR to succeed in achieving gold sales’ target of 400,000 oz this year, contributing 7.3% of total revenue and 7.2% in 2020F.

    MUTED EARNINGS

    We estimate UNTR’s revenue to hit Rp86.5T/Rp87.1T in 2019F/20F, boosted by gold sales despite falling heavy machinery sales. 19F GPM is expected to improve to 25.3% on the back of thicker gold mine margin, but could slightly slip to 24.7% given thinner ASP amid tepid coal price in 2020F. Bottom line, we estimate UNTR’s net profit to reach Rp10.9T/Rp11T in 2019F/20F in the wake of mounting interest expense, eroding UNTR’s earnings. No significant concerns are present however, as DER remains well below 1.0x.

    VALUATION

    We initiate coverage on UNTR with BUY recommendation. We arrive at TP of Rp23,000/share by utilizing Discounted Cash Flow (DCF) method. Key assumptions include: WACC: 12.2%, cost of equity: 13.4%, after-tax cost of debt: 7.2%, and long-term growth: 1.0%. We like UNTR due to its gold mining business and healthy balance sheet. Weakening coal price will be factor to consider.

    Tuesday October 15Th, 2019
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  • Morning Dew 24 September 2019

    FOKUS

    INFLATION OF NON-OIL & GAS WHOLESALE PRICE IN 8M19 WAS 0.14%

    The non-oil & gas wholesale price index in 8M19 advanced by 0.14% to 167.78, with the highest hike was at non-oil & gas export at 0.54%. Y/Y basis, the inflation of non-oil & gas wholesale price was 1.66%. The rising commodity prices occurred to red chili, cayenne pepper, oil palm, cattle, goats, and sheep, as well as both animal and vegetable fats and oil. 

     

    In general, the non-oil & gas construction wholesale price index hit 143.38 or grew by 0.07% M/M or 2.77% Y/Y. Based on its types, the other constructions experienced the highest growth of 0.11%, while the residence & non-residence construction grew the least at 0.07%. Top five construction materials price which inflated the most were backfill (0.45%), brick (0.34%), roof tiles and others (0.25%), gravel & sand (0.18%), and cement (0.18%).

     

    JCI

    JCI started this week’s trading by losing -25.27 points (-0.41%) to 6,206.19. The total trading volume during the session was 15.0B shares with a value amounting to Rp7.9T. Foreign investors posted a net sell of Rp185.6 billion, bringing the YTD net foreign buy to Rp53.7T.

     

    Only two sectors strengthened: miscellaneous industry (+0.60%) and finance (+0.03%). The remaining sectors ended in the red zone, mostly dragged by basic industry (-1.72%), property (-1.65%), and manufacturing (-0.62%). Stocks supporting the JCI were UNVR (+2.5%), BBCA (+0.6%), and PGAS (+5.1%). On the other hand, stock weighing down JCI were HMSP (-2.6%), TLKM (-0.9%), BMRI (-1.1%).

     

    U.S. NEWS

    U.S. stocks ended mixed as investors weighed downbeat data on eurozone manufacturing activity in September fell to a nearly seven years low of 45.6 in September and coupled with the news that Chinese officials played down the significance of last week’s cancellation of visits to U.S. farm states. The DJIA was up 0.06% at 26,950.26, the S&P 500 was down 0.01% at 2,991.79. The Nasdaq Composite dropped 0.06% at 8,112.46. 

     

    U.S Treasury yields fell, the benchmark 10 years notes gained 12/32 to yield 1.7111. Two-year notes were up 3/32 to yield 1.6709. 30- year bonds rose 25/32, yielding 2.1630%.


    Oil prices rose, as Saudi Arabia has reportedly restored around 75% of crude production lost in the attacks that initially disrupted 5.7 million barrels a day of Saudi oil production, or about 5% of world output. Brent crude oil rose by +0.33% to US$64.49 per barrel, while WTI up by +0.7% to US$58.49 per barrel.

     

    COMPANY UPDATE

    BRMS’ UPCOMING PRODUCTION OF GOLD, ZINC, AND BLACK TIN

    PT Bumi Resources Minerals Tbk (BRMS) is planning to produce gold coming from a gold mine in Palu, Central Sulawesi with an initial annual production of 100,000 tons. It is expected that the production could reach 180,000 tons (+80%) IN 2020. The mining age is approximately 7 years. It is expected that the company will need capex of US$ 10-15M for initial production. As of 1H19, the revenue jumped 258.85% to US$ 2.96M. The bottom line flipped compared to 1H18 of loss of US$ 10.72M, to become a profit of US$ 932,697. Furthermore, the company together with NFC China ( the majority partner) continue the production facility of zinc mine in Dairi which will need US$ 350-400M. The source of the fund may come from project financing. The production of zinc and black tin in Dairi is expected to start in 2022 with an initial volume of 200,000 tons of ore. Moreover, in 2023, the production is forecasted to hike to 500,000 tons of ore.

     

    JPFA EXPORTS ITS PRODUCT TO TIMOR LESTE

    PT Ciomas Adisatwa, PT Japfa Comfeed Indonesia Tbk (JPFA)'s subsidiary export 30 tons of frozen meat to Timor Leste with total value of Rp 1.1B. This was the first step, of which the second will be in Mid October with value of Rp 1.3B for 30 tons as well.  The products exported include boneless chicken, chicken nuggets, chicken meatballs. On 12 September, the animal feed division of JPFA also exported 40 tons of animal feed to Timor Leste. The second step of export will be conducted on Tuesday (24/09).

     

    TBIG TO ISSUE GLOBAL BONDS US$650 MILLION

    PT Tower Bersama Infrastructure Tbk (TBIG) plans to issue global bond or notes amounting to US$650 million. The fund raised will be loaned to its subsidiaries to repay their debts and to support business activities. The Company will seek approval from the shareholders at RUPSLB which will be held on 30 October 2019. 

     

    ACES TO OPEN 12TH OUTLET THIS YEAR

    PT Ace Hardware Tbk (ACES) announces its newest outlet opening on 25 September 2019 at Pacific Place Mall, Jakarta. With a total area of 1,700 meter square, this outlet will be the twelfth outlet opened this year. Including this outlet, ACES will own a total of 187 outlets.

     

    KBLM DOUBLED ITS CAPEX TO INCREASE PRODUCTION CAPACITY

    PT Kabelindo Murni Tbk (KBLM) increased this year’s capital expenditure allocation by 100% to Rp20 trillion. The capital expenditure will be used to increase the production capacity of low-voltage cable to 800 ton from previously 650 ton. To date, KBLM has absorbed 80% of the allocated capex. For additional information, as of 1H19, KBLM net profit soared 401% (Y/Y) to Rp12.15 billion.

     

    AS OF SEPTEMBER 2019, VOKS HAS ABSORBED 75% OF CAPEX

    PT Voksel Electric Tbk (VOKS) allocates US$7.5 million for capital expenditure which will be used to rejuvenate machineries and building as well as to produce high-voltage cable. As of September 2019, VOKS has absorbed 75% of total allocated capex. For additional information, VOKS has also entered retail segment by partnering with PT Ace Hardware Tbk (ACES) to supply electric cable. As of 1H19, VOKS recorded 40% (Y/Y) revenue increase to Rp1.44 trillion.

     

    TECHNICAL OUTLOOK

    JCI is NEGATIVE with expected range of 6,160-6,240

    JCI inched lower to 6,206. The resistance hangs at 6,400/580 and support lays at 6,200/160. RSI still flat while MACD was negative. Stochastic cross up but still in the oversold area. Parabolic Stop and Reversal red dot still appears along with EMA 5&20 still in dead cross pattern. Hence, we are positive on today’s trading session.

     

    ACES   

    Support            1,650

    Resistance        1,850

    Target Price      1,900

               

    ANTM 

    Support            1,057

    Resistance        1,167

    Target Price      1,145

               

    ASII

    Support            6,590

    Resistance        7,090

    Target Price      7,025

               

    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).

    Monday September 23Th, 2019
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  • Morning Dew 13 September 2019

    FOCUS

    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).

    Thursday September 12Th, 2019
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