Indonesia Market Today - 10 February 2021

A. INDONESIA MORNING MARKET REVIEW

(Wed, 10 Feb 2021).

Global Market Highlight

DJIA was flat by -0.03% on Tuesday (09/02) followed by the drop on S&P 500 (-0.11%) and gains on Nasdaq (+0.14%). Wall Street`s movement was variative as there has been fewer than 100,000 new cases reported for the second straight day and hospitalizations continued to fall in the wake of increasing vaccinations across the country. The Biden administration is set to boost the supply of vaccines sent directly to states by 5% over the next week as Pfizer and Moderna increase production. Moreover, the market will look forward to several data releases today, such as: 1) US Core Inflation Rate; 2) China Inflation Rate; 3) Germany Inflation Rate.

Domestic Update

• Bank Indonesia (BI) has purchased Government Securities (SBN) in the primary market for IDR35.7 trillion until February 4, 2021. Purchases consist of a non-competitive bidder mechanism of IDR13.11 trillion and a green shoe option (GSO) mechanism of IDR22.61 trillion.

• The 2021 national economic recovery program (PEN) budget increased to IDR627.96 trillion. The latest PEN Fund has increased by 55.4% from the first time it was sparked in the Draft Law (RUU) due to the spike in Covid-19 cases and the policy of imposing restrictions on economic activity (PPKM). So, the government needs to widen the budget for handling the impact of the pandemic.

• Furthermore, there was an addition of 3,437 new Covid-19 cases in Jakarta yesterday.

IHSG Updates

JCI dropped by -0.44% to 6,181.07 on Tuesday (09/02) followed by net foreign sell reaching IDR441.07 billion. The decrease was led by miscellaneous industry, infrastructure and mining sectors while agriculture and finance remain strong backed by the releases of banks financial performance. Meanwhile, the Rupiah exchange rate was strengthening at IDR13,995. 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. HMSP IJ

Recorded a -19.3% YoY decline in cigarette sales or 79.5 billion cigarettes in Dec-20 (vs 98.5 billion cigarettes Dec-19). HMSP also experienced a decline in FY20 market share, to only 28.8% from 32.2% with total domestic cigarette sales reaching 276.3 billion sticks.

We believe the performance of HMSP will decline due to the prolonged pandemic and low people`s purchasing power. This is also in line with the decline in industrial volume by 9.6% YoY in FY20. Currently HMSP is trading at 17.55x/5.64x PE/PBV.

2. WSBP IJ

Is targeting the acquisition of new contracts in FY21E worth IDR7.88 trillion. The target is 57.6% YoY higher than the new contract target set by the company in 2020 worth IDR 5 trillion. WSBP in FY21E will target internal projects from the Waskita Group at 21% and 79% from external.

This target can be realized if SWF runs effectively with strategic investors who are ready for realization in infrastructure development. WSBP is currently trading at 1.20x PBV.

3. ERAA IJ

Plans to conduct a stock split with a ratio of 1: 5, ERAA plans to hold an EGMS to be held on March 3, 2021. After the stock split, the total paid-up and issued capital reaches 15.95 billion shares of the current ERAA total paid-up capital. amounting to 3.19 billion shares.

Stock split is planned to increase the liquidity of ERAA shares and increase the purchasing power of retail investors. ERAA is trading at 22.94x/1.76x PE/PBV.

C. STOCK WATCHLIST

RALS, BSDE, ELSA, ICBP.

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