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Danareksa Equity Snapshot - 30 Juni 2020
June 30, 2020 09:47

FROM EQUITY RESEARCH

 

Consumer: Seeking cost efficiencies in a challenging environment (Overweight)

Kadin estimates that around 6mn workers have been furloughed/laid off during the Covid-19 pandemic, translating into weak purchasing power in April – May 2020. Even consumer companies have reported tough business conditions, including during this year’s Ramadan season. As such, we expect continued cost efficiencies to preserve earnings. As we believe health-related products will benefit the most, our top picks are KLBF and UNVR.

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Retail: Varying Pace of Recovery (Neutral)

We visited a few malls in South and West Jakarta on the first payday weekend post PSBB relaxation and our observations suggest: 1) a more rapid recovery in South Jakarta, more moderate in West Jakarta, 2) middle-up targeted shops are crowded, and thus a clear indication of pent-up demand, while the middle and mid-low segments have yet to meaningfully recover, 3) more discount offerings to attract more sales. All in all, our observations corroborate our view of a stronger middle-up recovery as captured in MAPI and ACES but a slower middle and mid-low recovery pace as represented by LPPF and RALS. We maintain our Neutral rating on the sector given its cheap valuation, even though 2020’s performance has been hit by Covid-19.

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Pakuwon Jati: Revenues growth streak ended  (PWON IJ. IDR 424 BUY TP. IDR 490)

PWON reported net profits of only IDR67bn in 1Q20 (-91% y-o-y, -88% q-o-q) as a result of forex losses caused by significant rupiah depreciation at the end of Mar 20. Despite booking 4% lower revenues y-o-y, PWON was able to book core net profits of IDR679bn (+7% y-o-y) mainly due to normalization of minority interests.

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Aneka Tambang: 1Q20: Lower nickel volume and forex losses (ANTM IJ. IDR 595 BUY TP. IDR 750)

Aneka Tambang (ANTM) reported net losses of IDR282bn in 1Q20 vs. Net profits of IDR176bn in 1Q19 due to: a) lower ferronickel sales volume and the absence of nickel ore sales volume and b) forex losses from its USD loan given weakening of the rupiah/USD exchange rate in 1Q20. The result is below our expectation. In 2Q20, however, we expect the forex losses to reverse given the rupiah’s strengthening. Maintain BUY with lower TP of IDR750 with the expectation of a recovery in nickel prices in 4Q20.

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Waskita Beton Precast: Weak 1Q20 results (WSBP IJ. IDR 196 BUY TP IDR 240)

WSBP booked weak net income of IDR105bn in 1Q20, slumping by 64.1%yoy on the back of lower revenues. The top line is down by 61.8%yoy to IDR754bn. New contracts booked in 5M20 reached IDR713bn, accounting for 6% of the management’s FY target of IDR11.9tn. The DER stood at 0.83x as of Mar20, with an interest coverage ratio of 4.90x. We maintain our forecast while we await new guidance from the management to be released soon.

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MARKET NEWS

 

MACROECONOMY

Budget Revision 2020: Key takeaways from the 2nd revision in the 2020 Budget

The President of Indonesia, Joko Widodo, has issued Presidential Regulation (Perpres) No.72/2020 to change the previous regulation in Perpres No.54/2020 concerning the budget revision this year. In this regulation, the govt set a budget deficit of 6.34% of GDP, with state revenues falling to IDR1,700tn (-3% from Perpres No.54/2020 and -24% from the 2020 Budget), and with IDR2,739tn of state expenditure (+5% from Perpres No.54/2020 and +8% from the 2020 Budget). The budget deficit financing will be higher on sovereign bond issuances, foreign loans, and investments in SOEs. The net sovereign bond issuance is set at IDR1,173.7tn (+114% from Perpres No.54/2020). It should be noted that in this new regulation, there is no separation between sovereign bonds and pandemic bonds as there were in Perpres No.54/2020. The foreign loans were set at IDR45.4tn, or 8 times higher than in Perpres No.54/2020. Investments in SOEs is also higher at a budgeted IDR31.5tn, almost two times the amount budgeted in Perpres No.54/2020.

State revenues are set lower at IDR1,700tn. There are some reductions in the revenues components from Perpres No.54/2020, i.e. -5% in income tax, -4% in VAT, and -6% in international tax revenues. Meanwhile, excise tax remains stable. For non-tax revenues, the govt budgeted only a 1% reduction at IDR294.1tn.

For expenditure, the govt set a higher budget for three ministries: the Ministry of Social Affairs (+IDR43.7tn), the Ministry of Health (+IDR2tn), and the Ministry of Trade (+IDR100bn). On the other hand, the govt made another sizable reduction for the Ministry of Public Works and Public Housing (PUPR) to IDR75.6tn (-IDR20tn, or -21% from Perpres No.54/2020).