The JCI August 4, 2020
Aᴜɢᴜsᴛ 4, 2020
* Tʜᴇ JCI ᴛʀᴀᴅɪɴɢ ʀᴀɴɢᴇ: 4,975ᴘᴛ – 5,100ᴘᴛ ( Yᴇsᴛᴇʀᴅᴀʏ ᴄʟᴏsᴇ : 5,006ᴘᴛ )
* Wᴀʟʟ Sᴛʀᴇᴇᴛ ᴄʟᴏsᴇᴅ ʜɪɢʜᴇʀ ʙʏ ᴏᴠᴇʀ 1% ᴏɴ ᴛᴇᴄʜ’s sᴛᴏᴄᴋs ʀᴀʟʟʏ ꜰᴏʀ ʜɪɢʜᴇʀ-ᴛʜᴀɴ-ᴇxᴘᴇᴄᴛᴇᴅ 2Q20 ᴇᴀʀɴɪɴɢs ɢʀᴏᴡᴛʜ/
* Tʜᴇ JCI ɪs ᴇxᴘᴇᴄᴛᴇᴅ ᴛᴏ ꜰʟᴜᴄᴛᴜᴀᴛᴇ ᴏɴ ᴀ ʀᴇᴠᴇʀsɪɴɢ ᴛʀᴇɴᴅ ᴛᴏᴅᴀʏ ᴏɴ ᴀʟsᴏ ʙʏ sᴜᴘᴘᴏʀᴛ ᴏꜰ ʜɪɢʜᴇʀ ᴏɪʟ ᴄʟᴏsᴇ
Morning,
The Jakarta Composite Index (JCI) today (4/8) is expected to be in the range of 4,975pt – 5,100pt to be in cautious stance on 2Q20 data releases, but supported by stable USDIDR and oil close. Meanwhile, yesterday (3/8) in Wall Street the DJIA ended higher by 236 points or 0.9% at 26,654pt , while the S&P500 and the Nasdaq both gained by 0.7% and 1.5%, respectively.
𝐈𝐧𝐝𝐨𝐧𝐞𝐬𝐢𝐚 𝐂𝐨𝐧𝐬𝐮𝐦𝐞𝐫 𝐒𝐞𝐜𝐭𝐨𝐫
𝐔𝐧𝐢𝐥𝐞𝐯𝐞𝐫 𝐈𝐧𝐝𝐨𝐧𝐞𝐬𝐢𝐚 𝐫𝐞𝐩𝐨𝐫𝐭𝐞𝐝 𝐯𝐞𝐫𝐲-𝐦𝐮𝐜𝐡-𝐝𝐞𝐜𝐞𝐧𝐭 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥𝐬 𝐝𝐮𝐫𝐢𝐧𝐠 𝐭𝐡𝐞 𝟐𝐐𝟐𝟎
* 𝟏𝐇𝟐𝟎 𝐩𝐮𝐛𝐥𝐢𝐬𝐡𝐞𝐝 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥𝐬 𝐢𝐬 𝐢𝐧-𝐥𝐢𝐧𝐞 𝐰𝐢𝐭𝐡 𝐨𝐮𝐫 𝐞𝐬𝐭𝐢𝐦𝐚𝐭𝐞𝐬
* 𝐄𝐢𝐝 𝐜𝐞𝐥𝐞𝐛𝐫𝐚𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐌𝐚𝐲 𝐡𝐞𝐥𝐩𝐞𝐝 𝐬𝐮𝐩𝐩𝐨𝐫𝐭𝐞𝐝 𝐅&𝐑 𝐬𝐚𝐥𝐞𝐬 𝐢𝐧 𝟐𝐐𝟐𝟎
* 𝐁𝐚𝐥𝐚𝐧𝐜𝐞 𝐬𝐡𝐞𝐞𝐭 𝐢𝐦𝐩𝐫𝐨𝐯𝐞𝐝 𝐭𝐨 𝐝𝐞𝐛𝐭-𝐟𝐫𝐞𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧 𝐚𝐭 𝐞𝐧𝐝 𝐨𝐟 𝐉𝐮𝐧𝐞
* 𝐌𝐚𝐢𝐧𝐭𝐚𝐢𝐧 𝐨𝐮𝐫 𝐁𝐔𝐘 𝐜𝐚𝐥𝐥 𝐰𝐢𝐭𝐡 𝟏𝟐-𝐌 𝐭𝐚𝐫𝐠𝐞𝐭 𝐩𝐫𝐢𝐜𝐞 𝐨𝐟 𝐈𝐃𝐑𝟏𝟎,𝟔𝟎𝟎 / 𝐬𝐡𝐚𝐫𝐞
𝐒𝐭𝐚𝐛𝐥𝐞 𝟐𝐐𝟐𝟎 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞𝐬
Unilever Indonesia (UNVR) reported 1H20 financials with sales amounted to IDR21.8tr , an increase of 2% YoY, while during 2Q20 alone the company recorded total net sales of IDR10.6tr. Sales during 2Q20 was representing a 2% decline as compared to the same period last year, and a 5% decline as compared to the 1Q this year.
Eid festive season on May helped support the company’s total net sales in the 2Q20 through its Foods & Beverages (F&B) division that saw a 1.5% growth over the 1Q20 versus that of Home & Personal Care that contracted by 7.5% over the same period. We see the performance of the F&B division positively given the highly competitive food market in Indonesia. We gather UNVR’s innovations on ice cream lines supported the existing solid establishment of its margarine (Blue Band), Bango (soybean sauce), Sari Wangi (tea bags).
Total gross margins in 1H20 came in at 51.4% (1H19:51.0%, 2Q20: 50.2%), mainly being backed by that of HPC during the 2Q20 at 57.4% (1H20:56.8%, 1H19: 54.1%), while F&R gross margins in the 2Q20 was recorded at 34.8% (1H20:39.1%, 1H19:44.2%). We refer that UNVR’s medium to high-end lines of products as resilient during the start of the pandemic climate.
Total operating margins stood at 21.8% in 1H20 as compared to 23.4%, nevertheless during the 2Q20 alone the position was at 22.1% which we relate to lower financing costs.
As of end of June this year, UNVR balance was debt-free, having paid off balance of bank loan amounted to IDR2.9tr end of 2019.
We valued the company ‘s share by DCF method (WACC:9%, LTG:2%) and come with a 12-month fair price of IDR10,600/share. At the fair price of IDR10,600, the counter is trading at 51 times next year’s earnings or about similar to its historical earnings multiple. At yesterday price of IDR8,250, UNVR is trading at 39.7 times our estimated FY21 earnings, representing a historical premium rate of some 70% to the general market earnings multiples. We view premium to the counter justified. Maintain our BUY call (please see our report dated December 6, 2019, and July 16, 2020)
At the other end, yesterday the WTI price closed higher by 1.8% to USD41.0/barrel on higher America’s manufacturing index over 1.5 years. Meanwhile the USDIDR closed at IDR14.713 vs. IDR14.570 the previous one.
We advise the following recommendation , for both trading and longer-time investment purpose. 𝐀𝐀𝐋𝐈, 𝐋𝐒𝐈𝐏 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘈𝘨𝘳𝘪, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘜𝘯𝘥𝘦𝘳𝘸𝘦𝘪𝘨𝘩𝘵 ), 𝐔𝐍𝐓𝐑, 𝐈𝐓𝐌𝐆, 𝐀𝐃𝐑𝐎, 𝐏𝐓𝐁𝐀 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘊𝘰𝘢𝘭 𝘔𝘪𝘯𝘪𝘯𝘨, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘔𝘢𝘳𝘬𝘦𝘵-𝘸𝘦𝘪𝘨𝘩𝘵), 𝐆𝐆𝐑𝐌, 𝐔𝐍𝐕𝐑, 𝐈𝐂𝐁𝐏 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘊𝘰𝘯𝘴𝘶𝘮𝘦𝘳, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘖𝘷𝘦𝘳𝘸𝘦𝘪𝘨𝘩𝘵 ), 𝐀𝐒𝐈𝐈 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘈𝘶𝘵𝘰𝘮𝘢𝘵𝘪𝘷𝘦, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘔𝘢𝘳𝘬𝘦𝘵-𝘸𝘦𝘪𝘨𝘩𝘵), 𝐚𝐧𝐝 𝐀𝐂𝐄𝐒, 𝐒𝐂𝐌𝐀, 𝐌𝐀𝐏𝐈 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘛𝘳𝘢𝘥𝘦, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘖𝘷𝘦𝘳𝘸𝘦𝘪𝘨𝘩𝘵),𝐚𝐧𝐝 𝐓𝐊𝐈𝐌 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘉𝘢𝘴𝘪𝘤 𝘐𝘯𝘥𝘶𝘴𝘵𝘳𝘺, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘔𝘢𝘳𝘬𝘦𝘵-𝘸𝘦𝘪𝘨𝘩𝘵).
Cheers,