Indonesia Market Today - 9 February 2021
A. INDONESIA MORNING MARKET REVIEW
(Tue, 9 Feb 2021).
Global Market Highlight
DJIA increased by +0.75% on Monday (08/02) followed by S&P 500 (+0.74%) and Nasdaq (+0.95%). Wall Street`s record all-time high is supported by Congressional approval of the 2021 state budget, which includes a fiscal stimulus of USD1.9 trillion. It is estimated that the stimulus will help create jobs to the point of full employment within a year. Moreover, the market will look forward to several data releases today, such as: 1) US Redbook; 2) Germany Balance of Trade; 3) Germany Current Account.
Domestic Update
• The government implements a micro PPKM which will be carried out on February 9 to February 22, 2021 to reduce the transmission of Covid-19. This micro PPKM provides a number of easing such as WFH 50% for offices, shopping malls can operate until 9 pm and dine-in restaurants a maximum of 50% while still implementing strict health protocols.
• The government will distribute IDR 42.48 trillion for nine state-owned enterprises (BUMN). These funds are included in the state capital participation mechanism (PMN) for the FY21E.
• Furthermore, there was an addition of 3,144 new Covid-19 cases in Jakarta yesterday.
IHSG Updates
JCI rose by +0.93% to 6,208.87 on Monday (08/02) followed by net foreign sell reaching IDR233.72 billion. Optimism on JCI continues as the Government implements a relaxation on PPKM as the tighter one was deemed ineffective. Furthermore, all sectors still record gains while consumer weakened. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,002. We estimate JCI will move in the range of 6,018 – 6,280 while waiting for Balance of Trade and Consumer Confidence data Release.
B. INDONESIA CORPORATE NEWS
1. BBCA IJ
Posted a net profit of IDR27.1 trillion in FY20 or -5% YoY (vs IDR28.6 trillion FY19). Total loans decreased 2.1% YoY to IDR575.6 trillion. BBCA managed to record a healthy performance of third party funds, where CASA grew 21.0% YoY to reach IDR643.9 trillion, DPK increased 19.3% YoY to IDR840.8 trillion in FY20. Financial ratios remain in a strong position with CAR at 25.8% and LDR at 65.8%. The non-performing loan ratio was maintained at 1.8%.
We estimate that BBCA`s credit growth will still be at a moderate level of 5%-6% according to management estimates. Business activities that have not fully improved are still a challenge, with NPLs having the potential to slightly increase to the 2.4% level. Currently BBCA is trading at 31.93x/4.76x PE/PBV.
2. ARNA IJ
Posted sales growth of 2.7% YoY in FY20 to IDR2.21 trillion (vs IDR2.15 trillion FY19). On the other hand, ARNA managed to reduce the cost of goods sold to IDR1.5 trillion in FY20 (vs IDR1.58 trillion FY19), so that ARNA managed to record profit for the year attributable to the owner of the parent entity of IDR323.57 billion, or grew 49.8% YoY (vs IDR215.53 billion FY19).
ARNA posted that exceed estimate; implies 111% of the MNCS estimate for FY20E. We believe that net income can increase by double digit in FY21E, in line with the strong product mix and efficiency strategies implemented by management. ARNA is currently trading at 15.68x/3.95x PE/PBV.
3. HRUM IJ
Will budget around USD7 million in capex for FY21E, the funds will be used to add coal mining property and infrastructure, purchase of heavy equipment, and maintain tugboats and barges. Meanwhile, the capex budget for nickel mine development will be reviewed in 1H21. On the other hand, HRUM is targeting a coal production volume of around 3-4 million tons in FY21E.
HRUM has now diversified it`s business as they had acquired 2 nickel mines, one of which increased on ownership. We see this is a decent strategy amid the declining coal demand. HRUM is trading at 32.75x/3.34x PE/PBV.
C. STOCK WATCHLIST
SMRA, SIMP, PTBA, TINS
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