November in Review

Cutting the Subsidies

President Joko Widodo personally announced the reduction of fuel subsidies on November 18th. The government has decided to raise the price of gasoline by Rp2,000 per liter to Rp8,500 per liter, while the price of diesel fuel was raised to Rp7,500 per liter from Rp5,500 per liter. The subsidies cut has met criticisms as well as praises, but according to Jokowi, the subsidies will be rechanneled to more productive sectors such as building infrastructures (toll road, docks, roads, etc.) as well as for education and healthcare.

Preemptive Strike

In response to the cut in fuel subsidies, Bank Indonesia has decided to raise its key interest rate (BI rate) to 7.75% from 7.50%. Lending facility was raised by 50 basis points to 8.00% while the deposit facility has been maintained at 5.75%. Post-subsidies cut, the central bank now expects the inflation may reach around 8%

(year-on-year) at the end of 2014. Its previous inflation target at 3.5%-5.5% this year may be pushed up by 2.5% to factor in the fuel price hike. The impact of the government’s move may last for at least three months.

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Morning Dew - 28 November 2014

Waiting Mode

JCI was back up on Thursday, but still caught up within the recent consolidation range as lack of fresh leads dampened trades and turned investors into a waiting mode.

Coal exports were up 22.2% (m-o-m) to 31.4 million tons in October, defying previous concern that the exports would fall due to the new licensing system which was put into effect on October 1st 2014.

In 10M14 the total production of coal reached has reached 342.3 million tons, down 7.5% from 10M13 as output was seen curbed due to lower coal prices. Domestic coal production has fallen to 29.7 million tons in October or declined 15.9% (vs. Oct 2013). Government has put a cap on domestic output at 420 million tons with exports limited at 310 million tons.

For November 2014, the HBA (coal reference price) is set at US$65.7 per ton, down from US$67.26 per ton set for October.

USDIDR was up on Thursday, hitting 12,179 vs. 12,160 seen on Wednesday.

EPMT, ASIA, SCMA

EPMT: is targeting a 15% increase in net profit in 2015 to Rp499.43bn vs. this year’s target of Rp434.29bn. Sales on the other hand, is seen up to Rp15.6tn from this year’s Rp13.95tn, or up 11.86%. In 2015, the company plans to expand the distribution network by opening four new branches and 13 sales offices. About Rp200bn has been prepared for capex next year, up from this year’s Rp170bn. All of the funds will come from the company’s internal cash.

ASIA: is no longer listed on the IDX.

SCMA: has prepared Rp150bn for capex next year. The funds will be used program digitalization as well as equipments.

Technically Speaking...

JCI is back on track to breach its all-time high, but the near-term resistance around 5,150-.5,160 remains resilient in capping the index’s further gains.

Should the index fails to follow through the recent gains, it will risk returning to the bottom end of the recent consolidation range around 4,900.

Need to see if the index can maintain its position above 5,150. If it can, a clean and decisive break beyond the 5,150 will bring the index to test 5,200 and subsequently 5,251, ahead of the all-time record high at 5,262. 

Both MACD and RSI have been stabilizing near its neutral area.

Friday is seen stable within the familiar trading range between 5,000-5,250 as the index is expected to continue its consolidation.

Day Ahead

Barely any new catalysts in place will send the JCI back into its tight consolidation move, but with an upside bias as the technical outlook remains encouraging. Political front has somewhat dimmed a bit, while all eyes will focus on Jokowi’s cabinet over the realization of its many programs. JCI is seen around 5,100-5,250 for now.

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Morning Dew - 27 November 2014

Conundrum

JCI trimmed earlier losses as the index settled at 5,133 on Wednesday amidst lack of fresh leads from both the domestic and overseas fronts.

PTPP: Total contract as of November has reached Rp37tn, with Rp21.93tn came as last year’s carryover while new contracts obtained worth Rp15.1tn this year. For 2014 the company is aiming at Rp22tn worth of new contracts, so the current figure represents 67% of target for this year. For the coming year, PTPP expects Rp27.37tn worth of new projects or 25% increase from 2014 target.

To achieve its target, PTPP set the budget for capex amounting to Rp1.8tn next year, the amount is significantly higher than this year’s capex which was set at Rp466bn. About Rp800bn will be used to construct properties through its will-be-listed PT PP Properti and the rest of the capex budget will be used to build other projects. The capex will be financed both internally and externally (50%:50%). 

USDIDR was slightly lower on Wednesday, hitting 12,160 vs. 12,166 seen on Tuesday.

SPMA, SMBR

SPMA: expects sales to grow by 20% year-on-year in 2015, considering the market potentials for paper and tissue in Indonesia remain high. To tap into this opportunity, SPMA will increase its production capacity by adding its ninth production engine at the start of next year. Around US$25 million has been spent for the machine. About 20% of the capex was financed from internal cash while the rest came from bank loans. Capacity for production will increase to 40k MT per year from 25k MT.

SMBR: targets cement sales to reach 1,315,089 tons in 2014, up 4% from last year’s sales of 1,262,389 tons. ASP for this year is seen up 3% from last year to Rp957.425/ton.

Technically Speaking...

Another attempt took the JCI back on track to breach its all-time high.

However, should the index fails to follow through the recent gains, it will risk returning to the bottom end of the recent consolidation range around 4,900.

Need to see if the index can maintain its position above 5,150. If it can, a clean and decisive break beyond the 5,150 will bring the index to test 5,200 and subsequently 5,251, ahead of the all-time record high at 5,262. 

Both MACD and RSI have been stabilizing near its neutral area.

Thursday is again, seen contained within recent the trading range between 5,000-5,250 as the index is expected to continue its consolidation.Day Ahead

Day Ahead

Barely any new catalysts in place will send the JCI back into its tight consolidation move, but with an upside bias as the technical outlook remains encouraging. Political front has somewhat dimmed a bit, while all eyes will focus on Jokowi’s cabinet realization for its programs. JCI is seen around 5,100-5,250 for now.

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Morning Dew - 26 November 2014

Stepping Back

JCI took a step back on Tuesday as it settled the day down at 5,118 after recent strength which propelled it above 5,100.

Monetary stimulus in China and potentially coming from Europe have provided support for the global markets recently, contrasting with the ones seen back home and in the U.S. which scrapped the QE.

Golden Plantation offers its stocks to the public at the range of Rp250-Rp300 per share with a total of 800 million shares or 21.82% from its equity. From the IPO, the company aims at gaining Rp240bn of fund which will be used to acquire PT Bailangu Capital Investment aand PT Persada Alam Hijau while the other 32% will be used for capital expenditures and working capital. About 80 million shares will be allocated for ESA. CIMB Securities is the sole underwriter of this IPO.

USDIDR was up on Tuesday, hitting 12,166 vs. 12,122 seen on Monday.

Agris, ASII, LPIN

Bank Agris offers its shares to the public to raise a maximum of RP103.5bn for new branches (30%) as well as for loans (70%). The company offers 900 million shares priced at Rp105-115 per share, equal to 21.25% of the bank’s total equity.

ASII: The giant automaker is facing at possible stagnant car sales in 2015 as the impact of higher subsidized fuel prices spills over the industry. So far this year, the 10-month sales have reached 525,976 units vs. 1.03 million units of nationwide sales. The figure however, translates to 2% lower market shares of Astra (51%) compared to last year.

LPIN: Net income fell to Rp51.07bn vs. last year Rp59.66bn in 9M14, net losses increased to Rp11.29bn from Rp9.91bn.

Technically Speaking...

JCI took a breather of Tuesday after recent strength but still maintaining its position above 5,100.

However, should the index fails to follow through the recent gains, it will risk returning to the bottom end of the recent consolidation range around 4,900.

Need to see if the index can maintain its position above 5,150. If it can, a clean and decisive break beyond the 5,150 will bring the index to test 5,200 and subsequently 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked down a bit but relatively stable, while RSI also maintains its position around the neutral zone.

Wednesday is seen contained within recent the trading range between 5,000-5,250 as the index is expected to continue its consolidation.

Day Ahead

Rates euphoria fades in Europe and U.S., as the market took a pause after recent gains. The closest thing will be the release of US nonfarm payrolls in the first Friday in December. For JCI, the fading euphoria will put a strain on the index’s bid to break through its historical peak. Still, the odds of doing that remains open as the index is expected to maintain its position above 5k on the back of the optimism over the realizations of Jokowi’s government programs.

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Morning Dew - 25 November 2014

On the Right Foot

JCI opened the week on the right foot as it resumed its rally on Monday, climbing to as high as 5,157 before settling at 5,141 at the end of the day.

Earlier gains this week was triggered by monetary policy in China and Europe where rates were reduced in China while the ECB pledged to provide stimulus in a bid to trigger inflation in Europe. The moves were in contrast with the ones we’ve seen in Indonesia (higher rates to keep inflation at bay) and in the United States (the end of QE and possible higher rates in 2015).

Exports of CPO and its derivatives climbed 45.8% in October 2014 from prior month to 2.47 million mt as export tariff helped boost trades. October tariff was scrapped as September’s CPO prices came in below US$750 per mt. With November price benchmark set at US$665 per mt, the odds is that tariff will remain scrapped, possibly through the end of this year.

USDIDR was lower on Monday, down to 12,122 from 12,161.

AISA, BWPT, BTEL

AISA: Net sales were up 24.4% year-on-year in 9M14 to Rp3.66tn (vs. Rp2.94tn [9M13]); net profits for the period were up from Rp250.6bn to Rp283.57bn.

BWPT: Decision to conduct rights issue by the company has been put on hold as the OJK has yet to give its permission. According to the company, the permission is expected to be obtained on Tuesday at the latest.

SIPD: Plan to conduct reverse stock split has been put on hold as the Extraordinary General Shareholders’ Meeting failed to reach quorum. 

BTEL: Debt restructuring proposal has been offered to the creditors which involves cash payment as well as debt-to-equity swap scheme.

Technically Speaking...

JCI continued to move higher on Monday as the new week kicked off nicely.

However, should the index fails to follow through the recent gains, it will risk returning to the bottom end of the recent consolidation range around 4,900.

Need to see if the index can maintain its position above 5,150. If it can, a clean and decisive break beyond the 5,150 will bring the index to test 5,200 and subsequently 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked up a bit more after Friday’s turnaround, while RSI inched higher a bit but still around the neutral zone.

Tuesday, expect the trading range between 5,000-5,250 to be maintained but with upside bias as the index is expected to continue its consolidation.

Day Ahead

Rates euphoria fades in Europe and U.S., as the market took a pause after recent gains. The closest thing will be the release of US nonfarm payrolls in the first Friday in December. For JCI, the fading euphoria will put a strain on the index’s bid to break through its historical peak. Still, the odds of doing that remains open as the index is expected to maintain its position above 5k on the back of the optimism over the realizations of Jokowi’s government programs.

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Morning Dew - 24 November 2014

By Any Means Necessary

European Central Bank (ECB) President Mario Draghi pledged to revive the economy through broader asset-purchase program with the goal of accelerating inflation in the ailing European economy.

Elsewhere, in China the interest rates were reduced for the first time since July 2012 as the Asian giant endured slowdown in annual growth which hitting the slowest pace since 1990.

Both Europe and China follow the path taken by Japan which had deployed fresh stimulus recently. On the contrary, the US Federal Reserve has abandoned its quantitative easing program as the economic outlook is seen improving (at least according to the Fed).

Relating to the domestic monetary condition, Bank Indonesia has recently raised the interest rates in response to the government’s step in reducing fuel subsidies to finance more productive sectors such as building up infrastructures across the country.

USDIDR was unchanged on Friday, steady at 12,161.

MDRN

MDRN aims at 20%-30% growth in sales in 2015 compared to this year’s sales. The 7-Eleven outlets and the company’s imaging division will be the contributors to sales. Fifty new outlets will be added to bring the total number of 7-Eleven outlets managed by MDRN to 200 by the end of 2014. In addition, another fifty outlets will be added next year.

For net profit, MDRN aims at 10% to 15% growth in 2015, assuming sales will grow around 20% to 30%. The 7-Eleven’s contribution to MDRN’s sales is expected to reach 70% by the end of this year (68% as of September 2014). 

MDRN capex to build 50 new outlets next year will be around Rp150bn, which already prepared and ready to use.

Technically Speaking...

JCI ended higher on Friday after earlier setback took it back near its 50-day EMA support.

Should the index fails to follow through the recent gains, it will risk returning to the bottom end of the recent consolidation range around 4,900.

A clean and decisive break beyond the next interim resistance at 5,150 will bring the index to test 5,200 and subsequently 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked up a bit after Thursday’s slip while RSI curled higher a bit around the neutral zone.

Monday, expect the trading range between 5,000-5,250 to be maintained but with upside bias as the index is expected to continue its consolidation.

Week Ahead

Global markets cheered the China’s rate cut as well as the ECB’s commitment to push inflation up via more stimulus if necessary. This will be the positive catalyst for stocks at least for early next week. The domestic front offers no key catalysts so the JCI may as well go with the global flow in sentiment. Recently hiked fuel prices and interest rates will continue to weigh on sentiment, but eventually this will dissipate as better and broader opportunities are there should infrastructures can be realized according to Jokowi’s grand plan.

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Morning Dew - 21 November 2014

Myriad of Challenges

JCI fell on Thursday as profit taking set in to take away some of this week’s early gains.

Average minimum wages will rise by 12.77% (yoy) next year. Excluding four provinces, 29 provinces have confirmed the respective rises in minimum wages. Riau has the lowest growth wage increase of 0.58% while Bangka Belitung recorded the highest increase of 28%.

A combination of higher fuel prices, higher minimum wages as well as higher electricity costs, tighter monetary policy and weak rupiah will be the challenges faced by the business amidst optimism over longer-run benefits to be reaped through various government infrastructure projects.

SPMA reported 9M14 net sales at Rp1.1tn from Rp.1.51tn (or 74%) of 2014 target. This year’s paper sales reached 141,009 metric tons, about 73.2% of the target set for this year (192,700 MT). Capex for this year amounting to US$27.8 million has been used by US$25 million so far to raise the production capacity.

BLTA to conduct private placement to restructure the company’s debt. About 4.27bn of new shares will be issued at the par price of Rp62.5 per share. The corporate action will have to wait until the annual shareholders meeting approves it on December 4th 2014.

USDIDR climbed back to 12,161 on Thursday from 12,124.

CPIN, MAYA

CPIN: Aims at expansion after obtaining loans from 15 banks worth US$400 million. The proceeds will be used to raise production volume for each of its business lines by 10%. Animal feed  production capacity is currently at 5 million tons per year while processed food production capacity is currently at 150k tons per year and day old chicks reached 17 to 18 million chicks per week.

MAYA: Will add another 71 new offices by 2018, bringing the total to 250 offices by 2018. The bank offers a seven-year bonds worth Rp700bn with interest set at 12.5% per year. The proceeds will be used to finance expansion and to strengthen the bank’s capital structure.

Technically Speaking...

JCI slipped on Thursday after it failed to follow up recent rally which took it to as high as 5,140, just shy of its next resistance at 5,150.

Should the index fails to follow through the recent gains, it will risk returning to the bottom end of the recent consolidation range between 4,900 and 5,100.

A clean and decisive break beyond the next interim resistance at 5,150 will bring the index to test 5,200 and subsequently 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked down after a series of upticks while RSI curled lower a bit after recent rebound.

For Friday, expect the trading range between 5,000-5,250 to be maintained as the index is to stabilize after recent gains.

Day Ahead

After a drop on Thursday, the JCI is expected to stabilize. No key catalysts are seen on the horizon so far as most of them were out already. Essentially, with fuel price puzzle, higher BI rates and political cease-fire between KMP and KIH already passed, the focus now is on how the government will be able to realize its ambitious projects amidst a variety of challenges such as higher rates and inflation as well as relatively weaker rupiah. JCI for Friday is seen stable after recent drop took away earlier gains.

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Morning Dew - 20 November 2014

Inflation Puzzle

JCI staged another rally on Wednesday, hitting 5,141 which opens up more upside potential on the back of optimism that rechanneling of government subsidies will bear fruit in the future with the country as the benefactor reaping the profits.

Foreign debt ballooned by the end of September 2014 to US$292bn, up 11.2% year-on-year. Privately-held foreign debt reached US$159.3bn during the period, 14% higher from a year ago. Financial, manufacturing and mining sectors were the dominating sectors contributing to these foreign debts.

Public sector however, saw less growth in debt as debt increased 7.8% year-on-year to US$132.9bn. According to BI, the ratio of external debt to GDP has increased to 34.68% in Sep 2014 vs. 2Q14 (34.00%). Debt service ratio was up from 44.29% (2Q14) to 46.16% (3Q14).

In the US, Fed Minutes of recent FOMC meeting reveals that there were concerns over the possibility that deflation may occur as inflation may not be growing as fast as earlier expected. 

USDIDR eased further to 12,124 on Wednesday from 12,146.

GZCO, SSMS, JSPT

GZCO’s subsidiary PT Suryabumi Agrolanggeng has obtained loan from BNII worth Rp783bn. The loan will be used to acquire a CPO plantation in South Sumatera with a seze of 8,731.08ha.

SSMS is set to acquire two CPO plantation companies PT Tanjung Sawit Abadi and PT Sawit Multi Utama. The total amount for the deal is Rp1.55tn and will be carried out through its subsidiary PT Kalimantan Sawit Abadi.

JSPT aims at 10-15% of growth in revenues in 2015 vs. 2014. Capex for 2015 will be Rp1.2tn with and only Rp160bn has been used so far for the Mega Kuningan project. The project is expected to contribute significantly in 2016.

Technically Speaking...

JCI rallied again on Wednesday as it approached the next resistance at 5,150.

Should the index fails to follow through the recent gains, it will risk returning to the bottom end of the recent consolidation range between 4,900 and 5,100.

A clean and decisive break beyond the next interim resistance at 5,150 will bring the index to test 5,200 and subsequently 5,251, ahead of the all-time record high at 5,262. 

The MACD continues to tick above zero while RSI curled lower a bit after recent rebound.

For Thursday, expect the trading range between 5,000-5,250.

We have removed WSKT from the reco list as it has reached its designated target at Rp1,000.

Day Ahead

As the fog of uncertainties over the prices of subsidized fuel clears, the market responded positively, bringing the JCI back on track to challenge the all-time high at 5,262. For Thursday, there is still more to explore upwards, but the higher it goes, the risk of getting knocked on corrective move will also increase. In addition, Fed inflation puzzle may also weigh on the sentiment on Thursday.

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Morning Dew - 19 November 2014

The Tightening

Bank Indonesia raised its rates in response to the rise in the prices of subsidized fuel. The key interest rate has been raised by 25 basis points to 7.75% while the Lending Facility rate has been raised by 50 basis points to 8%. Deposit Facility stays at 5.75%.

Earlier estimate by Bank Indonesia stated that an Rp2,000 per liter price hike will add around 2.5 percentage points to the annual inflation pace for about three months before the impact dissipates. This will bring annual inflation to 7% in November-January before normalizing in subsequent months. 

JCI soared on Tuesday as the market turns optimistic over the raise in subsidized fuel prices. Some had expected the hike would have been by Rp3,000 instead of Rp2,000 per liter, while on the other hand, the subsidies will be channeled to fund the building of infrastructures – a long-term benefit for the economy.

USDIDR eased further to 12,146 on Tuesday from 12,193.

SRIL & APOL

SRIL has reduced the value of its bond emission to US$70 million from US$200 million. The bond will be issued through its subsidiary, Golden Legacy Pte Ltd. The fixed interest rate is set at 9% p.a. and will be due in 2019. The proceeds from the bond issuance will be used to finance the general needs of the company, including the expansion of the company’s production capacity.

APOL will conduct its General Bondholders Meeting (RUPO) on December 11th 2014 regarding the company’s decision to delay the payment of interests on its bonds. The bond was scheduled to have been due on September 30th 2014. The 

RUPO aims at gaining agreement on the delay so that the company can conduct restructuring in the company.

Technically Speaking...

JCI rallied on Tuesday as it ended the session back above 5,100, the top of its recent trading band.

Should the index fails to follow through the recent gains with a clean break of 5,100 resistance level, it will risk returning to the bottom end of the current consolidation range between 4,900 and 5,100.

A clean and decisive break beyond 5,100 will lead towards the next interim resistance at 5,150, followed by  5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD continues to tick above zero while RSI curled lower a bit after recent rebound.

For Wednesday, expect the trading range between 4,900 and 5,100 to shift upwards towards 5,000-5,250.

Day Ahead

As the fog of uncertainties over the prices of subsidized fuel clears, the market responded positively, bringing the JCI back at the top of its recent consolidation range of 4,900-5,100. A rise in BI rate also cleared the uncertainties on the monetary front, preparing the economy towards higher inflation as well as higher global rates environment. For Wednesday, expect more upside to be explored.

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Morning Dew - 18 November 2014

Energy Shock

The government finally decided to raise the prices of subsidized fuel effective on Tuesday, 18 November 2014. Gasoline price was raised to Rp8,500 from Rp6,500 per liter, while diesel fuel price was raised to Rp7,500 from Rp5,500 per liter.

Earlier estimate by Bank Indonesia stated that an Rp2,000 per liter price hike will add around 2.5 percentage points to the annual inflation pace for about three months before the impact dissipates. This will bring annual inflation to 7% in November-January before normalizing in subsequent months. 

The government aims at shifting the subsidies towards the more productive sectors such as construction of infrastructures, particularly marine infrastructures which involve 24 seaports mentioned by Jokowi during the recent APEC meeting. Other sectors aimed are healthcare and education.

USDIDR eased to 12,193 on Monday after it hit 12,206 on Friday.

MDLN & BRNA

MDLN: Jan-Oct 2014 residential sales reached Rp1.66tn (93% of Rp1.79tn target for 2014); Jan-Oct 2014 industrial sales reached Rp1.02tn (93% of Rp1.1tn target for 2014). Land sale to ASRI amounted to Rp642bn in Jan-Oct 2014 while another Rp250bn to be received in Nov-Dec 2014. More negotiations over JGC sales of commercial area and some negotiations over industrial land in Cikande are in progress with 10-15 potential customers.

BRNA: sales growth of 15-20% is expected in 2015 with 2014 sales expected to reach Rp1.1tn. Based on 3Q14 report, sales were up 34.44% to Rp943.5bn while net profit reached Rp41.33bn compared to Rp3.8bn seen in 3Q13.

Technically Speaking...

JCI was slightly higher on Monday as it ended the session at 5,053.94, the fourth consecutive listless session.

Should the index fails to follow through the recent gains with a clean break of 5,100 resistance level, it will risk returning to the bottom end of the current consolidation range between 4,900 and 5,100.

Beyond 5,100, the next interim resistance will be 5,150, followed by  5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked up but still slightly above zero after recent decline, RSI was slightly higher after recent rebound.

For Tuesday, expect the trading range between 4,900 and 5,100 to continue to be the JCI’s playground.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100. Fuel price hike has been announced and may put the index under pressure again, albeit temporary as the issue has been swirling around the market since Jokowi’s campaign days. Technical outlook of the JCI remains neutral but persistent bump onto the resistance at 5,100 may eventually push the index down.

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Morning Dew - 17 November 2014

In A Standstill

JCI maintained its tight consolidation range on Friday as the index ended at 5,049.49.

Balance of Payments recorded a surplus in the 3Q14 of US$6.5bn, up from US$4.3bn surplus in the 2Q14. The US$6.84bn current account deficit was offset by US$13.7bn of financial and capital account surpluses.

CAD has eased to US$6.84bn or 3.07% of GDP in 3Q14. The amount was less than US$8.69bn or 4.07% seen in prior quarter. Surplus in the non-oil and gas sector was the factor behind the improvement.

Indonesia’s Sovereign Credit Rating was affirmed at BBB/Stable Outlook by Fitch Ratings. On the planned fuel prices increase, Fitch said it would create fiscal space of better public infrastructure spending and would help reduce CAD and increase foreign confidence.

USDIDR inched higher to end the week at 12,200 compared to 12,191 seen on Thursday.

ECII, MDRN, SRIL

On its 13th anniversary, ECII has launched several premium after sales services: EC Express, EC 24-hour Repair and EC Service Contract. The aim of these programs are to boost customers’ satisfaction.

By the end of 3Q14, the 7-Eleven outlets have contributed a significant share of 68% to the overall MDRN’s revenues. About 175 outlets have been scattered around Jakarta and will continue to be developed according to the consumers’ needs. By the end of 2014, the 7-Eleven outlets are expected to contribute 70% of total sales of MDRN.

SRIL has been assigned a national long-term rating of A (idn) with a stable outlook by Fitch Ratings.

Technically Speaking...

JCI inched higher on Friday as it ended the session at 5,049.49, the third consecutive listless session.

Should the index fails to follow through the recent gains with a clean break of 5,100 resistance level, it will risk returning to the bottom end of the current consolidation range between 4,900 and 5,100.

Beyond 5,100, the next interim resistance will be 5,150, followed by  5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked up but still slightly above zero after recent decline, RSI was slightly higher after recent setback.

For Monday, expect the trading range between 4,900 and 5,100 to continue to be the JCI’s playground.

Week Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100. Fuel price hike is closing in as the VP recently said that the fuel price adjustment will wait until President Jokowi returns from his  overseas visits. The hike is considered as a potential drag for the index as it will be seen as short-term negative despite its longer-run benefits. Technical outlook is steady, but risks remain balanced.

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Morning Dew - 14 November 2014

Miners’ Blues

JCI slipped but stayed above 5k as the index took a pause in its aims at recouping the lost ground near 5,100, the upper-end of its broad consolidation range between 4,900 and 5,100.

Bank Indonesia (BI)’s Board of Governors’ meeting on Thursday has decided to maintain rates unchanged. The BI rate stays at 7.5%, the lending facility rate at 7.5% and the deposit rate is also stays at 5.75%. According to BI, the rates were kept as current account deficit has narrowed to 3.07% of GDP in 3Q14.

Coal miners’ blues is set to continue as the Ministry of Energy and Mineral Resources set the reference coal price for November to US$65.70 per ton vs. last month’s US$67.26 per ton. Poor global demand has not been balanced by production control, leading to gloomy global coal price outlook. Even for the coming month, the price outlook is seen no better than November.

USDIDR slipped a bit on Thursday, ended the day at 12,191 from 12,205 seen on Wednesday.

UNVR, HERO, BABP

UNVR to distribute its interim dividend for FY2014 amounting to Rp2.56t or Rp336 per share. The dividend payment is scheduled on December 12th 2014.

HERO aims at 13% growth in revenues in 2015 to Rp13.56tn. In 2014 the company is targeting at Rp12tn in revenues. HERO is also planning to open new outlets which will cost the company Rp10bn to Rp25bn for each outlet.

BABP is planning to conduct a rights issue in 2015 worth Rp500bn. According to the bank, it expects business to grow 30% in 2015. The rights issue is expected to raise CAR to 18% as the bank will focus on consumer, corporate and SME sectors. Net profit is seen to be around Rp30-40bn.

Technically Speaking...

JCI was steady on Thursday as it barely changed from its previous day’s close at 5,048.

However, should the index fails to follow through the gains with a clean break of 5,100 resistance level, it will risk returning to the bottom end of the current consolidation range between 4,900 and 5,100.

Beyond 5,100, the next interim resistance will be 5,150, followed by  5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked up but still slightly above zero after recent decline, RSI was slightly higher after recent setback.

For Friday, expect the trading range between 4,900 and 5,100 to continue to be the JCI’s playground.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100. Fuel price hike is considered as a potential drag for the index as it will be seen as short-term negative despite its longer-run benefits. Thursday’s pause showed that the investors preferred to take a wait-and-see stance over the fuel price hike issue. Technical outlook improved a bit, but remains cloudy.

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Morning Dew - 13 November 2014

BI to Maintain Rates

JCI stayed above 5k as the index aims at recouping the lost ground near 5,100, the upper-end of its broad consolidation range between 4,900 and 5,100.

Bank Indonesia (BI) is set to meet on Thursday for regular meeting and it is seen to leave rates unchanged at 7.5%.

Overseas, the European and US stock indexes bumped into resistance and stepped back overnight, signaling that Asian stock indexes (including JCI) are set for temporary setback.

BUVA plans to conduct private placement to issue 309,603,100 new shares. The exercise price will be Rp582 per share, bringing the total proceeds to Rp182.19bn. About 91% of the proceeds is to be used for its subsidiary, about 6% for land purchase and the rest for working capital.

USDIDR gained more on Wednesday, ended the day at 12,205 from 12,163 seen on Tuesday.

The Shine

PT Archi Indonesia Tbk. is offering its shares between Rp1,895 and Rp2,445 per share. The gold miner aims at issuing 1,600,000,000 shares or 40.41% of its equity.

The proceeds from the IPO is expected around Rp3tn to Rp3.9tn. About US$216.2 million will be used to repay debt while US$35.9 million will be used to acquire 99.98% of PT Smart Mining Resources’ shares. The remaining proceeds will be used for working capital.

PT CIMB Securities, PT Danareksa Sekuritas, PT Mandiri Sekuritas and PT Valbury Asia Securities are the joint underwriters for this IPO.

Technically Speaking...

JCI continued to climb on Wednesday as it struggles to secure its footing above the 5k mark.

However, should the index fails to follow through the gains with a clean break of 5,100 resistance level, it will risk returning to the bottom end of the current consolidation range between 4,900 and 5,100.

Beyond 5,100, the next interim resistance will be 5,150, followed by  5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked up but still below zero after recent decline, RSI curled up a bit 

after being taken back to the neutral area.

For Thursday, expect the trading range between 4,900 and 5,100 to continue to be the JCI’s playground.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100. Fuel price hike is considered as a potential drag for the index as it will be seen as short-term negative despite its longer-run benefits. Wednesday’s rally will need more convincing push to the upside or risk slipping back below 5k. Technical outlook improved a bit, but remains cloudy.

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Morning Dew - 12 November 2014

Fighting Back

JCI struck back as the index climbed its way above 5k. Several positive catalysts involved were political reconciliation between political elites and optimism over the economy after the President’s presence in the APEC summit reinforced beliefs that Indonesia will become a more important key player in the regional economy under Jokowi’s tenure.

Upside is expected to remain capped by the government’s plan to cut fuel subsidy however, as this will naturally push the inflation up, somewhat similar to last year’s fuel price hike.

Rising inflationary pressure may push Bank Indonesia (BI) which is set to meet on Thursday for regular meeting to raise rates as well if the risk of inflation endangers the central bank’s inflation target for this year (at 4.5% plus or minus 1%)

USDIDR gained on Tuesday, ended the day at 12,163 from 12,138 seen on Monday.

ITMG, TAXI, INCO

ITMG recorded net sales of US$1.48bn in 9M14, down from US$1.63bn in 9M13. Net profit however, up to US$168.85 million compared to US$155.86 million.

TAXI’s revenues gained 26% in 9M14 from Rp506.29bn to Rp640.15bn. Net profit grew 15% to Rp109.25bn.

INCO will distribute interim dividend for FY2014 worth US$0.01007 per share. The date is set for Dec 17th 2014 for shareholders listed by 3 Dec 2014.

Technically Speaking...

JCI bounced on Tuesday as the index found its way back above 5k. The rebound however, may open a way back to return to the highs of 5,200s.

However, should the index fails to follow through the gains with a clean break of 5,100 resistance level, it will risk returning to the bottom end of the current consolidation range between 4,900 and 5,100.

Beyond 5,100, the next interim resistance will be 5,150, followed by  5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked up but still below zero after recent decline, RSI curled up a bit after being taken back to the neutral area.

For Wednesday, expect the trading range between 4,900 and 5,100 to continue to be the JCI’s playground.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100, but with downside bias as fuel price hike announcement will be seen as short-term negative despite its longer-run benefits. Tuesday’s rally will need more convincing push to the upside or risk slipping back below 5k. Technical outlook improved a bit, but remains cloudy.

Click here to download the full update (PDF)

Morning Dew - 11 November 2014

Screeching Halt

JCI slipped further on Monday as lack of significant catalysts put pressure on the index. The US nonfarm payrolls slowed in October, trailing the market consensus and reducing the earlier optimism.

Automotive Industry Association (Gaikindo) released its data on domestic car sales which showed that sales have fallen by 6.3% to 104,916 units in October 2014 (yoy), taking the cumulative number of sales for the first ten months of 2014 to 1.04 million units, only 1.6% higher from the same period last year. On the other hand, the motorcycle sales also declined, taking the total units sold for the Jan-Oct period to 6,760,557 units, just 3.5% above same period last year.

Slowing economy, weaker currency as well as the anticipation of higher fuel prices were cited as the factors behind the decline in auto sales.

USDIDR slipped further on Monday, ended the day at 12,138 from 12,149 seen last Friday.

Forex Reserves, ISAT

Forex reserves only inched higher in October to US$112b from last month’s US$111.2bn. Income from oil and gas exports as well as rising income from forex deposits in BI were cited as the factors behind the rise.

ISAT booked revenues of Rp17.72tn in 9M14 compared to 9M13 when it booked Rp17.79tn. Losses incurred by the company shrunk to Rp1.32tn vs. Rp1.76tn last year.

Technically Speaking

JCI started the week soft, staying submerged below 5k but it remains within the confines of 4,900-5,100 trading range.

Losing the 5k support could lead to more downside as the index is now eyeing at the bottom end of the range around 4,900. In-between, the 200-day EMA at around 4,920 will be the subsequent cushion for the JCI. Below 4,900, support area lies at 4,835-4,840 (prior congestion area).

On the upside, former support at 5k now turns as resistance, while 5,100 will be the next interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD continued to edge lower while the RSI fell again.

For Tuesday, expect the trading range between 4,900 and 5,000.

ECII has been added to the list of recommendations.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100, but with downside bias as fuel price hike announcement will be seen as short-term negative despite its longer-run benefits. Monday’s decline reinforced the downside potential of the JCI. Technical outlook however, points at more downside to come instead.

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Morning Dew - 10 November 2014

Trailing the Consensus

US economy has added 214k new jobs in October, trailing the consensus of 235k additional new jobs and lower than the 257k new jobs added in September. The unemployment rate however, ticked lower to 5.8% from 5.9% during the same period.

October’s NFP was the ninth consecutive figure above 200k, the longest since 1994, despite it fell below the market consensus. The US equities were relatively flat at the end of the day. As long as the payrolls maintain its number above 200k, the market is likely to stay relatively optimistic on how the US economy would be able to weather the upcoming higher rates in the US. Jobs market has been one of FOMC’s key trigger for raising rates and so far the figures were solid enough to justify the central bank to raise the Fed funds rate sometime in 2015. In its recent meeting the FOMC has scrapped its bond-purchasing program.

USDIDR stepped back to 12,149 from 12,179 on Friday.

MSCI, RBMS, Ratings

MSCI Indonesia small cap semi-annual index review had three stocks added to the list: ELSA, TARA, and WTON while removing TAXI, PADI, SRIL and TRAM.

RBMS sales hit Rp22.57b in 9M14, up from Rp15.22b booked in last year, but the bottom line saw Rp3.96b losses compared to last year’s losses of Rp2.65b

.

APLN’s outlook has been revised to Negative from Positive by Pefindo; Fitch has assigned a national long-term rating of A(idn) with stable outlook to SRTG; Moody’s has affirmed B1 corporate family rating on SRIL and B1 rating on $300 million senior unsecured notes.

Technically Speaking...

JCI crashed below the 5k mark on Friday, taking out the key support at 4,995 despite it remains within the confines of 4,900-5,100 trading range.

Losing the 5k support could lead to more downside as the index is now eyeing at the bottom end of the range around 4,900. In-between, the 200-day EMA at around 4,920 will be the subsequent cushion for the JCI. Below 4,900, support area lies at 4,835-4,840 (prior congestion area).

On the upside, former support at 5k now turns as resistance, while 5,100 will be the next interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD continued to edge lower while the RSI fell again.

For Monday, expect the trading range between 4,900 and 5,000.

Week Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100, but with downside bias as fuel price hike announcement will be seen as short-term negative despite its longer-run benefits. Less than expected US nonfarm payrolls figure is also seen as a neutral catalyst. Individual plays are expected to dominate as the market is still digesting the recent flow of 3Q14 financial reports. Technical analysis of JCI however, shows weakness is on the horizon as the Friday’s fall took out important support around 5k.

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Morning Dew - 7 November 2014

Eyes on Jobs Data

PT Intan Baruprana Finance Tbk. has set its initial offering price between Rp311-383 per share. The company plans to use 50% of the IPO funds for working capital and the other 50% for debt repayment. About 1.67b shares are to be offered and BNI Securities has been appointed as sole underwriter.

Unemployment rate ticked up in August 2014 from 5.7% (Feb 2014) to 5.94%. According to BPS, there were 7.24 million people without a job vs. 7.15 million (Feb 2014). The jobless data is announced twice a year.

US nonfarm payrolls is set for release on Friday, the consensus expects 235k jobs added to the economy, slightly lower than September’s 248k. Unemployment rate is expected to stay at 5.9%

USDIDR jumped to 12,179 from 12,092 on Thursday.

SAME, MBSS, BRAU

SAME booked net profit of Rp41.89b in 9M14, up 37% from the same period last year which stood at Rp30.58b. Revenues were up from Rp247.13b to Rp299.96b.

MBSS’s revenues fell to US$103.83 million from US$112.05 million, sending the net profit to fell from US$28.29 million to US$16.51 million.

Moody’s downgraded BRAU to B3 from B2 for both bonds issued by BCE and Berau Capital Resources Pte. Ltd. In addition, all the ratings are also put on review for possible downgrade.

Technically Speaking...

JCI fell to 5,034 on Thursday, but it maintains its recent trading range between 4,900 and 5,100.

Downside, the psychological support 5,000 will be the first support, followed by the 200-day EMA at around 4,915 will be the subsequent cushion for the JCI, afterwards support area lies at 4,835-4,840 (prior congestion area).

On the upside, 5,100 will be the interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD continued to edge lower while the RSI stumbled after it hit the overbought area a few sessions earlier.

Upside and downside potentials seem to be in balance as the index is seen returning to its consolidation range between 4,900 and 5,100.

For Friday, expect the trading range maintained around 4,900-5,100.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100 as the market is now waiting for the government’s decision to raise the prices of subsidized fuel.  Combined with recent GDP data which showed that slowdown continued in 3Q14, an energy shock from higher fuel prices could dent growth further. This will distance the economy farther from reaching Jokowi’s GDP target of around 7%. From abroad, the market also awaits the release of US nonfarm payrolls for October this Friday.

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Morning Dew - 6 November 2014

Growth Slowed

Economic growth slowed to 5.01% (year-on-year) in 3Q14, the slowest pace in five years. Previously, in 2Q14 the GDP grew 5.12% (year-on-year) while in 3Q13 it grew 5.62% (year-on-year).

GDP slowdown was attributed mainly on two factors: slowing global growth and the impact from recent ban on mineral ore exports (although somewhat relaxed on some commodities after its adoption).

Slowing global growth came mostly from China, one major source of demand for Indonesia’s commodities. In additions, vulnerable commodities’ prices have also weighed on exports.

Private consumption’s share towards GDP has also declined in 3Q14 to 55.11% from 55.72%, and this could slip further considering the government is planning to cut fuel subsidy further.

USDIDR fell to 12,092 from 12,130 on Tuesday.

BIRD, BRNA

BIRD took off on its first flight on Wednesday as the taxi operator finished its first session up 14.62%. Originally set the offering price between Rp7,200 and Rp9,300, BIRD eventually offered at Rp6,500. According to the company, the demand mostly came from foreign investors (60-65%) while the remainder came from domestic investors.

BRNA booked a sterling financial performance in 9M14 as net profit went more than tenfold from Rp3.81b to Rp41.33b. Forex gains were the major driver for the increase while revenues grew from Rp701.75b to Rp948.5b.

Technically Speaking...

JCI remains stuck within the large consolidation range of 4,900 and 5,100 after recent failure to capitalize on an upside breakout above 5,100.

Downside, the psychological support 5,000 will be the first support, followed by the 200-day EMA at around 4,915 will be the subsequent cushion for the JCI, afterwards support area lies at 4,835-4,840 (prior congestion area).

On the upside, 5,100 will be the interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD edged lower while the RSI stumbled near the overbought area.

Upside and downside potentials seem to be in balance as the index is seen returning to its consolidation range between 4,900 and 5,100.

For Thursday, expect the trading range maintained around 4,900-5,100.

Day Ahead

We still expect the JCI to remain confined within the recent range of 4,900-5.100 as the market is now waiting for the government’s decision to raise the prices of subsidized fuel.  Combined with recent GDP data which showed that slowdown continued in 3Q14, an energy shock from higher fuel prices could dent growth further. This will distance the economy farther from reaching Jokowi’s GDP target of around 7%. From abroad, the market also awaits the release of US nonfarm payrolls for October next Friday.

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Morning Dew - 5 November 2014

Prelude to Energy Shock

JCI fell 0.29% amidst lack of fresh catalysts but the index maintains its position within a wide range of 4,900-5,100.

VP Jusuf Kalla confirmed that subsidized fuel prices will be increased this November. No specific mention about how much the raise will be, but the consensus is around Rp2,000 to Rp3,0000 per liter which represents a nearly 50% of increase.

Previously, on Monday the government launched three forms of social safety nets to anticipate higher fuel prices: KIS (Kartu Indonesia Sehat), KIP (Kartu Indonesia Pintar) and KKS (Kartu Keluarga Sejahtera).

A while back, BI Governor Agus Martowardojo said that raising subsidized fuel prices is a way to deal with the twin deficits faced by the government: the fiscal one and the current account.

USDIDR inched higher to 12,130 from 12,105 on Monday.

PTPP, WTON

PTPP plans to spend Rp490.6b for capex in 2015, up from this year’s Rp446b. The sources for the capex will come from internal cash, bank loans as well as bonds. By August 2014, the company has realized 50% of the total capex prepared or about Rp225b.

WTON is set to start the construction of its concrete factory in Balikpapan. The factory with the capacity of 50-100k tons is scheduled to be completed in 2016. Currently, the company’s production capacity is at 2.2 million tons per year. Its Lampung plant set to be completed this year and to add another 250k tons of production capacity.

Technically Speaking...

JCI remains stuck within the large consolidation range of 4,900 and 5,100 after recent failure to capitalize on an upside breakout above 5,100.

Downside, the psychological support 5,000 will be the first support, followed by the 200-day EMA at around 4,915 will be the subsequent cushion for the JCI, afterwards support area lies at 4,835-4,840 (prior congestion area).

On the upside, 5,100 will be the interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD edged lower while the RSI stumbled near the overbought area.

Upside and downside potentials seem to be in balance as the index is seen returning to its consolidation range between 4,900 and 5,100.

For Wednesday, expect the trading range maintained.

Day Ahead

The big question now is not about when the fuel prices are to be raised, but it’s about how much will they be raised. One thing is clear though: we’re facing another energy shock similar to last year. The difference is that this time it was well advertised before the presidential election and this time the savings from the subsidy cut are hopefully, used to finance the government’s programs. Overall, the JCI is seen fluctuating within its familiar range of 4,900-5,100.

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Morning Dew - 4 November 2014

A Mixed Start

JCI started November on a mixed tone as the consolidation continues within a wide range of 4,900-5,100.

With nearly all of the constituents have already submitted their 3Q14 reports, there will be yet another shortage of key catalysts.

On the macroeconomics front, inflation data showed that October inflation hit 0.47%, higher accelerating from September’s rate of 0.27%.The year-on-year figure came in at 4.83%, up from 4.54% seen in September. Core inflation, which strips volatile food and fuel prices, came in at 4.02%, slower than 4.04% registered on September. Higher electricity tariffs and volatile food prices were cited as the causes of accelerating inflation.

USDIDR inched higher to 12,105 from 12,082 on Monday.

Trade and Manufacturing

Trade balance showed narrowing deficit in September, from US$318 million to US$270 million. Oil and gas items showed deficit of US$1.03b while the non-oil and gas still recorded surplus of US$760 million.

HSBC Purchasing Managers’ Index for October showed Indonesia’s manufacturing activity slipped to 49.2 points from 50.7 points. Figure below 50 represents contraction while above 50 signifies expansion.

In Japan, the Nikkei 225 index soared after the Bank of Japan increased stimulus, contrasting the removal of quantitative easing by the US Federal Reserve.

Technically Speaking...

JCI had a brief spell above 5,100 on Monday but finished the session back below it. 

Downside, the psychological support 5,000 will be the first support, followed by the 200-day EMA at around 4,915 will be the subsequent cushion for the JCI, afterwards support area lies at 4,835-4,840 (prior congestion area).

On the upside, 5,100 will be the interim resistance, followed by 5,150 and 5,200 and another one at 5,251, ahead of the all-time record high at 5,262. 

The MACD ticked higher while the RSI stumbled near the overbought area.

Upside and downside potentials seem to be in balance as the index is seen returning to its consolidation range between 4,900 and 5,100.

For Tuesday, expect the trading range maintained but with slight upside bias.

Day Ahead

Higher than average October inflation came in at the time when the market awaits for the government’s decision over the fuel subsidy. How much and when the fuel prices are to be raised will be the market’s next focus. From abroad, the global market will once again sets its eyes on the US jobs report which is expected to moderate from 248k to 228k in October while jobless rate steady at 5.9%. Overall, the JCI is seen fluctuating within its familiar range of 4,900-5,100.

Click here to download the full update (PDF)