Indonesia Market Today - 1 February 2021

A. INDONESIA MORNING MARKET REVIEW

(Monday, 1 Feb 2021).

Global Market Highlight

DJIA fell by -2.03% on Friday (29/01) followed by S&P 500 (-1.93%) and Nasdaq (-2.00%). U.S. stocks fell sharply since October, reflecting concern over the lingering economic impact of the Covid-19 and ripples from the trading frenzy that has swept Wall Street this month. Besides, news about the state of the U.S. economy, the spread of the Covid-19 and the success of vaccination efforts also contributed to the market movement. Moreover, the market will look forward to several data releases today, such as: 1) US ISM Manufacturing PMI; 2) China Caixin Manufacturing PMI; 3) Eurozone Markit Manufacturing PMI Final.

Domestic Update

• The Ministry of Health announced that the Human Resources for Health (SDMK) that had undergone the first phase of vaccination reached 405,012 people, of which 11,287 people had received the second dose. Of the human resources vaccination target of 1,529,934 people, around 98% have registered for vaccination.

• Furthermore, there was an addition of 3,474 new Covid-19 cases in Jakarta yesterday.

IHSG Updates

JCI dropped by -1.96% to 5,862.35 on Friday (29/01) followed by net foreign sell reaching IDR921.78 billion. JCI has recorded seven consecutive corrections and has slump by -7.05% last week. On the other hand, the agriculture, trade and mining sectors still managed to strengthen on Friday’s closing. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,030. We estimate JCI will move in the range of 5,850 – 6,280 while waiting for PMI Markit Manufacturing data Release.

B. INDONESIA CORPORATE NEWS

1. BBNI IJ

Targets that in FY21E, credit will grow by 6% - 9%. In FY20, BBNI has disbursed loans amounting to Rp586.2 trillion or an increase of 5.3% YoY, where corporate segment loans increased by 7.4% YoY to Rp309.7 trillion, small business segment loans were still maintained by 12.3% YoY to Rp84, 8 trillion, consumer credit +4.7% YoY to Rp89.9 trillion in FY20. Meanwhile, DPK +10.6% YoY to Rp679.5 trillion. In FY21E the ratio of non-performing loans is targeted to be below 4%. We believe that BBNI will be able to recover gradually, supported by an efficiency strategy by reducing the cost of credit at the level of 3.3% -3.6%. Currently BBNI is trading at 17.97x/0.94x PE/PBV.

2. TBIG IJ

Will conduct a public offering of Obligasi Berkelanjutan IV Phase III in 2021 valued at IDR 2.92 trillion on February 10 - 11, 2021. Series A bonds, worth IDR 1.90 trillion with a fixed interest rate of 5.50% and a tenor of one year . Meanwhile, series B is valued at Rp1.02 trillion with a fixed interest rate of 6.75% and has a term of three years. The funds will be used to repay part of the debt worth USD275 million. We believe TBIG still has room to seek funding through loan facilities, in line with the capital-intensive nature of tower business and the net gearing ratio which is still at the 3.5x level. TBIG is currently trading at 50.92x 8.47x PE/PBV.

3. ACES IJ

Plans to add 8-10 outlets in FY21E. ACES has added 14 outlets in FY20. The additional outlets will use an investment of IDR 150 billion, with funding sources coming from internal cash. Meanwhile, ACES targets its revenue in FY21E to grow by around 8% YoY. We believe ACES will be able to achieve the target in line with the hope of relaxing the PSBB so that SSSG could gradually pick up in FY21E. ACES is trading at 37.88x / 5.52x PE / PBV levels.

C. STOCK WATCHLIST

BBRI, TINS, ICBP, MEDC.

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