Indonesia Market Today - 8 February 2021

A. INDONESIA MORNING MARKET REVIEW

(Mon, 8 Feb 2021).

Global Market Highlight

DJIA increased by +0.30% on Friday (05/02) followed by S&P 500 (+0.39%) and Nasdaq (+0.57%). Wall Street strengthened after Vice President Kamala Harris cast her first tiebreaking vote in the Senate to advance the USD1.9 trillion Covid-19 stimulus package. The House is looking to pass a stimulus bill within two weeks. Democrats are looking to force through a rescue package with no Republican votes if necessary. Moreover, the market will look forward to several data releases today, such as: 1) US Consumer Inflation Expectation; 2) Japan Current Account; 3) Eurozone ECB President Lagarde Speech.

Domestic Update

• Indonesia 4Q20 GDP fell -2.19% YoY (vs est. -2.30%); -0.42% QoQ. FY 2020 GDP growth plunge by -2.07% YoY (vs est. -2.10%) 2020 GDP contracted by 2.07%, slightly better-than-expected, which is still reasonable considering the domestic and global economies are still not recovering due to the pandemic. However, we believe GDP should recover to 4.5%-5.5% in FY21E supported by optimism over the vaccine distribution and government structural reforms.

• Indonesia`s foreign exchange reserves in January 2021 were recorded at USD138 billion. This figure is the highest record in history. The position of foreign exchange reserves is equivalent to financing 10.5 months of imports or 10.0 months of imports and servicing of government external debt, and is above the international adequacy standard of around 3 months of imports.

• Furthermore, there was an addition of 4,213 new Covid-19 cases in Jakarta yesterday.

IHSG Updates

JCI rose by +0.73% to 6,151.73 on Friday (05/02) followed by net foreign sell reaching IDR186.81 billion. JCI was backed by the strengthening of all sectors, especially mining, while the release of Indonesia`s GDP data, which is still in line with consensus estimates, also helped strengthen the JCI. Meanwhile, the Rupiah exchange rate was weakening at IDR14,030. We estimate JCI will move in the range of 5,920 – 6,280 while waiting for Balance of Trade and Consumer Confidence data Release.

B. INDONESIA CORPORATE NEWS

1. BBTN IJ

Targets the growth of Third Party Funds (DPK) to reach double digits in FY21E. To achieve this target, the company is expanding in the Special Region of Yogyakarta, targeting the real estate and education sectors. Until now, Bank BTN has 6 Sub-Branch Offices and 5 Cash Offices in Yogyakarta. In FY20, BBTN recorded deposits growth of around 10% YoY or IDR1.26 trillion (vs IDR 1.1 trillion FY19).

We estimate that BBTN will continue to achieve its targets with 8% of loan growth and lower NPL of 3.5% in FY21E. Currently BBTN is trading at 12.70x/1.08x PE/PBV.

2. BRPT IJ

Plans to participate in EV development in Indonesia through its subsidiary PT Chandra Asri Petrochemical Tbk (TPIA) by distributing plastic material to be used as a basic material for EVs, especially in vehicle interiors. In FY21E, BRPT allocated USD175 million for capex which will come from internal cash. Capex will be used for the implementation of the drilling program of the geothermal business entity, Star Energy. In addition, the capex allocation is also used for routine expenses from the subsidiary TPIA.

This would be an advantage for the long term for BRPT. Other than plastic materials, EV also need more petrochemicals than regular vehicles, so BRPT can contribute much more in the future. BRPT is currently trading at 488.08x/5.65x PE/PBV.

3. IPCM IJ

Collaborates with PT Jawa Satu Power to provide tug support facilities for LNG ship services for the operational area of Floating Storage Regasification Unit (FSRU) Java Satu with a capacity of 170,000m3 FSRU and Gas and Steam Power Plants ( PLTGU) with a capacity of 1,760 MegaWatt (MW).

This collaboration has the potential to improve IPCM`s performance on FY21E. IPCM is trading at 18.64x/1.58x PE/PBV.

C. STOCK WATCHLIST

ACES, ADHI, ANTM, BRPT.

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