- Riset Terkini
December 17, 2014 09:13 WIB
While continued weakness in crude oil price is perceived to be positive for net importer country such as Indonesia, weakening of the currency have put a stop to the recent market uptrend. Outflow intensified last week, with total MTD reached IDR2.18t. More update on demand post fuel hike; negative for 4W, positive for retailer and taxi. Our key theme remains big cap defensive counters and the infrastructure sector. Heavy energy consumer such as cement and airlines will enjoy positive momentum with crude oil price weakness.
Weakening IDR jitters confidence
After couple of weeks stays in positive weekly return, JCI finally took a hit, down 0.5% last week. In regional context, weakness in ASEAN 5 market was relatively modest in the region, excludingThailand which saw a substantial correction, down 5% w-w, mainly driven by continued weakness in oil, with Brent touched USD63/barrel last week, the lowest in 5 years. While lower oil price should actually be positive for net importer oil such as Indonesia, the expected upward movement on JCI had largely been dragged by ongoing IDR weakness, with IDR touched IDR12,700 level, the highest since Jun 98 While weakening currency had been a trend which followed any fuel price hike in the past, any further weakness from this level can amplified outflow situation in equity market. Outflow continues to escalate on the second week of December with another IDR1.37t exiting the market, with MTD outflow has reached IDR2.18t, nearly 40% of total inflow in Nov.
The impact on demand from the fuel price hikes starts to show
To follow up with selected development on several sector post fuel price hike: Car sales - Inline with the trend on the 2W sales, 4W also showed weakness in November with domestic car sales declined 15% m-m to 91,449 units. Car manufacturers have also prepared for further weakness in Dec and started to reduce their unit delivery to dealers. Retailers – Generally still show an improvement in November mainly supported by higher seasonality toward year end. In November, MAPI enjoyed sales growth of 19%y-y and 1.8% m-m with SSSG remains strong at 8%. On the other hand, ACES sales still held up well rose 17.5% y-y and 1.5% m-m in November although SSSG were down 1%. Transportation - With new tariff adjustment is only made effective by mid Dec (vs fuel price hike in 18 Nov), BIRD saw 10% increased on its taxi booking in November.
Two initiations: the leader on its respective segment
With higher inflation post fuel price hike coupled with weakening of the IDR, Indonesia corporate will need to navigate through difficulties in the short to medium term. To preserve profitability while maintaining market share, in our view, it is necessary for corporates to have: 1) Strong positioning with high market share; and 2) greater economic of scale, which provide the company with more flexibility to circumvent cost pressure. The company with these two factors will likely to outperform in the medium term. Having said that, we initiate coverage on two companies, which we believe possess those two factors: 1)We rated BIRD with BUY and TP IDR10,200 mainly underpinned by a) BB’s strong brand equity as the leading passenger transportation in Indonesia, b) its aggressive expansion in fleets post-IPO and c) the recent tariff increase post-fuel hikes event will offer better profitability in the long-run; and 2)We re-initiated ICBP with BUY and TP IDR13,400 as we believe that the company represents a safe shelter in Indonesia’s consumer sector. As purchasing power may wane due to a higher cost of living, we think that ICBP is one of the most defensive stocks in the market that can weather the challenging macro conditions. The company’s defensive characteristics are exemplified by its best-selling instant noodles, which have low selling prices and high brand awareness among Indonesian consumers.
The key theme ahead
Our key theme remains big cap defensive counters - which are also a play on year-end window dressing and positive momentum in the infrastructure sector. As most construction counters have already enjoyed substantial runs, the laggard in the sector, ADHI, looks attractive at this level, especially since we believe that 2015 will be a better year for construction. With continued crude oil price weakness, heavy energy consumer such as cement and airlines will enjoy positive catalyst. To play on IDR weakening, INCO is our top preference as: 1)nickel demand is expected to recover; 2) continuation of export ban and slow development of smelters in Indo and 3)less correlation between nickel price and crude oil price.
Trade Outlook November 2014
November 27, 2014 14:57 WIB
Indonesia’s exports rose 5.5 percent MoM in September to US$ 15.3 bn, driven by both higher non oil and gas xports (+6.5 percent MoM) and oil and gas exports (+0.9 percent MoM). The average aggregate prices edged down 0.38 percent MoM, although on a YoY comparison, they are still 26.0 percent higher. Exports volume rose 5.9 percent MoM, although cumulatively in the first 9 months of the year, it is 18.8 percent lower compared to last year’s exports volume.
The exports of two major products rebounded in September. Exports of animal and vegetable fats (HS 15) and mineral fuels (HS 27) increased by 4.3 percent and 5.7 percent, respectively. The exports of other non oil and gas products, such as electrical machinery and rubber products, also posted increases.
Shipments of non oil and gas export products to Indonesia’s major trading partners posted increases. On a monthly basis, Indonesia’s non oil and gas exports to China increased the most (up 13.9 percent), followed by a 9.1 percent increase to the U.S. and a 6.7 percent increase to Japan.
Imports also rose in September. Total imports climbed 5.1 percent MoM to US$ 15.5 bn, driven by stronger oil and gas imports (+7.4 percent MoM) and non oil and gas imports (+4.4 percent MoM). September’s imports volume was up 12.7 percent although the average aggregate prices contracted 6.7 percent MoM.
By product type, imports of mechanical machinery and equipment (HS 84) dipped 0.7 percent, while imports of electrical machinery and equipment (HS 85) rose 1.4 percent. Shipments of non oil and gas products from China increased by 14.3 percent, while imports from Japan and Singapore declined by 3.8 percent and 6.8 percent, respectively.
By classification, imports of all types of goods still posted increases. Imports of raw materials were up the most (+5.64 percent), followed by imports of capital goods (+4.90 percent) and imports of raw materials (+0.3 percent). In the January-September period, imports of raw materials accounted for 76.5 percent of Indonesia’s total imports.
After recording a trade deficit of US$ 311.5 mn in August, Indonesia recorded another trade deficit of US$ 270.3 mn in September. The deficit narrowed as exports growth was higher than imports growth. Also encouragingly, Indonesia’s trade deficit in the first 9 months of 2014 stood at US$ 1.7 bn – or significantly lower than the deficit of US$ 6.4 bn recorded in the corresponding period of last year.
CPI & SBI Outlook November 2014
November 27, 2014 14:54 WIB
Inflationary pressures began to rise in October. After posting benign inflation of 0.27 percent MoM in September, October’s MoM inflation accelerated to 0.47 percent. Nonetheless, on a yearly basis, inflation reached only 4.83 percent. And cumulatively, in the January-October period, headline inflation only reached 4.19 percent, or far lower than last year’s 7.42 percent.
All CPI components rose in October. The housing component (+1.04 percent) and the medical care component (+0.60 percent) recorded the largest MoM increases. The other components also posted increases: the prepared foods component rose 0.43 percent, the foodstuffs component edged up 0.25 percent, the education component climbed 0.23 percent, the clothing component added 0.21 percent, and the transportation component rose 0.16 percent.
In November, the government finally bit the bullet and hiked subsidized fuel prices to create a more sustainable state budget. Through this policy, the price of subsidized premium gasoline was raised from IDR 6,500/liter to IDR 8,500/liter, while the price of diesel fuel was upped from IDR 5,500/liter to IDR 7,500/liter. The price of subsidized kerosene was kept unchanged at IDR 2,500/liter. In our estimates, the government’s decision to hike fuel prices by 32 percent on average will create additional inflation of 2.2 percent, meaning that the inflation rate will reach around 7.4 percent at the end of 2014.
To cushion the impact of the fuel price hikes, the government provided social assistance to low income families through several socialprotection cards, i.e. the Indonesia Health Card (KIS), the Indonesia Smart Card (KIP) and the Prosperous Family Card (KKS). .. For November, given the absence of seasonal factors, heightened inflationary pressures will be driven by the government’s decision to hike subsidized fuel prices. Indeed, inflationary expectations already increased ahead of the fuel price hikes with the prices of several types of commodities heading higher. Then, after the announcement, increases in transportation fares and the prices of some goods followed. In our estimate, the full impact of the fuel price hikes will be seen in the December inflation figure.
Against this backdrop, we predict inflation of 1.29 percent MoM in November, translating into YoY inflation of 6.01 percent.
|Exports||US$ 16.40 bn|
|Imports||US$ 16.50 bn|
|Trade Balance||US$ 82.10 bn|
Forecast for 2014
|Exports||US$ 196.40 bn|
|Imports||US$ 192.30 bn|
|Trade Balance||US$ 4.10 bn|
|End of period(% p.a)||7.75|
Forecast for 2014
- Adhi Karya - Starting over
- Company Update: UNTR
- Consumer Confidence December 2014
- Kimia Farma - Still Promising
- Weekly Report - Persimpangan Jalan
- Trade Outlook July 2014
- Trade Outlook June 2014
- Trade Outlook May 2014
- Trade Outlook April 2014
- Trade Outlook Maret 2014
CPI & SBI Outlook
- CPI & SBI Outlook June 2014
- CPI & SBI Outlook May 2014
- CPI & SBI Outlook April 2014
- CPI & SBI Outlook Maret 2014
- CPI & SBI Outlook Januari 2014