๐๐ฎ๐ ๐ฎ๐ฌ๐ญ ๐๐, ๐๐๐๐
* ๐๐ก๐ ๐๐๐ ๐ญ๐ซ๐๐๐ข๐ง๐ ๐ซ๐๐ง๐ ๐: ๐,๐๐๐๐ฉ๐ญ – ๐,๐๐๐๐ฉ๐ญ (๐๐๐๐ง๐๐ฌ๐๐๐ฒ ๐๐ฅ๐จ๐ฌ๐: ๐,๐๐๐๐ฉ๐ญ)
* ๐๐๐ฅ๐ฅ ๐๐ญ๐ซ๐๐๐ญ ๐๐ฅ๐จ๐ฌ๐๐ ๐ก๐ข๐ ๐ก๐๐ซ ๐จ๐ง ๐ข๐ฆ๐ฉ๐ซ๐จ๐ฏ๐ข๐ง๐ ๐ญ๐ก๐ ๐๐ ๐ฆ๐๐ง๐ฎ๐๐๐๐ญ๐ฎ๐ซ๐ข๐ง๐ ๐๐ง๐ ๐ฌ๐๐ซ๐ฏ๐ข๐๐๐ฌ ๐๐๐ ๐ข๐ง๐๐๐ฑ
* ๐๐ก๐ ๐๐๐ ๐ข๐ฌ ๐๐ฑ๐ฉ๐๐๐ญ๐๐ ๐ญ๐จ ๐๐ฅ๐ฎ๐๐ญ๐ฎ๐๐ญ๐ ๐๐ฎ๐ญ ๐ฌ๐ฎ๐ฉ๐ฉ๐จ๐ซ๐ญ๐๐ ๐๐ฒ ๐ฌ๐ญ๐๐๐ฅ๐ ๐จ๐ข๐ฅ ๐๐ง๐ ๐๐๐๐๐๐ ๐๐ฅ๐จ๐ฌ๐
Morning,
The Jakarta Composite Index (JCI) today (24/8) is expected to be positive within the range of 5,225pt โ 5,375pt by support of ย stable USDIDR and oil close. ย Meanwhile Friday last week (21/8) in Wall Streetย theย DJIAย ended lower byย 191 points or 0.7%ย at 27,930pt , while the S&P500 and the Nasdaq both closed higher by 0.3% and 0.4%, respectively. ย Wall Street responded positively on data of the United States manufacturing activity from the IHS Market that hit its highest level in 19 months in August, while services were at their highest level in 17 months.
๐๐ง๐๐จ๐ง๐๐ฌ๐ข๐ ๐๐จ๐ง๐ฌ๐ฎ๐ฆ๐๐ซ ๐ฌ๐๐๐ญ๐จ๐ซ
๐๐จ ๐ก๐๐จ๐ฉ๐๐ฃ๐๐ฃ๐ ๐ฉ๐ค ๐ฉ๐๐ ๐ซ๐๐๐๐จ ๐ค๐ ๐๐ค๐ก๐
We maintain the investment ย recommendation of ย United Tractors (UNTR) as BUY, given the latest progress of the company, ย with a 12-TP of IDR31,000/share, or representing a prospect of annual capital gain of 31% against last close of IDR23,475 (19/8). At the appointed target price, derived from an annualized FY20 estimate of this yearโs earnings, UNTR is trading at 14 x earnings which is below its historical peaks of 17x earnings and below the current weighted-average of Jakarta stock market universe of 28.0 x earnings.
The risks to our valuation approach is mitigated from the following factors. 1) bottoming coal price, 2) limited downside from current earnings multiple, 3) increasing gold prices.
๐๐ข๐ฆ๐๐ฅ๐ฒ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ๐ฌ ๐ข๐ง ๐ ๐จ๐ฅ๐ ๐ฆ๐ข๐ง๐ข๐ง๐
UNTR finalized its purchase of gold mining of Martabe, in south Tapanuli in North Sumatera at end of December 2018. UNTR consolidatedย the 95% owned Agincourt Resources the right-holder to explore, mine, and process gold from the mine. As at end of 2018, the gold mine sold 35k ounces of gold (1Q19:97k oz , FY19: 410k oz).ย Last year, revenue from gold mining contributed 9% to total consolidated one at IDR7.9tr. Meanwhile, until end of June this year, gold mining sold 186k of gold (1H19: 195k oz), decreased by 4% YoY because of less mining activities due to the limited-lock down condition. Nevertheless, the lower volume was being offset ย by higher gold prices and led to a 11% YoY growth of revenue to IDR4tr.ย Gold mining contributed 12% to total consolidated revenue.ย This year, UNTR expect to sell 360k oz of gold.
Gold mining division is expected to provide support during the declining trend of coal price and trigger leverage during the reversal. ย Last coal price of coal was at USD49/tonne last week (December 2019: USD68/tonne). Current declining trend is limited, as slowing down of exploration would lead to less supply in the immediate short term, in our note. This implies, investor may bet nice surprise from higher coal price. Higher coal price will impact positively to the other divisions of the company, namely, Construction Machinery, Mining Contracting, ย and Mining.
As at end of June this year, Construction Machinery, Mining Contracting, Mining, Gold Mining, and Contruction Industry accounted for 22%, 46%, 18%, ย 12%, 2%, respectively, to total consolidated revenue of UNTR of IDR33.2tr (2019: IDR84.4tr, 1H19:IDR43.4tr).
The company has a strong balance, at net cash in June 2020 which composed of interest-bearing debt of IDR11.6tr while cash of IDR16.9tr. At the other end, last December, the net gearing stood at 1%, while gross gearing at a moderate 21%.
At the other end, Friday last week ย the WTI price closed lower by ย 1.1% at USD42.3/barrel demand worries. Meanwhile the ย USDIDR ย closed ย at IDR14.786 ย vs. IDR14.907 the previous one.
We advise the following recommendations, for both trading and longer-time investment purpose. ๐๐๐๐, ๐๐๐๐ (๐ฌ๐๐๐ญ๐จ๐ซ ๐จ๐ ๐๐จ๐ณ๐ช, ๐๐ฅ๐ฅ๐จ๐๐๐ญ๐ข๐จ๐ง ๐ฌ๐ฎ๐ ๐ ๐๐ฌ๐ญ๐ข๐จ๐ง ๐๐ฏ๐ฅ๐ฆ๐ณ๐ธ๐ฆ๐ช๐จ๐ฉ๐ต ), ๐๐๐๐, ๐๐๐๐, ๐๐๐๐, ๐๐๐๐ (๐ฌ๐๐๐ญ๐จ๐ซ ๐จ๐ ๐๐ฐ๐ข๐ญ ๐๐ช๐ฏ๐ช๐ฏ๐จ, ๐๐ฅ๐ฅ๐จ๐๐๐ญ๐ข๐จ๐ง ๐ฌ๐ฎ๐ ๐ ๐๐ฌ๐ญ๐ข๐จ๐ง ๐๐ข๐ณ๐ฌ๐ฆ๐ต-๐ธ๐ฆ๐ช๐จ๐ฉ๐ต), ๐๐๐๐, ๐๐๐๐, ๐๐๐๐ (๐ฌ๐๐๐ญ๐จ๐ซ ๐จ๐ ๐๐ฐ๐ฏ๐ด๐ถ๐ฎ๐ฆ๐ณ, ๐๐ฅ๐ฅ๐จ๐๐๐ญ๐ข๐จ๐ง ๐ฌ๐ฎ๐ ๐ ๐๐ฌ๐ญ๐ข๐จ๐ง ๐๐ท๐ฆ๐ณ๐ธ๐ฆ๐ช๐จ๐ฉ๐ต ), ๐๐๐๐ (๐ฌ๐๐๐ญ๐จ๐ซ ๐จ๐ ๐๐ถ๐ต๐ฐ๐ฎ๐ข๐ต๐ช๐ท๐ฆ, ๐๐ฅ๐ฅ๐จ๐๐๐ญ๐ข๐จ๐ง ๐ฌ๐ฎ๐ ๐ ๐๐ฌ๐ญ๐ข๐จ๐ง ๐๐ข๐ณ๐ฌ๐ฆ๐ต-๐ธ๐ฆ๐ช๐จ๐ฉ๐ต), ๐๐ง๐ ๐๐๐๐, ๐๐๐๐, ๐๐๐๐ (๐ฌ๐๐๐ญ๐จ๐ซ ๐จ๐ ๐๐ณ๐ข๐ฅ๐ฆ, ๐๐ฅ๐ฅ๐จ๐๐๐ญ๐ข๐จ๐ง ๐ฌ๐ฎ๐ ๐ ๐๐ฌ๐ญ๐ข๐จ๐ง ๐๐ท๐ฆ๐ณ๐ธ๐ฆ๐ช๐จ๐ฉ๐ต),๐๐ง๐ ๐๐๐๐ (๐ฌ๐๐๐ญ๐จ๐ซ ๐จ๐ ๐๐ข๐ด๐ช๐ค ๐๐ฏ๐ฅ๐ถ๐ด๐ต๐ณ๐บ, ๐๐ฅ๐ฅ๐จ๐๐๐ญ๐ข๐จ๐ง ๐ฌ๐ฎ๐ ๐ ๐๐ฌ๐ญ๐ข๐จ๐ง ๐๐ข๐ณ๐ฌ๐ฆ๐ต-๐ธ๐ฆ๐ช๐จ๐ฉ๐ต).
Cheers,