Indonesia Market Today - 28 January 2021
A. INDONESIA MORNING MARKET REVIEW
Global Market Highlight
DJIA fell by -2.05% on Wednesday (27/01) followed by S&P 500 (-2.57%) and Nasdaq (-2.61%). Wall Street decline despite the Federal Reserve`s accommodative remarks on monetary policy as investors digested mostly downbeat corporate earnings. The Fed kept its benchmark rate in a range of 0% to 0.25% and maintained its USD120 billion monthly pace of bond purchases as they think the economy is a long way from employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved. Moreover, the market will look forward to several data releases today, such as: 1) US Fed Interest Rate Decision; 2) US GDP Growth Rate; 3) US Initial Jobless Claims.
• The government estimates that Indonesia`s economic growth will be in the range of 4.5% to 5.5% in 2021. This is in line with the predictions of other international institutions on the Indonesian economy such as: 1) World Bank (4.4%); 2) OECD (4%); 3) Asian Development Bank (5.3%); 4) International Monetary Fund (4.8%); and predictions of other institutions in the range of 4.0% to 6.1%.
• Furthermore, there was an addition of 1,836 new Covid-19 cases in Jakarta yesterday.
JCI dropped by -0.50% to 6,109.17 on Wednesday (27/01) followed by net foreign sell reaching IDR6.78 billion. JCI continues its downtrend with mining and miscellaneous industry leading the drop. Consumer sector also fell due to the weakening of pharmacy stocks as Jokowi received the second vaccination dose. However, agriculture, infrastructure and property strengthened. Meanwhile, the Rupiah exchange rate was strengthening at IDR14,050. We estimate JCI will move in the range of 5,980 – 6,300 while waiting for PMI Markit Manufacturing data Release.
B. INDONESIA CORPORATE NEWS
1. ANTM IJ
The Company has obtained metal mineral export approval for export sales of washed bauxite ore with an Al2O3 content of more than 42% of 1.89 million wet metric tonnes (wmt) on the period 2021-2022 for the implementation of the downstream project in the construction of the Smelter Grade Factory Alumina Refinery (SGAR). This mineral export permit complements the bauxite ore export permit that ANTM has previously had of 840 thousand wmt on the ownership of the Chemical Grade Alumina (CGA) Factory in Tayan.
We hope the approval would make the downstream operation run even more smoothly and we believe ANTM will be benefitted by the downstream. Currently ANTM is trading at 54.99x/3.24x PE/PBV.
2. SMCB IJ
The Company will receive additional capital from a Japanese cement company through rights issue worth USD220 million with a share purchase price of IDR2,300 per share. Taiheiyo Cement Corporation, will acquire shares in SMCB. The corporate action is scheduled to take place in July 2021.
The acquisition from TCC is a realization of the initial agreement in 2020. With this additional capital, it is hoped that it will strengthen the company`s capital structure. SMCB is currently trading at 22.41x/1.78x PE/PBV.
3. PWON IJ
The Company prepares a capital expenditure budget of Rp1.1 trillion in FY21E. The funds will be used to finance the development of shopping centers in Yogyakarta and Solo, building renovations of IDR100 billion, in addition to purchasing land for IDR400 billion, and IDR600 billion for construction costs.
PWON`s business development strategy is quite strategic, amidst the improving property business climate. PWON is trading at the level of 29.22x/1.63x PE/PBV.
C. STOCK WATCHLIST
WSKT, ASII, BBRI, INCO.
GFS ASIA TEAM
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