Indonesia Market Today - 4 March 2021

A. INDONESIA MORNING MARKET REVIEW

(Thu, 4 Mar 2021).

Global Market Highlight

DJIA slipped by -0.39% on Wednesday (03/03) followed by S&P 500 (-1.31%) and Nasdaq (-2.70%).Wall Street fell as concerns over stretched valuations in big tech were worsened by a renewed climb in US interest rates. The economy has not recovered to pre-pandemic levels, but markets have continued to surge well above 2020 levels, leading to an overvaluation. Moreover, the market will look forward to several data releases today, such as: 1) US Initial Jobless Claims; 2) Eurozone Retail Sales; 3) Eurozone Unemployment Rate.

Domestic Update

• The government has increased the threshold for working capital for Micro, Small and Medium Enterprises (MSMEs). The Head of the Investment Coordinating Board said that for micro businesses the amount of basic capital is less than IDR1 billion, then for small businesses it is IDR1 billion to IDR5 billion. Then, for medium-sized businesses in the range of IDR5 billion to IDR10 billion. Meanwhile, for the types of large businesses there is no change, namely more than IDR10 billion.

• Furthermore, there was an addition of 1,437 new Covid-19 cases in Jakarta yesterday.

IHSG Updates

JCI rose by +0.28% to 6,376.76 on Wednesday (03/03) followed by net foreign buy reaching IDR521.75 billion. JCI is still hiking despite the weakening on global indices previously. Finance and miscellaneous industry sectors led the strengthening while the basic industry sector fell the deepest. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,245. We estimate JCI will move in the range of 6,300-6,505 while waiting for foreign exchange reserve data release.

Support: 6,173, 6,069
Resistance: 6,505, 6,600

B. INDONESIA CORPORATE NEWS

1. ADRO IJ

Produced 54.53 million tonnes of coal in FY20 or -6% YoY and slightly exceeded the stipulated guidance of 52-54 million tonnes. Meanwhile, coal sales volume was recorded at 54.14 million tonnes in FY20, or down 9% YoY. In FY21E ADRO prepared a capital expenditure of USD200 million - USD300 million.

We hope that the volume increase would offset the drop on coal ASP. Though coal is currently on the uptrend since the end of last year. Currently ADRO is trading at 17.42x/0.70x PE/PBV.

2. JSMR IJ

Estimates that FY20 net profit will continue to grow, even though the revenue is estimated to decrease in the range of IDR2 trillion or -15%. JSMR has made a number of efficiencies and cut operational costs.

We see that the efficiency carried out by JSMR is quite good, so we hope that JSMR`s performance in FY21E can improve. JSMR is currently trading at 142.65x/1.59x PE/PBV.

3. TOWR IJ

Plans to participate in the auction to acquire part of the tower of PT Indosat Tbk. (ISAT), where ISAT plans to sell 4,000 towers this year. Meanwhile, in FY21E TOWR prepares a capital expenditure budget of IDR 3.25 trillion and targets organic revenue growth of around 8% YoY.

We see that TOWR growth are still very attractive in this year, supported by an increase in demand for tower lease and a strong balance sheet position. TOWR performance also tends to be resilient amid the pandemic. TOWR is trading at 25.36x/6.66x PE/PBV.

Corporate Action

Rights Issue: ARTO (IDR100/share)

General Meeting of Shareholders : BPII, ELTY

C. STOCK WATCHLIST

1. INTP - Buy on Weakness (13,350)

Buy on Weakness: 12,800-13,400
Target Price: 14,250, 15,500
Stoploss: below 12,300

2. LSIP - Buy on Weakness (1,325)

Buy on Weakness: 1,280-1,325
Target Price: 1,450, 1,550
Stoploss: below 1,255

3. ADRO - Buy on Weakness (1,185)

Buy on Weakness: 1,170-1,185
Target Price: 1,320, 1,430
Stoploss: below 1,150

4. BBCA - Sell on Strength (35,000)

Sell on Strength: 35,200-36,000

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