MNCS Morning Navigator 21 January 2021
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21 Jan 2021

Global Market Highlight

DJIA rose by +0.83% on Wednesday (20/01) followed by S&P 500 (+1.39%) and Nasdaq (+1.97%). Wall Street rallied to record highs as President Joe Biden was sworn in as the 46th U.S. president. The advance brought all three of the major indices into record territory, adding to the market's strong performance during the four years of the Trump administration. Earlier in the session, the release of encouraging corporate earnings reports also helped stoke optimism about the path to economic recovery. Moreover, the market will look forward to several data releases today, such as: 1) US Initial Jobless Claims; 2) Japan BoJ Interest Rate Decision; 3) Eurozone ECB Interest Rate Decision.

 

Domestic Update

• The Ministry of Finance will issue State Sharia Securities (SBSN) amounting to IDR27.58 trillion which will be divided into several auctions. The debt will be allocated to finance projects in 11 Ministries/Institutions. This year's state budget (APBN) is still under pressure due to the pandemic. Therefore, SBSN will be issued from 1Q21 as an alternative financing.

• Furthermore, there was an addition of 3,786 new Covid-19 cases in Jakarta yesterday.

 

Company News

1. PGAS IJ recorded realization of gas distribution volume of 879 billion British therma units per day (bbtud) in December 2020 or -2.2% YoY (vs 899 bbtud in November 2020). PGN's distribution volume is 800 million standard cubic feet per day (mmscfd) or + 1.26% MoM. Meanwhile, the distribution volume by Gagas was stagnant at 6 mmscfd, and the distribution volume by Pertagas was 73 mmscfd or -29.1% MoM. PGAS has absorbed capital expenditure of USD201 million as of November 2020 or is still below the target of last year's capex of USD350-500 million (Kontan). MNCS Comment: PGAS distribution has improved in line with the improvement in manufacturing production in Indonesia. Currently PGAS is trading at 39.69x/1.11x PE/PBV.

2. HOKI IJ targets sales growth of 15% YoY FY21E, HOKI plans to increase its total production capacity by continuing the construction of a new factory located in Tugumulyo, Ogan Komering Ilir, South Sumatra. The total production capacity will be 95 tons per hour from the previous 75 tons per hour. HOKI prepares a capital expenditure budget of IDR100 billion in FY21E. These funds will be used for working capital and financing for the construction of a new factory, adding a dryer machine that breaks the skin, and for investment diversification (Investor Daily). MNCS Comment: We consider the addition of a dryer to break the skin and product diversification to be a strategy to maintain the company's margins in FY21E, in the midst of demand conditions that have not fully recovered. HOKI is currently trading at 71.67x/4.24x PE/PBV.

3. CTRA IJ will release medium term notes (MTN) in 2021. CTRA will issue MTN 2021 with a value of 20% - 50% of the company's equity in 9M20. Most of the funds will be used for refinancing both from MTN and also for bank loans that will mature and have high interest (Kontan). MNCS Comment: The issuance was an effort by CTRA to maintain the company's cash flow in FY21F. CTRA is trading at the level of 65.05x/1.37x PE/PBV.

 

IHSG Updates

JCI increased by +1.71% to 6,429.76 on Wednesday (20/01) followed by net foreign buy reaching IDR734.86 billion. JCI strengthened backed by mining sector as news about Tesla’s plan to build a factory became a boost for the nickel and tin companies. On the other hand, consumer sector still weakened. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,035. We estimate JCI will move in the range of 6,300 – 6,475 while waiting for BI 7DRR decision. Today's recommendation: INDY, UNVR, AKRA WSBP.

 

Corporate Action

RUPS: BEEF, BBRI

 

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