The JCI January 4, 2021

𝐉𝐚𝐧𝐮𝐚𝐫𝐲 𝟒, 𝟐𝟎𝟐𝟏

* 𝐓𝐡𝐞 𝐉𝐂𝐈 𝐭𝐫𝐚𝐝𝐢𝐧𝐠 𝐫𝐚𝐧𝐠𝐞:𝟓,𝟗𝟐𝟓𝐩𝐭 – 𝟔,𝟏𝟓𝟎𝐩𝐭  (𝐃𝐞𝐜𝐞𝐦𝐛𝐞𝐫 𝟑𝟎 𝐜𝐥𝐨𝐬𝐞: 𝟓,𝟗𝟕𝟗𝐩𝐭)

* 𝐖𝐚𝐥𝐥 𝐒𝐭𝐫𝐞𝐞𝐭 𝐞𝐧𝐝𝐞𝐝 𝐡𝐢𝐠𝐡𝐞𝐫 𝐰𝐢𝐭𝐡 𝐭𝐡𝐞 𝐃𝐉𝐈𝐀 𝐚𝐧𝐝 𝐭𝐡𝐞 𝐒&𝐏𝟓𝟎𝟎 𝐚𝐭 𝐭𝐡𝐞 𝐫𝐞𝐜𝐨𝐫𝐝-𝐜𝐥𝐨𝐬𝐞 𝐢𝐧 𝐭𝐡𝐞 𝐥𝐚𝐬𝐭 𝐭𝐫𝐚𝐝𝐢𝐧𝐠 𝐝𝐚𝐲 𝐥𝐚𝐬𝐭 𝐲𝐞𝐚𝐫, 𝐦𝐨𝐬𝐭𝐥𝐲 𝐨𝐧 𝐠𝐞𝐧𝐞𝐫𝐚𝐥 𝐨𝐩𝐭𝐢𝐦𝐢𝐬𝐦 𝐭𝐡𝐢𝐬 𝐲𝐞𝐚𝐫 𝐚𝐬 𝐰𝐞𝐥𝐥 𝐨𝐧 𝐭𝐡𝐞 𝐥𝐚𝐭𝐞𝐬𝐭 𝐨𝐟 𝐭𝐡𝐞 𝐔𝐧𝐢𝐭𝐞𝐝 𝐒𝐭𝐚𝐭𝐞𝐬 𝐫𝐞𝐥𝐞𝐚𝐬𝐞 𝐰𝐞𝐞𝐤𝐥𝐲 𝐝𝐚𝐭𝐚 𝐨𝐟 𝐣𝐨𝐛𝐥𝐞𝐬𝐬 𝐜𝐥𝐚𝐢𝐦𝐬, 𝐰𝐡𝐢𝐜𝐡 𝐢𝐬 𝐥𝐨𝐰𝐞𝐫-𝐭𝐡𝐚𝐧-𝐞𝐬𝐭𝐢𝐦𝐚𝐭𝐞𝐝

* 𝐓𝐡𝐞 𝐉𝐂𝐈 𝐢𝐬 𝐞𝐱𝐩𝐞𝐜𝐭𝐞𝐝 𝐭𝐨 𝐟𝐥𝐮𝐜𝐭𝐮𝐚𝐭𝐞 𝐭𝐨 𝐚𝐭𝐭𝐞𝐦𝐩𝐭 𝐡𝐢𝐠𝐡𝐞𝐫 𝐛𝐞𝐢𝐧𝐠 𝐬𝐮𝐩𝐩𝐨𝐫𝐭𝐞𝐝 𝐛𝐲 𝐬𝐭𝐚𝐛𝐥𝐞 𝐔𝐒𝐃𝐈𝐃𝐑 𝐚𝐧𝐝 𝐨𝐢𝐥 𝐜𝐥𝐨𝐬𝐞

Morning,

The Jakarta Composite Index (JCI) today (1/4) is expected to be in the range of 5,925pt – 6,150pt, to fluctuate and incline higher, also being supported by the extention of transitional PSBB (large-scale social distancing (PSBB), effective today. Meanwhile, last trading day  last year  (12/31), the DJIA closed higher by 197 points or 0.7% to 30,607pt, while the S&P500 and the Nasdaq both ended higher by 0.6% and 0.1%, respectively.

Despite the worrying  latest 7-day average (January 2)  Positivity Rates (PR) of COVID-19 new cases in Jakarta capital city,  at 13.3%, or higher as compared to the preceeding weeks of 12.7% and 10.9% respectively, the governor Anies Baswedan extends the transitional PSBB into January 17.  The decision is also msinly based on the lower latest pandemic score of 59pt as compared to 61pt the previous one.  The score, adapted and computed by the University of Indonesia, put significant weight on the vaccination detailed-program currently ready to be rolled-out throughout the country, we suspect.  Furthermore, current higher PR is also considered as seasonal,  factoring in year end holiday seasons.

𝐌𝐚𝐢𝐧𝐭𝐚𝐢𝐧 𝐬𝐞𝐜𝐭𝐨𝐫𝐬 𝐫𝐞𝐜𝐨𝐦𝐦𝐞𝐧𝐝𝐚𝐭𝐢𝐨𝐧 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐲𝐞𝐚𝐫 𝟐𝟎𝟐𝟏

The Jakarta Composite Index (JCI) ended the year 2020  at 5,979pt, representing an annual loss of 5.9%. The JCI performance last year is about mediocre, with the closest neighbors posted positive returns in the year, example of FTSE BM of Malaysia (+ 3.4%), VN-Index of Vietnam (14.2%), All Ordinaries of Australia (2.1%), and CH Composite of China (11.9%). Volatility factor has colored the JCI as well with the index performed by an annual gain of 52.8% against intra-year low in March 24.

Against the background of cautious-optimistic approach to the stock market this year (please see our report dated 12/30/20), sectors’ recommendation is maintained while counters’ selection are modified to adhere to ethical investing category of sharia adherence.  For this matter, starting today,  GGRM and ASII are excluded, and ULTJ, MNCN, and SIDO are included. Below are brief remarks on the new counters in the list.

𝐔𝐥𝐭𝐫𝐚𝐣𝐚𝐲𝐚 𝐌𝐢𝐥𝐤 𝐓𝐫𝐚𝐝𝐢𝐧𝐠 𝐂𝐨𝐦𝐩𝐚𝐧𝐲 (𝐔𝐋𝐓𝐉)

ULTJ started the Ultra High Temperature(UHT)-  based technology of milk product since 1975, well known with the brand of “Ultra Milk”. Went IPO in 1990 at IDR7,500/share, has conducted  3 (three) public offering with Preemptive Rights in 1994, 1999, and 2004, and 2 (two) stock splits in 2000(1:5) and in 2017 (1:4).  Main product Ultra Milk has major market share in the segment, while during the progressing years others of the company’s  beverages brand have follow suit.

As at end of September 2020, ULTJ is estimated to contract 2.8% YoY last year, while balance sheet stood as a net-cash one, with total equity of IDR4.6tr, debt of IDR2.2bn, while cash at IDR710.2bn.

At the last closing price of IDR1,160, the counter is trading at 14.3x that of  FY2020 annualized estimated earnings which is a discount to its historical rates to provide room to re-rate with stable growth mode along with the economic recovery.

𝐈𝐧𝐝𝐮𝐬𝐭𝐫𝐢 𝐉𝐚𝐦𝐮 𝐝𝐚𝐧 𝐅𝐚𝐫𝐦𝐚𝐬𝐢 𝐒𝐢𝐝𝐨 𝐌𝐮𝐧𝐜𝐮𝐥 (𝐒𝐈𝐃𝐎)

Established in 1940 as a home industry with 3 (three) employees, SIDO went listed on 2013 at the IPO price opf IDR530/share. Over the years of progress, at present SIDO has an extraction production capacity of 13,500 kg/day, and liquid drugs production capacity of 100mn  sachets /month, with total employees of over 4,000 people.

As at end of September 2020, SIDO is estimated to book an annualized sales growth 6% YoY last year, and stood as a debt-free company.

At the last closing price of IDR850 (12/30), the counter is trading at 28.3x that of annualized last year estimated earnings. Earnings multiple represents discount to its historical range, give more room to re-rate over stable earnings growth mode tagged along with the economic recovery.

𝐌𝐞𝐝𝐢𝐚 𝐍𝐮𝐬𝐚𝐧𝐭𝐚𝐫𝐚 𝐂𝐢𝐭𝐫𝐚 (𝐌𝐍𝐂𝐍)

MNCN operates 4 (four) of Indonesia’s 11 Free-To-Air (FTA) TV stations, namely RCTI, MNCTV, GTV, and iNews, also that of television content production and delivery. MNC also owns radio, print media, talent management, content production units.

As at end of September 2020, MNCN is estimated to contract 4.8% YoY  last year, while net gearing stood at 28%. MNCN is among counters estimated to have a  V-shape recovery along  with that of the economy.

At the last closing  price of IDR1,140 , the counter is trading at 9.3x  last year estimated annualized earnings multiple which  representing significant discount to both the sector and the market.

At the other end, December 31 last year,  the WTI price closed higher  by  0.3% to USD48.5/barrel against the previous close for the upcoming OPEC + member countries meeting scheduled today. The meeting is expected to decide on the tapering quantity of output cut. Meanwhile, the USDIDR  closed  at IDR14.105  vs. IDR14.169 the previous one.

We advise the following recommendations, 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), 𝐒𝐈𝐃𝐎, 𝐔𝐋𝐓𝐉, 𝐔𝐍𝐕𝐑, 𝐈𝐂𝐁𝐏 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘊𝘰𝘯𝘴𝘶𝘮𝘦𝘳, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘖𝘷𝘦𝘳𝘸𝘦𝘪𝘨𝘩𝘵 ), 𝐚𝐧𝐝 𝐀𝐂𝐄𝐒, 𝐒𝐂𝐌𝐀, 𝐌𝐀𝐏𝐈,𝐌𝐍𝐂𝐍 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘛𝘳𝘢𝘥𝘦, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘖𝘷𝘦𝘳𝘸𝘦𝘪𝘨𝘩𝘵),𝐚𝐧𝐝 𝐓𝐊𝐈𝐌 (𝐬𝐞𝐜𝐭𝐨𝐫 𝐨𝐟 𝘉𝘢𝘴𝘪𝘤 𝘐𝘯𝘥𝘶𝘴𝘵𝘳𝘺, 𝐚𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 𝐬𝐮𝐠𝐠𝐞𝐬𝐭𝐢𝐨𝐧 𝘔𝘢𝘳𝘬𝘦𝘵-𝘸𝘦𝘪𝘨𝘩𝘵).

Cheers,