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Morning Dew 20 May 2020

FOCUS

BOARD OF GOVERNORS MEETING TAKEAWAYS

Through the Board of Governors Meeting, Bank Indonesia (BI) decided to maintain interest rate at 4.5%, deposit facility at 3.75%, and lending facility at 5.25%. Also, BI estimates that the global economy may contract by -2.2% and will improve to 5.2% in 2021. For Indonesia, BI views that the economy could go slower, as retail sales and Purchasing Manager Index, in April, went downward.  However, the economy may undergo recovery next year in light of a better global economy, coupled with stimulus effects.

 

Next, BI estimates the current account deficit (CAD) to stand below 2% of GDP from previously 2.5-3.0% of GDP, as foreign capital inflows have been improving since April 2020 and foreign exchange reserves have been stronger as well, with Rupiah is forecast to remain solid. Core inflation, on the other hand, grew slower as a result of weaker demand, also was exacerbated by volatile food’s deflation. Yet, going forward, BI believes inflation to remain at 3.0+/-1% in 2020 and 2021. 

 

So far, financial system stability is in control, seen from Capital Adequacy Ratio (CAR) at 21.63% and low Non Performing Loan at 2.77% (gross) and 1.02% (net). Still, credit growth and third party funds remained soft, in March, at 7.95% (Y/Y) and 9.54% (Y/Y), respectively, although it actually improved from 5.93% (Y/Y) and 7.77% (Y/Y), consequently. Going forward, BI plans to take more macroprudential and accommodative policies.

 

JCI

In yesterday's trading session, on Tuesday (5/19), JCI closed at 4,549 or rose by 38 points (+ 0.8%). The total trading volume reached 7.6 billion shares while the total transaction value reached Rp8.6T. Foreign investors recorded a net sale of Rp2.1T while foreign net trading value reached Rp27.6T.

 

All sectors strengthened except these following sectors: Manufacturing (-0.12%), Mining (-0.27%), and Miscellaneous Industry (-0.77%). While the highest strengthening is led by these following sectors: Property (+ 2.04%), Finance (+1.95), and Agriculture (1.92%). These stocks supported the JCI are: BBRI (+ 9.2%), BMRI (+ 3.8%), and TLKM (+ 1.6%) dan these following stocks weakened the JCI are: BBCA (-1.8%), UNVR (-2.7%) and HMSP (-1.6%).

 

U.S. NEWS  

U.S. stocks closed lower as investors focused on a report from Boston Globe Media’s STAT news service questioning Moderna's a phase-one clinical trial for its COVID-19 vaccine trial results and the drug’s effectiveness. The DJIA fell 1.56% to 24,213.76, the S&P 500 was down 1.05% at 2,922.94, and the Nasdaq Composite lost 0.54% to 9,185.10.

 

U.S. Treasury prices up, edging yields lower after congressional testimony from Jerome Powell and  Steven Mnuchin shed no new light on the government's economic response to the COVID-19 pandemic while investors are questioned about why funding from the US$2 T economic-relief package approved by Congress legislation remains unspent. The benchmark 10-year notes were up 15/32 to yield 0.69%. The two-year notes rose 1/32 to yield 0.17%. The 30-year bonds were 29/32 higher to yield 1.42%.

 

Crude oil prices ended mixed. WTI crude up by 1.70% to US$32.36/barrel buoyed by global supply cuts and signs of improving demand. On the other side, Brent futures down by 0.46% to US$34.65/barrel on concerns that output cuts might not be sufficient.

 

COMPANY UPDATE

KLBF AND GENEXINE PREPARE BIOTECHNOLOGY TO WARD COVID-19

PT Kalbe Farma Tbk. (KLBF) as a pharmaceutical company, is currently preparing 10 prospective biotech-based products to stop the spread of COVID-19. The company is exploring cooperation with Genexine, which is a company engaged in biotechnology and vaccines in South Korea. In addition, the company is also trying to establish cooperation with prospective partners from China and Europe to strengthen its modern technology. Furthermore, as an anticipation measure towards WFH and social distancing, the company also introduced new ways to market products and information such as the use of digital platforms and webinars with doctors.

 

CMPP WILL EXTEND FLIGHT SUSPENSION 

PT AirAsia Indonesia Tbk. (CMPP) plans to extend the period of temporary suspension of regular flights of AirAsia Indonesia aircraft due to operational reasons and the extension of the period of social restrictions in several regions. AirAsia Indonesia regular flight services will adjust the operation of scheduled flights on international and domestic routes in stages and will start on June 1, 2020, on certain routes.

 

BRMS WILL ISSUE NEW SHARES

PT Bumi Resources Minerals Tbk (BRMS), a subsidiary of PT Bumi Resources Tbk (BUMI) will increase Company's capital by issuing new shares (Seri B) of 14.59 billion shares (private placement). The share price is Rp 50/ shares. BRMS targeted to raise funds amounting to Rp 729,57B through this corporate action. However, BRMS will wait for shareholders’ approval on June  24, 2020. The funds will be converted into ordinary shares and be owned by Wexler Capital Pte Ltd. BRMS has a debt that is due and underpaid amounting to US$53.995.367. Previously, the Company converted part of its debt amounting to US$100.961.331 to Wexler on 30 Mei 2017. BMRS share ownership will become 26.9% in Wexler after this conversion activity.

 

EXCL TO PAY OFF MATURING DEBTS WORTH MORE THAN Rp2.5 TRILLION

PT Excel Axiata, Tbk. (EXCL) has some maturing debts to settle this year. One of which is a Rp2.65 trillion loan from Bank of Tokyo Mitsubishi UFJ Ltd., due on September 28, 2020. Besides, EXCL has also to pay off its sharia bond, Sukuk Ijarah I Phase I 2017 Series C, with principal amounting to Rp323 billion and will be due in December 2020. To settle these debts, EXCL plans to use internal cash and bank loans, one of which is a five-year, Rp1.5 trillion facility offered by PT Bank Central Asia, Tbk. (BBCA). Previously, EXCL has paid off its Rp900 billion debt to PT Bank BTPN, Tbk. (BTPN) and its Sukuk Ijarah I Phase II 2017 Series B worth Rp402 billion.

 

INCO TO CARRY ON SMELTER PROJECTS

Despite Covid-19 pandemic, PT Vale Indonesia, Tbk. (INCO) said that the challenge on its expansion plan is not coming from the shortage of liquidity, but from the availability of manpower, materials, and services needed to carry on the projects. As of 1Q20, INCO's cash and equivalents stood at US$292.7 million (Rp4.3 trillion). So far, the company still sticks on its capital expenditure budget of US$166 million (Rp2.5 trillion), US$70 million (Rp1 trillion) of which will be spent on redeveloping the furnace 4 in 4Q20.

 

Additionally, the development of smelters for nickel in Pomalaa, Central Sulawesi (target 2024) and for ferronickel in Bahodopi, Southeast Sulawesi (target 2025), with a total investment of US$5 billion (Rp74 trillion), keeps going on. When finished, the smelters will produce premium grade nickel as the raw material for producing batteries for electric vehicles (EV). As of 1Q20, INCO managed to produce 17,614 tonnes of nickel (+34.7% Y/Y), 16,713 tonnes of which were sold (+20.5% Y/Y), with the average selling price of US$10,428/tonne (+14.4% Y/Y).

 

TECHNICAL OUTLOOK

JCI IS POSITIVE, WITH EXPECTED RANGE OF 4,450 to 4,600.

JCI closed higher at 4,548. The Resistance lay still at 4,474/390 while Resistance hanging still at 4,730/975. PSAR red dot still appears, while RSI curled slightly higher.  Stochastic and MACD signaling positive while EMA 5, & 20 confirm its death cross pattern. Hence, JCI is still showing a possibility to rebound up

 

ASII

Support            3580

Resistance        4100

Target Price     4150

 

BBNI

Support            2700

Resistance        4650

Target Price     4600

 

BBTN

Support            660

Resistance        1930

Target Price     1800

 

BMRI

Support            3780

Resistance        5400

Target Price     500

 

CPIN

Support            4100

Resistance        5900

Target Price     5700

 

DMAS

Support            102

Resistance        296

Target Price     246

 

INDF

Support            6165

Resistance        6900

Target Price     6800

 

KLBF

Support            1365

Resistance        1585

Target Price     1580

 

POWN

Support            300

Resistance        430

Target Price     430

           

WEGE

Support            107

Resistance        290

Target Price     240

 

 

DISCLAIMER

This research report is prepared by PT MINNA PADI INVESTAMA SEKURITAS Tbk. for information purposes only and is not to be used or considered as an offer or the solicitation of an offer to sell or to buy or subscribe for securities or other financial instruments. The report has been prepared without regard to individual financial circumstance, need or objective of person to receive it. The securities discussed in this report may not be suitable for all investors. The appropriateness of any particular investment or strategy whether opined on or referred to in this report or otherwise will depend on an investor’s individual circumstance and objective and should be independently evaluated and confirmed by such investor, and, if appropriate, with his professional advisers independently before adoption or implementation (either as is or varied).

Tue May 19Th, 2020

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