Indonesia Market Today - 29 January 2021

A. INDONESIA MORNING MARKET REVIEW

(Fri, 29 Jan 2021).

Global Market Highlight

DJIA rose by 0.99% on Thursday (28/01) followed by S&P 500 (+0.98%) and Nasdaq (+0.50%). Wall Street closed higher driven by mostly bullish quarterly earnings and a rise in cyclicals on expectations the economy is set to rebound strongly. While 4Q20 US GDP grew at a 4% YoY. However, GDP decreased by 3.5% YoY in FY20, following a slump in the first and second quarters. Moreover, the market will look forward to several data releases today, such as: 1) US Core PCE Price Index; 2) US Michigan Consumer Sentiment; 3) Germany GDP Growth Rate.

Domestic Update

• Bank Indonesia is optimistic that Indonesia`s economy in 2021 will grow in the range of 4.8% to 5.8%. Where the figure consists of the estimated growth of components, namely: 1) Consumption grows by 4.6% to 5.9%; 2) Investment grew by 3.8% to 4.8%; 3) Export grew by 4.5% to 5.5%; 4) Imports grew by 3.0% to 4.3%.

• Furthermore, there was an addition of 2,889 new Covid-19 cases in Jakarta yesterday.

IHSG Updates

JCI dropped by -2.12% to 5,979.39 on Thursday (28/01) followed by net foreign buy reaching IDR52.5 billion. The JCI was still declining, which was caused by several factors: 1) Investors were still watching the decision on stimulus that had not been issued; 2) Covid-19 cases that continue to increase; 3) Force margin or forced sale of shares purchased using margin. Meanwhile, the Rupiah exchange rate was weakening at IDR14,078. We estimate JCI will move in the range of 5,920 – 6,280 while waiting for PMI Markit Manufacturing data Release.

B. INDONESIA CORPORATE NEWS

1. BMRI IJ

Recorded net profit of IDR17.1 trillion in FY20 which dropped by 37.7% YoY. On the other hand, provision rose significantly by 89.7% YoY to IDR22.9 trillion. Loan stood at IDR892.8 trillion (-1.6% YoY) with NPL at the level of 3.1%. Meanwhile, BMRI targets a single digit loan growth and Net Interest margin growth at 4.6% - 4.8% as well as accelerating digital transformation in FY21E.

BMRI`s FY20 performance slightly inline with MNCS and Consensus estimate, reaching 98%/100% respectively. We believe that earnings has already bottomed-out in FY20 and should start to recover in FY21E supported by better loan restructuring as well as cost efficiency initiatives. Currently BMRI is trading at 1.78x PBV.

2. KLBF IJ

Plans for Covid-19 Genexine vaccine made with partners from South Korea to get an Emergency Use Authorization in 3Q21. Based on the stages, animal trials have been completed, human trials phase one have also been carried out. As for safety, it is claimed that it has been proven, only adjusting the dosage so that the efficacy can be maximum.

We hope that KLBF’s vaccine can be used in Indonesia, while KLBF is now one of the Sinovac distributors which we see will be an advantage. KLBF is currently trading at 26.27x PE.

3. BSDE IJ

Recorded marketing sales of IDR6.5 trillion in FY20. This figure reflects 90% of the achievement of the target of IDR7.2 trillion. Meanwhile, the income consists of: 1) Landed Houses IDR4.2 trillion; 2) Commercial IDR2.1 trillion; 3) IDR1 trillion house shops; 4) Plots of land IDR664.9 billion; and the rest comes from the apartment.

This achievement is quite good, despite the pandemic in FY20. BSDE marketing sales have the potential to grow in FY21, in line with the improvement in the economy and people`s purchasing power. BSDE is currently trading at 36.69x/0.77x PE/PBV.

C. STOCK WATCHLIST

INDY, PTPP, PGAS, ERAA.

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