The JCI August 5, 2020
Aᴜɢᴜsᴛ 5, 2020
* Tʜᴇ JCI ᴛʀᴀᴅɪɴɢ ʀᴀɴɢᴇ: 5,025ᴘᴛ – 5,160ᴘᴛ (Yᴇsᴛᴇʀᴅᴀʏ ᴄʟᴏsᴇ: 5,075ᴘᴛ)
* Wᴀʟʟ Sᴛʀᴇᴇᴛ ᴇɴᴅᴇᴅ ʜɪɢʜᴇʀ ʙʏ ᴄʟᴏsᴇ ᴛᴏ 1% ᴏɴ ᴘᴏsɪᴛɪᴠᴇ ɴᴇᴡs ᴏꜰ Cᴏʀᴏɴᴏᴠɪʀᴜs sᴛɪᴍᴜʟᴜs ᴄʜᴇᴄᴋs
* Tʜᴇ JCI ɪs ᴇxᴘᴇᴄᴛᴇᴅ ᴛᴏ ʜᴀᴠᴇ ᴀ ʟɪᴍɪᴛᴇᴅ ᴇxᴛᴇɴᴅᴇᴅ ɢᴀɪɴ ᴏɴ sᴛᴀʙʟᴇ USDIDR ᴀɴᴅ ᴏɪʟ-ᴄʟᴏsᴇ
Morning,
The Jakarta Composite Index (JCI) today (5/8) is expected to be in the range of 5,025pt – 5,160pt to extend gain but restrained by profit – takings. Furthermore, domestic market is cautiously monitor 2Q20 Indonesia GDP growth data, widely expected to contract at the range of 2% to 8% YoY. Should the published data be in the estimated range, this would support the stock market, in our view. Meanwhile, yesterday (4/8) in Wall Street the DJIA ended higher by 154 points or 0.6% at 26,828pt , while the S&P500 and the Nasdaq both gained by 0.4%.
𝐈𝐧𝐝𝐨𝐧𝐞𝐬𝐢𝐚 𝐂𝐨𝐧𝐬𝐮𝐦𝐞𝐫 𝐒𝐞𝐜𝐭𝐨𝐫
𝐈𝐦𝐩𝐫𝐨𝐯𝐢𝐧𝐠 𝐞𝐱𝐩𝐨𝐫𝐭 𝐩𝐫𝐨𝐟𝐢𝐥𝐞 𝐛𝐞𝐧𝐞𝐟𝐢𝐭𝐬 𝐝𝐨𝐦𝐞𝐬𝐭𝐢𝐜 𝐜𝐨𝐧𝐬𝐮𝐦𝐞𝐫𝐬’ 𝐰𝐞𝐥𝐟𝐚𝐫𝐞
* 𝐓𝐣𝐢𝐰𝐢 𝐊𝐢𝐦𝐢𝐚 𝐭𝐨 𝐛𝐞𝐧𝐞𝐟𝐢𝐭 𝐟𝐫𝐨𝐦 𝐬𝐭𝐚𝐛𝐥𝐞 𝐚𝐧𝐝 𝐡𝐢𝐠𝐡𝐞𝐫 𝐭𝐫𝐞𝐧𝐝 𝐨𝐟 𝐠𝐥𝐨𝐛𝐚𝐥 𝐭𝐢𝐬𝐬𝐮𝐞 𝐩𝐚𝐩𝐞𝐫 𝐩𝐫𝐢𝐜𝐞
* 𝐌𝐚𝐢𝐧𝐭𝐚𝐢𝐧 𝐨𝐮𝐫 𝐁𝐔𝐘 𝐜𝐚𝐥𝐥 𝐰𝐢𝐭𝐡 𝐚 𝐫𝐞𝐯𝐢𝐬𝐞𝐝-𝐝𝐨𝐰𝐧 𝟏𝟐𝐌 𝐓𝐏 𝐨𝐟 𝐈𝐃𝐑𝟖,𝟑𝟎𝟎 / 𝐬𝐡𝐚𝐫𝐞
* 𝐎𝐤𝐢 𝐏𝐮𝐥𝐩 & 𝐏𝐚𝐩𝐞𝐫 𝐌𝐢𝐥𝐥 (𝐎𝐏𝐏𝐌) 𝐜𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧 𝐢𝐧 𝐭𝐡𝐞 𝟐𝐇𝟐𝟎 𝐭𝐨 𝐬𝐮𝐩𝐩𝐨𝐫𝐭 𝐭𝐡𝐞 𝐜𝐨𝐦𝐩𝐚𝐧𝐲’𝐬 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞
Tjiwi Kimia (TKIM) is a listed-company among one of Indonesia conglomerates that produce paper products (please see our report dated January 7, 2019). TKIM reported sales of USD1.05bn in 2019 (2018: USD1.06bn) which made up 96% of our estimates for both years. However, bottom lines for both years were off our estimates as non-consolidating and 49%-owned OPPM reported net profit of USD220mn in 2018 and USD234mn in 2019 as compared to the forecasted USD324mn and USD334 mn, respectively. OPPM is a non-listed company .
For the first half of this year, TKIM reported sales of USD450mn vs. USD577mn in 1H19, a decline of 22% YoY, which we relate to the lower paper price index of 21% YoY . OPPM contributed USD71.8mn during 1H20 (1H19:USD125.5mn). On an annualized basis, TKIM is expected to report net profit of USD180mn this year, as compared to USD104.7mn in 2019.
At yesterday closing price of IDR6,600, TKIM is trading at 8.0 times this year annualized-estimate, which we reckon as undemanding, as compared to the average peers ( consist of INCO, ADRO, ITMG, and AALI) of 15.0 times. We arrived at TKIM 12M target price of IDR8,300 / share by assuming a 33% discount (equivalent to 10x) to peer multiples’ valuation for a relatively heavy –gearing of the company’s balance sheet. Gross gearing was of 92% of total equity in June this year, and at 101% end of last year.
Export of Indonesia Tissue, Towel, Napkin Stock or Similar (HS Code : 38) has gained traction in recent years, to have increased by a CAGR of 15% during 2015-2019. Until June this year, export value amounted to USD430mn , higher by 9.8% as compared to 1H19.
At the other end, yesterday the WTI price closed higher by 1.7% to USD41.7/barrel on hope of higher demand following the release of PMI data as well as second tranche of stimulus check. Meanwhile the USDIDR closed at IDR14.697 vs. IDR14.713 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,