Morning Dew - 23 December 2014

A Photo Finish

Despite the drop on Monday, the JCI’s outlook for the rest of the year remains upbeat. The record high is still within reach and there’s hardly a negative catalyst around as the Fed hype trumped most if not all, negative vibes.

Even the USDIDR continues to fall, ending the day at 12,435 after it scored a big jump last week to 12,900. FOMC’s assurance that the Fed is being patient with rates seems to have reversed the flow of the greenback back to IDR, especially with Bank Indonesia will remain vigilant over the impact of recent subsidized fuel price hike towards inflation.

Oil prices will be one of those key factors in 2015 to watch. Monday saw another drop with WTI crude fell 3.17% to $55.32/bbl and Brent crude fell 2.12% to $60.08/bbl. Continuous drop of oil prices will force the Fed to wait for a while before they can justify an interest rate hike, even amidst the improving US jobs market.

Rebuilding the Nation

Infrastructure and construction will be the key driver in the coming year, assuming the President can secure enough money to realize his vision. On the other hand, he must keep his political opponents at bay by keep on working and producing results. Else, he will face political risk which could disrupt the big picture that he envisioned.

Commodities prices remain on the slump, a risk for miners to face in 2015. Higher rates, pricier electricity, and relatively more expensive USD are also challenges faced by the nation in 2015.

The Great Divide

In the end Yellen and Co. managed to deliver the market from getting a big slump as the Fed stated its patience on rates. The coming year is likely to feature the Federal Reserve mostly as their policy will be put under the tight watch by investors. How soon the rates will be raised will be the key theme for 2015. It’s a great divide, considering that Europe and Japan are still gloomy and the door is still open for more stimulus. China’s revival is awaited, but not sure that this can happen soon enough considering Europe is still in a slump.

Technically Speaking...

The doji star has warned of the impending fall and that was exactly what happened on Monday. The JCI dropped to end at 5,125, not severe enough as it remains on track to break through the barrier at 5,262.

However, should the index continues to fall, it will risk returning to the bottom end of the recent consolidation range around 4,900.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

The coming sessions will offer trading range for the JCI, between 5,000 and 5,262, at least for the remainder of the year. This year however, the JCI has been up by almost 1,000 points (last year-end the JCI was at 4,274) and next year, we see the index to journey north, heading towards the uncharted territories with 5,700-6,000 being the target area. 

ECII has met its entry price, and the reco is now active.

The daily update will return on January as this is the last one for this year. We wish you all a happy holiday and a better year in 2015!

Click here to download the full update (PDF)

Morning Dew - 22 December 2014

Stumbling Block

JCI put on a strong finish for the week above 5,140, tracking the world stocks rally and erasing earlier losses incurred at the start of the week. FOMC’s wording to be “patient” on rates has put the JCI back on track to break through the barrier at 5,262, the record high for the index.

USDIDR resumed its slide to end the week at 12,500 after earlier jump to 12,900 at the beginning of the week.

Oil prices have bounced a bit on Friday. The WTI crude oil was 5.1% higher at US$57.13/bbl  while the Brent crude oil was up 3.56% to US$61.38/bbl.  The decline of oil prices have been considered as a stumbling block for the Fed as it will put inflation under pressure, giving lack or no room for the policymakers to justify for higher interest rates.

What’s next for the Fed to decide will depend also on the oil prices. Should the oil prices stay under pressure, the central bank will indeed be “patient” on rates. On the other hand, the US jobs market has improved recently, providing the Fed a reason to start raising rates soon.

SUPR

SUPR: is planning to conduct rights issue worth Rp2.4tn early next year. The plan has been approved by the shareholders  and the proceeds are to be used to pay the equity bridge facility from BNP Paribas, HSBC, ING Bank NV and JPMorgan Chase as well as Standard Chartered Bank. These banks have provided loans worth US$790 million, of which US$140 million (6-mos term) will be repaid using the rights issue funds. The remaining US$650 million (4yrs, 6mos term) will be repaid using bonds issuance next year.

Technically Speaking...

JCI returned above 50-day EMA curve again as the strong showing on Friday also bent the MACD, putting the MACD back on track to resurface beyond the zero line. Judging from the volume, Friday’s rise was backed up by a very strong volume, a good news for the bulls.

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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

A doji star has appeared on the daily chart as Friday’s candle was somewhat separated from the prior ones and ended in a doji formation. This should be a warning that despite the potential additional gains ahead, the index is also ripe for a setback after putting a strong rally.

The coming week will offer trading range for the JCI, between 5,000 and 5,262. 

Week Ahead

It looks as if the JCI is going to have a merry end for this year. With Fed euphoria still in the air, the index is back on track to break its record high at 5,262. It may as well happen just before the year ends. But then again, strong consecutive gains recently have also presented a risk of some setback. All in all, JCI is seen fluctuating around 5,100-5,262.

Click here to download the full update (PDF)

Morning Dew - 19 December 2014

Breaking the Barrier

World stocks celebrated the FOMC’s wording as markets rallied on the assumption that the US federal funds rates won’t be up as soon as originally thought. Oil prices which have been under pressure recently, are dampening the prospect of higher rates.

JCI also cheered the Fed’s statement. The index jumped 1.5% to end back above 5,100 at 5,113. This has re-opened the prospect of breaking through the tough barrier around 5,262 and to end the year on a strong footing.

USDIDR continued to slide from the recent peak at 12,900 to 12,565 by the end of Thursday’s trading session. A perceived delay in US interest rates hike seemed to have put a brake on USD-based assets purchases and redirecting the flow back to IDR-based assets.

Overnight, US jobless claims were reportedly down by 6k in the week ended Dec 13.  The smaller the number the claims, the better and the figure supported the recent payrolls data which showed an additional of 321k jobs  back in November.

GWSA, Oil

GWSA: is offering bonds worth Rp500bn with the coupon rate between 13% and 14.25% with 5-year term. The proceeds from the bonds will be used to finance the construction and operational activities of TCC Batavia Tower (Rp150bn) and for developing projects and business development of the company.

From the energy market, WTI crude oil price saw another drop of $1.77 (3.13%) to $54.70/bbl while the Brent crude oil also fell $1.55 (2.53%) to $59.63/bbl.

Technically Speaking...

JCI returned above 50-day EMA curve again as the strong showing on Thursday also bent the MACD, putting the MACD back on track to resurface beyond the zero line. Judging from the volume, Thursday’s rise was backed up by a very strong volume and this surely a good news for the bulls.

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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. 

Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

The week will offer similar trading range for the JCI, between 5,000 and 5,250. 

Day Ahead

JCI is poised for a merry ending this week as US stocks resumed its power rally overnight.. Rupiah is likely to strengthen more following   the Fed’s recent comment. For Friday, JCI is seen between 5,100 and 5,200.

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Morning Dew - 18 December 2014

Saved by the Fed

The Fed came to the rescue to boost ailing sentiment which had put the global stock market under pressure recently. Result of the FOMC meeting was that the Fed has removed its “considerable time” and replaced it to “can be patient”, referring to the timing of normalization of monetary policy.

Sharp drop in oil prices have left the FOMC with hardly any justified reason to raise rates sometime in 2015. About 45% drop in oil has also put Russia into a crisis, an eerie reminder of 1998 crisis also originating from Russia. Russia had its ruble declined by about 47% this year, tracking the retreat of oil prices. The rout subsided on Wednesday however, as WTI inched higher to $56.27/bbl while Brent rose to $60.79/bbl. 

Latest measure taken by Russia is to ease accounting rules to curb the needs for dollars for banks. The move has boosted ruble and Russian stocks but need more time to assess whether the measure can put an end to the current crisis.

IDR, AHAP, AGRIS

IDR: fell to 12,720 on Wednesday, from 12,900 seen on Tuesday. BI has intervened in order to cap on IDR’s weakness.

AHAP: 11M14 net profit reached Rp14.09bn, up 5% from the same period last year. 

AGRIS: Bank Agris has set its offering price at 110 per share, bringing the IPO proceeds to about Rp99bn. About 70% of the funds will be used for credit expansion while the remainder will be used to expand the business network.

Technically Speaking...

JCI managed to hold its ground above 5,000 support, but despite downside risks remain at the moment the upside potential for a rebound is also present.

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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. 

Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

MACD has re-entered the sub-zero line while the RSI sunk towards the oversold area. This suggests that the index remains vulnerable to further drop but a potential rebound is likely in the near-term.

The week will offer similar trading range for the JCI, between 5,000 and 5,250. 

Day Ahead

Fed’s patience and a halt (for now) in oil prices should be positive catalysts for the JCI on Thursday. Rupiah however, remains vulnerable and this will be put under the spotlight along with developments in oil prices. Deeper drop in oil will mean more risk to bear for Russia but the same thing will hold  the Fed’s hand from pushing the US interest rates up. For now, JCI is seen between 5k and 5,150.

Click here to download the full update (PDF)

Morning Dew - 17 December 2014

Ruble in Rubbles

JCI fell 1.6% as global stocks were on retreat on Tuesday. The index briefly tested its support at 5,000 but settled at 5,026, trimming its prior losses.

Currency rout also continues as the IDR fell further to end at 12,900 but there’s still barely anything to help boost the rupiah in the short-term.

Brent fell 91c to $60.15 after previously reached $58.50, while the WTI ended at $55.57 a barrel, down another 37c. 

The US central bank itself is holding a two-day meeting to decide on US monetary policy on Tuesday and Wednesday. The market wants to see if the FOMC finally unplugs its “considerable time” wording from its post-meeting statement.

Ruble in rubbles as the Russian currency sunk to 68 per dollar even after the Russian central bank hiked interest rate by 6.5% to 17%. The ruble has been hit by both economic woes as well as the steep dive in oil prices.

PSKT, SKBM, WSKT

PSKT: is planning to add 20 new hotels by 2020. The Tune Hotels operator is to use private placement as well bonds issuance to fund the expansion. In 2015 the company expects to build three hotels at Tendean, Kelapa Gading and Cengkareng.

SKBM: adds one production line in Sidoarjo which will raise  the production capacity by another 300 tons per month. Currently, the Sidoarjo line’s capacity is at 800 tons per month. The new line is scheduled to start its operation around 1Q15.

WSKT: is considering rights issue to strengthen the company’s capital. There is no set date yet for the corporate action, but it is likely scheduled for next year.

Technically Speaking...

JCI fell for another 1.61%, close to touching the support at 5,000.

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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

MACD has re-entered the sub-zero line while the RSI sunk towards the oversold area. This suggests that the index remains vulnerable to further drop in the near-term.

The week will offer similar trading range for the JCI, between 5,000 and 5,250. As the upside remains sluggish, the downside risk cannot be ruled out.

Day Ahead

JCI started the week on a weak footing. For Wednesday, expect the index to remain under pressure as the US were in the red overnight. IDR is also facing strong pressure and is now approaching 13k, something unseen since 1998. A range between  5,000 to 5,250 is seen for the current week. Oil prices, IDR and Ruble will be the focus for the day.

Click here to download the full update (PDF)

Morning Dew - 16 December 2014

Return to 1998

Global rout continues on Monday as major stock indexes around the world were mostly down. JCI as expected, tracked the losses in global indexes seen on Friday and tumbled 1%. In addition, IDR revisited the low of 1998 as the ailing currency resumes its decline.

USDIDR started the week stronger, reaching 12,599 per US$ vs. Friday’s 12,432. Anticipation of higher rates in the US as well as US$ demand for debt repayments are cited as behind the recent downturn.

Oil prices remain vulnerable as Brent fell 2.3% to end at $60.45 a barrel. The global benchmark is seen falling to as low as $50 a barrel next year, according to Bloomberg survey. Meanwhile, WTI oil fell 4.48% to end at $55.22 a barrel.

Continuous rout in oil prices will put a challenge on the FOMC’s plan to raise rates sometime in 2015. It will also pose a challenge to the recent government’s decision to raise prices of subsidized fuel in Indonesia.

AKKU, GZCO, CTRS, KDSI

AKKU: is planning to conduct a private placement for about 23 million shares with the price being offered at Rp320 per share. This translates to a proceeds of Rp7.36bn.

GZCO: aims at an increase of 20% in sales worth Rp600bn in 2015. By the end of 3Q14 the company has reached Rp366bn, higher than Rp265bn in 3Q13 or up 38%. Full year 2014 revenues is seen at Rp500bn.

CTRS: is confident to be able to reach the 2014 target sales of Rp650bn. This year revenues came in mostly from CitraLand, CitraLand Utara and the Green Lake.

KDSI: is looking for 15-20% growth of revenues in 2015 vs. 2014.

Technically Speaking...

JCI started the week on a weak footing as the JCI fell 1%.

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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. 

Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

MACD has re-entered the sub-zero line while the RSI remains stuck near the neutral area. This suggests that while the index is steady, the risk of slipping further remains as indicated by MACD. 

The week will offer similar trading range for the JCI, between 5,000 and 5,250. As the upside remains sluggish, the downside risk cannot be ruled out.

Day Ahead

As expected, the JCI started the week on a weak footing. For Tuesday, expect the index to still face pressure as the Europe and US came down again overnight on the back of more oil slump. IDR is also facing strong pressure and is now back to a level of 12,599, something unseen since 1998. A range between  5,000 to 5,250 is seen for the current week.

Click here to download the full update (PDF)

Morning Dew - 15 December 2014

Oil Slick Ahead

Oil rout continues as WTI for January fell $2.14 or 3.6% to $57.81 a barrel while Brent declined $1.83 to $61.85 a barrel. Prolonged weakness of oil prices may actually put the US Federal Reserve’s off track of its rate rise scenario. With little or no inflation catalyst, the central bank will have a hard time justifying its plan to raise the Fed funds rate sometime in 2015.

The US central bank is set to meet on Tuesday and Wednesday, and with unemployment rate at 5.8%, the gauge has been well below the Fed’s mark of healthier recovery. With QE3 gone, the market will be keen to see whether the Fed will finally drop the words “considerable time” from the FOMC statement, to open the door wide open for a higher interest rate. For now, the expectations are for the Fed to raise rates sometime in mid-2015.

Domestic car sales fell 15% in November 2014 (yoy) to 91,449 units. 11M14 sales reached 1,129,746 units or 0.2% lower from the same period a year earlier. The target for this year seems to be hard to achieve, which is set at 1,250,000 units.

USDIDR continues to climb on Friday, reaching 12,432 per US$ vs. Thursday’s 12,336.

WIKA, COWL

WIKA: Trimmed government budget on infrastructure projects has led to the delays on several state-owned enterprises this year, including WIKA. The company expects to earn just 90% of its total target set earlier at Rp678.65bn. Net profit is expected to be at Rp610.76bn and by the end of 3Q14 the accumulated net profit has reached Rp400.71bn. For new contracts, 11M14 the total worth of new contracts is at Rp13.9tn, or 53.81% of target set for this year at Rp25.83tn.

COWL:  Obtained credit facility on Dec 10th 2014 based on Facility Agreement from PT QNB Indonesia and Qatar National Bank SAQ Singapore Branch. The credit worth US$163 million and will be used for working capital, project developments and other financing.

Technically Speaking...

JCI inched higher on Friday, settled at 5,160, but barely able to make significant breakthrough on the upside.

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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. 

Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

MACD has re-entered the sub-zero line while the RSI remains stuck near the neutral area. This suggests that while the index is steady, the risk of slipping further remains as indicated by MACD. 

The coming week will offer similar trading range for the JCI, between 5,000 and 5,250. As the upside remains sluggish, the downside risk cannot be ruled out.

Week Ahead

Friday saw a major upheaval stemming from the energy sector where oil rout continues.  With over 300 points drop in DJIA, it is very probable that the JCI is a likely victim when it returns to the floor on Monday. A continuous drop in oil price is expected to push the government to rethink its recent subsidized fuel price hike. For Monday, expect the index to face pressure as the Asian market responds to the latest oil prices rout seen on Friday. A range between  5,000 to 5,250 is seen for the coming week.

Click here to download the full update (PDF)

Morning Dew - 11 December 2014

Fighting Back

JCI fought back after the index took a sharp downturn earlier this week. The JCI returned to above 5,150 and ended the Wednesday’s session at 5,165, shrugging off the global dip in sentiment due to Greece and China’s issues.

Indonesia budget deficit hit Rp194.08tn by the end of October 2014, or 80.4% of the target (Rp241.5tn). The figure came in higher than the same period last year which was at Rp139.55tn or 62.2% of 2013 target.

Cement sales increased by 3.4% yoy in the first 11 months of 2014 to 54.6 million tons. This means slower growth than 5.6% annual pace seen during the full year of 2013. Politics were the major factor behind the slowdown after mid-year election sparked uncertainties for some time, resulting in delays of some infrastructure projects. Other factors attributed to the slowdown are low commodity prices, and weakened purchasing power. 

Elsewhere, oil prices fell again as Brent dropped 3.9% to $64.24/barrel and WTI fell 4.5% to $60.94/barrel. USDIDR slipped to 12,336 on Wednesday from 12,347 seen on Tuesday.

APEX

APEX: aims at revenues of US$290 million by the end of 2015. The figure is 28.88% higher than the current year’s target revenues which is set at US$225 million. Additional offshore rigs are expected to contribute positively to the company’s financial performance. Offshore contracts are still expected to dominate the company’s revenues by around 80%. On the bottom line, the 2015 figure is expected at US$30 million.

For the next three years APEX has secured a total value of contract amounting to US$614.2 million.

Technically Speaking...

JCI bounced off near its 50-day EMA and ended the Wednesday’s session up at 5,165.

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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

Although the index bounced, MACD continues to tick lower approaching the zero line. RSI however, has bounced after recent decline.

Overall however, the fluctuation is expected to remain within the familiar trading range between 5,000-5,250 on this week.

Day Ahead

JCI proved resilient on Wednesday as it shrugged off the global issues such as China and Greece. While the turnaround was encouraging, the upside potential remains limited as there is hardly any new positive key catalysts around. JCI may even weaken following strong showing on Wednesday, especially with the Dow tumbled more than 200 points overnight.  Expect the JCI to trade between 5,100-5,200 on Thursday.

Click here to download the full update (PDF)

Morning Dew - 10 December 2014

China Connection

JCI slipped again, settling the day at 5,122 as waves of profit-taking continue.

Global fundamentals have stepped under the highlights on Tuesday, with China took the first turn. 

China’s bonds rated below AAA or sold by issuers graded lower than AA are no longer allowed to be used as collateral for short-term loans obtained through repurchase agreements. The decision has sparked turmoil in Chinese shares as investors reassessed their portfolios related to such rated bonds.

In Europe, the ghost of past Greek crisis has returned as the government decided to fast forward a parliamentary vote on a new head of state. If the ruling PM Antonis Samaras cannot win supports from his political opponents, the vote is likely to be won by the anti-austerity party Syriza. Such win will put a major risk to the country currently undergoing the European bailout program to revive its economy.

USDIDR barely changed on Tuesday, only inching lower from 12,352 to 12,347.

Indonesia CPO

Exports are expected to increase to 21.6 million tons in 2015 while production may reach 32.5 million tons. Price of the commodity is expected to be between US$740-800 per ton. Assuming that the current zero export tariff scheme for CPO exports is maintained by the government, acceleration in exports is to be expected.

In October, exports reached 2.47 million tons, bringing the total of exports to 17.53 million tons. Average CPO price of these exports were at $864.24 per ton. Top markets for Indonesia’s CPO are USA, India, China, Eurozone, Bangladesh and Pakistan.

Technically Speaking...

JCI’s bid to break through its record high may have to wait for a while as the index is seen retreating to around its support at 5,100.

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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. 

Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

MACD continues to tick lower approaching the zero line while RSI has taken a sharper turn lower off its overbought area and back to the neutral zone.

Overall however, the fluctuation is expected to remain within the familiar trading range between 5,000-5,250 on this week.

Day Ahead

JCI looks soft on Wednesday as China and Greece may weigh on the investors’ sentiment. European and American stocks have been hit by these catalysts and ended lower.  Despite no direct relations to China and Greece, JCI may weaken alongside with the slump in the global sentiment. Expect the JCI to trade between 5,100-5,150 on Wednesday.

Click here to download the full update (PDF)

Morning Dew - 9 December 2014

Slippery Oil

JCI started the week on a weak footing as the index fell back below 5,150. With hardly any key positive catalysts, the already vulnerable rally finally ran out of steam. Elsewhere, US stocks also took a big slap from yet another drop in energy prices.

Brent and WTI oil fell to five-year low as oil slump continues. Brent ended down $2.88 to $66.19/barrel while WTI fell $2.79 to $63.05/barrel. Fastest pace of US production in the last three decades, rising output from the OPEC as well as weakening global demand have put the oil prices under strong pressure recently.

Domestic macroeconomic data showed that banking credit in October were up 12.4% (yoy) at Rp3,587.4T, vs. prior month’s pace of 12.6% (yoy), in line with the moderating economic growth.

USDIDR  started the week with a jump towards 12,352 vs. 12,296 seen last Friday.

TRUB, PSAB, SDPC

TRUB: Losses worsened in 6M14 to Rp160.8bn vs. Rp52.91bn seen in 6M13 as revenues fell to Rp601.88bn (6M14) vs. Rp786.94bn (6M13).

PSAB: 9M14 revenues were up 210.41% to US$202.45 million vs. US$65.22 million (9M13). The bottom line has turned from a loss of US$31.55 million in 9M13 to a net profit of US$12.14 million in 9M14. Assets also grew to US$844.23 million (end of Sep 2014) from US$805.47 million (end of Sep 2013).

SDPC: Ten-month net sales reached Rp1.18T in 2014 with operational costs hit Rp83.32bn while finance costs amounted to Rp17.85bn.  Net profit for the first ten months was at Rp4.87bn vs. Rp3.44bn seen in 9M14. Rising sales were in line with the growth of pharmaceuticals industry which is around 10%.

Technically Speaking...

JCI’s bid to break through its record high may have to wait for a while as the index is seen retreating to around its support at 5,100.

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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. 

Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

MACD continues to tick lower approaching the zero line while RSI has taken a sharper turn lower off its overbought area.

Overall however, the fluctuation is expected to remain within the familiar trading range between 5,000-5,250 on this week.

Day Ahead

JCI is staring at another vulnerable session on Tuesday after slippery oil market brought down the US stock indexes from record highs. Lack of major positive drivers also expected to contribute to Tuesday’s perceived weakness. As energy market continues to tumble, the pressure is mounting for the government to re-evaluate its gasoline pricing policy after recent price hike. Expect the JCI to trade between 5,100-5,150 on Tuesday.

Click here to download the full update (PDF)

Morning Dew - 8 December 2014

Payrolls Swell

US Nonfarm payrolls were up 321k in November, beating the consensus of 230k and also higher than 214k seen in October. Unemployment rate was steady at 5.8%. The strong job report suggests that the FOMC is likely to be on track to deliver its first tightening sometime in mid-2015. In the US, the DJIA scored another record high following the job report.

Fuel and inflation took the consumer confidence index down in November from 120.6 to 120.1. The consumer survey which interviewed 4,600 households from 18 major cities all over Indonesia suggests that index figure above 100 represents optimism.

HSBC PMI Manufacturing Index showed manufacturing growth has slowed to 48.0.

Forex reserves slightly fell to US$111.1bn by the end of November vs. US$112bn at the end of October. Government’s foreign debt payments and central bank’s monetary control were the factors behind the falling reserves. 

USDIDR  ended Friday with a drop to 12,296 from 12,318, ending a series of winning streak.

BUDI, TBLA

BUDI: A total of Rp300bn has been set for capex in 2015. One is for a 72k tons of factory in Lampung (Rp180bn), one 72k tons fructose factory at West Java (Rp190bn) and a power plant at Lampung (Rp180bn). The expansions are expected to boost sales next year by 10% from this year’s target of Rp2tn.

TBLA: will use Rp1.2tn for capex next year for construction of sugar mill at Terbanggi  (Rp600bn) and Rp200bn for cooking oil factory at Lampung and Surabaya and another Rp200bn for building of biodiesel factory in Lampung. For CPO factory at Bengkulu the company will need Rp100bn while the rest are to be used for factories maintenances as well as existing plants.

Technically Speaking...

JCI stays on track to breach its all-time high as it continues to stay close enough near the record high of 5,262.

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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. 

Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

While MACD ticked lower but remains stable, RSI has reached the overbought area recent consolidation has pushed the curve lower.

Overall however, the fluctuation is expected to remain within the familiar trading range between 5,000-5,250 on Friday.

Week Ahead

Strong US payrolls is expected to bolster the Fed’s argument for starting the rate rise sometime in 2015, possibly around mid-year. The domestic front continues to search for key catalysts while finding none so far. Hence, the performance of Europe and US are likely to be the driver for the index for now. Monday, the JCI is seen supported by how the Dow perform as the US stocks hit new record high on Friday. Upside is slippery as profit-taking is getting more likely to happen the higher the index goes.

Click here to download the full update (PDF)

Morning Dew - 5 December 2014

European QE

European equities fell sharply on Thursday after the ECB President Mario Draghi said that assessment on whether additional stimulus is needed or not will have to wait for the next quarter. The comment has dashed market hopefuls which expected such measures to be delivered sooner rather than later.  

In addition, Draghi also warned of the risk of deflationary spiral as prices fall continues and that economic outlook has been downgraded to GDP growth of 0.8% in 2014 and 1% next year vs. 1.1% (2014) and 1.6% (2015). Inflation is now expected at 0.5% (2014) and 0.7% (2015) vs. 1.1% (2014). Following the comment however, two ECB officials were reportedly saying that such stimulus proposal is expected to be considered next month. The proposal involves broad-based asset purchases, including sovereign debt.

JCI was close to break through 5,200 mark but it settled at 5,177, trimming some of its gains.

USDIDR  continues to head north as it settled the Thursday’s session at 12,318 vs. 12,295  yesterday.

BNGA, BKSL

BNGA: 4Q14 net profit is expected above Rp3tn, vs. 3Q14 net profit of Rp2.3tn. Last quarter, the net profit fell 28.5% (yoy). Credit growth is expected to be around 15%, slightly below the OJK’s guidance of 15-17%. By the end of September, credit growth reached Rp166.84tn, up 7.3 (yoy).

BSKL: 11M14 marketing sales have reached Rp1.45tn or equal to sales of 1,328 units. This however, represents just 72% of total target set for this year which is at Rp2tn.

Technically Speaking...

JCI stays on track to breach its all-time high as it continues to stay close enough near the record high of 5,262.

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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

While MACD ticked lower but remains stable, RSI has reached the overbought area.

Overall however, the fluctuation is expected to remain within the familiar trading range between 5,000-5,250 on Friday.

Day Ahead

New month but hardly any potential surprises on the news front. The next big thing possibly the release of US nonfarm payrolls. Still, the data may not be able to derail the FOMC from entering higher interest rate environment in mid-2015. Domestic calm may put the JCI stable around 5,000-5,262, but with upside bias as the index maintains its chance to set a new record high. European QE may be on the cards now, but the impact on the JCI’s fluctuation tends to be very much limited.

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Morning Dew - 4 December 2014

Slowing Down

JCI took a step back on Wednesday, but it remains on track to break its own record high at 5,262. Lack of key data and news will slow down the advance as investors may prefer to adopt a wait-and-see stance.

BUMI: S&P cut the corporate credit rating of BUMI to “default” from “selective default” as the company is expected to be unlikely to service any of its debt at least within the next six months.

SOCI: After briefly up to Rp700 per share, SOCI eventually settled its trading debut at Rp620 per share, up 12.73% on Wednesday. The coming year, SOCI is planning to bring the total number of fleets to 40 from the current 33. About US$80 million will be readied for this purpose as the new vessels are expected to arrive within 1H15. For the remainder of this year, two vessels will be bought.

USDIDR  resumed its climb on Wednesday, hitting 12,295 vs. 12,276 seen on Tuesday.

Archi Scraps IPO

Archi Indonesia has decided to call off its bid to go public on Wednesday after extension of its book-building period has been unable to lift investors’ interest. The stock was initially priced within the indicative price range of Rp1,895 to Rp2,445 per share or equal to 2015 EV/Ebitda valuation of 6.3 to 8.0 times. Underwriters appointed for the IPO were CIMB, Danareksa, Mandiri Sekuritas and Valbury.

Archi is under Rajawali Corp, owned by Peter Sondakh.

Technically Speaking...

JCI stays on track to breach its all-time high despite recent minor setback.

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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. 

Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

While MACD remains stable, RSI has reached the overbought area.

Overall however, the fluctuation is expected to remain within the familiar trading range between 5,000-5,250 on Thursday.

Day Ahead

New month but hardly any potential surprises on the news front. The next big thing possibly the release of US nonfarm payrolls. Still, the data may not be able to derail the FOMC from entering higher interest rate environment in mid-2015. Domestic calm may put the JCI stable around 5,000-5,262, but with upside bias as the index maintains its chance to set a new record high.

Click here to download the full update (PDF)

Morning Dew - 3 December 2014

On Track

JCI remains on track to break its own record high at 5,262 as the index inched higher on Tuesday, following up its gains earlier this week.

PBRX: Sales are expected to increase by 20% to 25% in 2015 as production capacity has been increased earlier this year. The figure is relatively steady compared to this year’s growth of 25%, or about US$424 million in sales. Hence, 2015 target is seen between US$508.8 million to US$530 million. Two new production facilities have been completed and ready for operation this year, raising total production capacity to 42 million units annually. Next year, the company will build two more production facilities in Central Java, costing the company US$8mn-10mn. Capex this year was set at US$40 million with US$20 million to be used for anorganic expansion while the rest will be used for organic expansion.

SRIL: Has prepared US$275 million for financing its expansion plan until 2016. The funding will be used to increase its production capacity which is currently near full utilization.

USDIDR  resumed its climb on Tuesday, hitting 12,276 vs. 12,264 seen on Monday.

TOTL, HITS, INAF

TOTL: In 11M14 the total new contracts obtained have reached Rp6.2tn, exceeding this year’s target of Rp5tn. Breaking down the figure, Rp2.7tn came from KSO projects while non-KSO projects worth Rp3.5tn. TOTL aims at Rp2tn of revenues for this year with the total net profit target of Rp150bn, down from Rp195bn achieved last year.

HITS: To conduct private placement worth around Rp1.63tn by issuing 2.33bn shares set at Rp700 per share.

INAF: Expects to gain Rp40bn in net profit in the coming year.Within the next three years the net profit may reach Rp70bn. Pefindo however, rates INAF’s MTN I/2012 at idBB, down from idBB+ as well as putting it on credit watch with negative implication.

Technically Speaking...

JCI stays on track to breach its all-time high. Still, despite it got as close to breaking the 5,200 mark, the index trimmed some of its gains and settled with smaller 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.

We have seen a test of 5,200 resistance, but successful breakout remains elusive. Beyond 5,200, the subsequent resistance will be at 5,251, ahead of the all-time record high at 5,262. 

While MACD remains stable, RSI has reached the overbought area.

Wednesday could bear another attempt to move past 5,200 mark. Overall however, the fluctuation is expected to remain within the familiar trading range between 5,000-5,250. 

MBSS has reached its stop point below 1,050 and thus taken out of the reco pool with a loss of 13.28%.

Day Ahead

New month but hardly any potential surprises on the news front. The next big thing possibly the release of US nonfarm payrolls. Still, the data may not be able to derail the FOMC from entering higher interest rate environment in mid-2015. Domestic calm may put the JCI stable around 5,000-5,262, but with upside bias as the index maintains its chance to set a new record high.

Click here to download the full update (PDF)

Morning Dew - 2 December 2014

Inflation Pickup

JCI started the month in a positive tone, but the index is still caught up within the recent consolidation range as lack of fresh surprises put the consolidation phase intact.

Inflation accelerated in November to 6.23% (yoy) from 4.83% (October) as the impact of subsidy reduction started to come into effect. Excluding food and energy prices, core inflation came in at 4.21% (yoy), up from 4.02% last month. On month-on-month basis, inflation went up 1.5% in November, a lot faster than 0.47% seen in October. Year-to-date, inflation has hit 5.75%. Components contributing significantly to the jump in November figure were food products and transportation as well as electricity tariffs.

Trade balance swung to surplus in October 2014 to US$20 million, reversing a US$270 million of deficit in September. Exports were at US$15.35bn while imports were at US$15.33bn.  Ex-oil and gas saw a surplus of US$1.13bn from US$760 million in September.

USDIDR continued to rally on Monday, hitting 12,264 vs. 12,196 seen on Friday.

PMI, NIRO, BCIC

HSBC Markit Purchasing Managers’ Index (PMI) continued to show contraction in the manufacturing activity. The index fell to 48.0 in November from 49.2 seen in October. The figure was the lowest since 2011 as weak demand and recent cut in fuel subsidy dealt a blow to the sector. Reading above 50 marks expansion while below 50 marks contraction.

NIRO: 9M14 showed losses of Rp66.89bn vs. Rp30.16bn of profits in 9M13. Sales were down to Rp189.82bn vs. Rp191.66bn  in 9M13.

BCIC: 9M14 losses were at Rp223.79bn vs. 9M13 losses of Rp645.51bn. Net interest income fell to Rp31.2bn from Rp213.19bn. 

Technically Speaking...

JCI is back on track to breach its all-time high, even after it breached the previous resistance around 5,150-.5,160, the index remains struggling to break the cap for 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. 

While MACD remains stable, RSI has reached the overbought area.

Tuesday is seen mixed but still within the familiar trading range between 5,000-5,250 as the index is expected to continue its consolidation.

Day Ahead

New month but hardly any potential surprises on the news front. The next big thing possibly the release of US nonfarm payrolls. Still, the data may not be able to derail the FOMC from entering higher interest rate environment in mid-2015. Domestic calm may put the JCI stable around 5,000-5,262, but with upside bias as the index maintains its chance to set a new record high.

Click here to download the full update (PDF)