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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