Morning Dew - 1 October 2014

Weathering the Storm

JCI ended slightly down after initially under pressure. Weak sentiment has weighed on the index recently due to political tempest on the domestic front.

USDIDR continued to climb on Tuesday, reaching 12,212 by the end of the day against 12,120 seen on Monday. The currency has been dogged by myriads of issues lately, both from the domestic and from the global front.

UNIT booked sales worth Rp38.32b in the first six months of 2014, down 14%from the same period a year ago (Rp44.56b). Net profit attributable to owners fell to Rp52.51 million from a year earlier (Rp191.95 million).

INKP and TKIM are set to distribute cash dividend for the FY2013 on November 5th 2014. INKP’s dividend amounted to Rp25 per share while TKIM’s worth Rp10 per share. 

ZBRA

ZBRA shareholders agreed to conduct debt restructuring worth Rp30.07b. The debt-to-equity swap scheme is set to exchange the debt with 15.35% of shares to PT Infinity Wahana, one of the company’s shareholders. The DES scheme will raise Infinity’s holdings to 37.65% from 22.3%.

ZBRA plans to add another 130 units of taxi in Surabaya with estimated cost of Rp18.5b. In October, 30 units will start operation, 50 units in November, and 50 units in December. About 25% of the funding comes from internal while 75% came from non-bank institutions.

Technically Speaking...

There is nothing new under the sun as the JCI slipped slightly after briefly touched the support at the lower 5,100s. It bounced back at the end of the trading session, returning close to Monday close. The outlook remains murky right now, however.

As we mentioned yesterday, the JCI is at risk of heading towards the next supports at 5,039 and 5,000 as the 50-day EMA has been punctured.

On the upside, prior resistance at 5,200 is back, followed by resistances at 5,251, ahead of the all-time record high at 5,262. Subsequently, the next psychological hurdle for the index at 5,300. 

Taking guidance from the indicators, the MACD continues to move away from the zero line deeper towards the negative area; the RSI has stopped sinking for now, while volume is rising. For now,  we can expect the index to maintain its position within 5,100-5,262 consolidation range with short-term upside bias.

Day Ahead

JCI is still seen struggling within a wide consolidation range of 5,100-5,262. Lack of fresh catalysts may put the index back under persistent pressure coming from domestic political storm as well as the continued weakness of IDR on the back of  the strengthening of the greenback as the end of Fed’s era of low interest rates coming to an end soon.

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Morning Dew - 30 September 2014

Political Storm

JCI finished slightly up after being slammed by political storm on the domestic front. Coupled with lack of fresh catalysts, this condition prompted investors heading for exits.

Dogged by myriads of issues, USDIDR continued to march higher to start the week finishing at 12,120, against Friday’s 12,007.

BORN’s net sales fell 72.61% by March 2014 to US$37.06 million against US$138.61 million seen last year. Net losses also jumped to US$85.28 million against prior losses of US$14.18 million.

Overseas, Hong Kong crisis sent the Hang Seng index plummeting nearly 2% on Monday. Demonstrations by pro-democracy protesters flooded Hong Kong demanding Beijing for free and open elections.

AALI, CNKO

AALI booked 1.14 million ton of CPO production for the first eight months in 2014, up 20% against the same period last year. Sales volume also up 20% and reached 889,978 ton with olein sales volume reaching 137,976 tons. Also, the average selling price by the end of August was up 27.8% from Rp6,735/kg (2013) to Rp8,604/kg.

OCBC was reportedly divested its CNKO shares worth Rp3.77b on September 18th 2014. The number of shares sold was 14,800,000 shares priced at Rp255 per share. Only 9.39% of CNKO is currently owned by OCBC.

Technically Speaking...

Monday saw the JCI slipped again well below the 50-day EMA before it again resurfaced above 5,100 at the end of the trading session. The prompt rebound may save another day for the index, but the outlook remains murky right now.

As we mentioned earlier, the JCI is at risk of heading towards the next supports at 5,039 and 5,000 as the 50-day EMA has been punctured.

On the upside, prior resistance at 5,200 is back, followed by resistances at 5,251, ahead of the all-time record high at 5,262. Subsequently, the next psychological hurdle for the index at 5,300. 

Taking guidance from the indicators, the MACD continues to move away from the zero line deeper towards the negative area; the RSI has stopped sinking for now, and the volume remains relatively stable. For now,  we can expect the index to maintain its position within 5,100-5,262 consolidation range.

Note that ADRO has met its entry price, so the reco is now open.

Day Ahead

JCI is still seen struggling within a wide consolidation range of 5,100-5,262. Lack of fresh catalysts may put the index back under persistent pressure coming from domestic political storm as well as the continued weakness of IDR on the back of  the strengthening of the greenback as the end of Fed’s era of low interest rates coming to an end soon.

Click here to download the full update (PDF)

Morning Dew - 29 September 2014

Democracy is Dead

Squeezed by domestic political storm and the tumbling global stock indexes, the JCI nosedived to the lower 5,100s before bouncing back and settled at 5,132.56, still down 1.32%. Among ten sectors, only consumer goods sector dodged the fall.

Foreigners ran for exit as sentiment soured on the parliament’s voting result, which brought the democracy in Indonesia back to the stone age.

Wall Street however, ended the Friday session on a solid footing after a terrible start  last week on the back of speculation that the Fed will raise rates sooner rather than later.

Following the backyard turmoil, USDIDR soared to return above 12k, after previously down to 11,947.

SMRA, BKSW, RIGS

SMRA is planning to expand its land portfolio in Bandung, Serpong, Bekasi and outside Java. Until the end of this year, the company has prepared Rp200b-300b to finance the expansion. SMRA will use the proceeds from recent issuance of bonds worth Rp800b plus Sukuk Ijarah worth Rp300b. Both sources are to be issued this year and will be used to finance the company expansion until next year (90%) and for the company’s working capital (10%).

BKSW aims at lowering its LDR to 95% from the current position of 104.43% by the end of 2014.

RIGS plans to add a new fleet worth US$28 million for transporting coal cargo by the end of this year.

Technically Speaking...

Friday’s tumble took JCI close to breaking the lower-end of its consolidation range at 5,100, but despite it managed to bounce back and settled at 5,132.56, the near-term outlook has turned sour and less promising.

As we mentioned earlier, the JCI is at risk of heading towards the next supports at 5,039 and 5,000 as the 50-day EMA has been punctured.

On the upside, prior resistance at 5,200 is back, followed by resistances at 5,251, ahead of the all-time record high at 5,262. Subsequently, the next psychological hurdle for the index at 5,300. 

The MACD has reversed direction away from the zero line, while RSI is now sinking towards the oversold area. Despite all the gloom and doom reflected on the Friday’s rout, we may see a follow-up bounce on Monday, but the best we can expect would be to maintain the index at 5,100-5,262 consolidation range.

Week Ahead

Slammed by political storm as well as tumbling global equity indexes the JCI is not seeing anything positive on the horizon at the moment. We may see the Constitutional Court back in action to defend the direct election at regional stages. For the week ahead, the index is seen struggling to hold on to its consolidation range at 5,100-5,262 but with a downside bias.

Click here to download the full update (PDF)

Morning Dew - 26 September 2014

Ill Omen

JCI managed to steer above 5,200 mark again on Thursday, but the path upside seems to be slippery, considering the big hit on the US equities overnight.

US equities faltered, dragging the European shares down as well. The 200-points plunge of DJIA is expected to echo in Asia this Friday and could drag Asian shares including IDX into the vortex.

U.S. data point at better employment outlook while rising durable goods (ex-transports) investments in equipments in August also suggests that the Fed is on track to raise the rates sooner rather than later, possibly in mid-2015.

From the home front, the political chaos continues to roil the domestic political landscape. As the country is now on the verge of falling back to indirect election on the regional stage, we could see a potential slipup in investors’ confidence following the shock walkout by the Democrat Party last night.

USDIDR slipped again to 11,947 on Thursday from 11,976.

BUMI, BWPT

BUMI was suspended during the Thursday’s trading session after the company delayed the issuance of new shares which supposedly worth US$275 million. Following the bourse’s inquiry over the status of the new stock issuance, BUMI said that as the company now sees positive opportunities to further discuss the matter with creditors, the company has decided to delay the initial plan to issue new shares.

BWPT is planning to conduct rights issue this year with offering price between Rp390-Rp411 per share, a potential of Rp11.1T to be gained from the corporate action. The matter is still to be reviewed and awaiting approval from the OJK.

Technically Speaking...

JCI climbed back above 5,200, but the ground seems shaky as lack of meaningful changes in the technical indicators could mean the recent bounce may hardly last.

As the index managed to clear the 5,200 resistance handle once more, resistance mark, the next support to watch is 5,125 which is the 50-day EMA. Should we broke below this line, more supports are seen at 5,039 and 5,000.

On the upside, resistances are lining up at 5,251, ahead of the all-time record high at 5,262. Subsequently, the next psychological hurdle for the index at 5,300. 

The MACD has reversed direction away from the zero line, while RSI is now back at the neutral area again. Volume seems to be steady recently. While all these are somehow good signs for the index, we should remain cautious over the risk of another setback as we approach the upper end of the expected trading range.

Day Ahead

There’s a storm coming, as the short-term outlook seems to be daunting following the sinking of DJIA and European equities overnight alongside the political turmoil on the home front. The bottom line is: we’re not seeing anything positive on the horizon at the moment, hence a slipup towards the bottom end of the consolidation range 5,100-5,250 may be on the cards this Friday.

Click here to download the full update (PDF)

Morning Dew - 25 September 2014

On the Sidelines

JCI slipped again on Wednesday as lack of fresh catalysts led investors to prefer to stand on the sidelines.

Consumer confidence hit a record high of 161.4 points in August, up 3.7 points from a month earlier as optimism mounts on the coming government led by Jokowi. 

Increased confidence in personal finances and consumers’ expectation to purchase household appliances are also behind the rise, according to data from ANZ-Roy Morgan. Jokowi’s plan to raise fuel prices may later knock confidence, however.

IDX may have a new gold miner listed soon. Archi Indonesia, a subsidiary of Rajawali Corpora, is aiming at US$200 million worth of IPO before the year ends. Rajawali Corpora is owned by Peter Sondakh, which acquired Archipelago Resources Plc. last year with a deal valued at US$541 million at the London Stock Exchange. Archi operates in North Sulawesi, Philippines and Vietnam.

USDIDR slipped to 11,976 on Wednesday from 11,987.

SMGR, LPKR

SMGR is eyeing at expansion to property business. The state-owned company plans to set up a new business entity to develop a 200ha land in West Java. The cost for the expansion is expected around Rp200b (US$17.1 million). The project may be co-developed with fellow state-owned entity WIKA, according to SMGR’s corporate secretary. Both companies have signed an MoU to work together in energy, realty and property sectors last month.

LPKR’s Holland Village was said to have been oversubscribed by 150%. The second stage offering of the apartment complex consists of 190 units built on 4ha land and priced at Rp19.5 million/m2.

Technically Speaking...

JCI took another slipup on Wednesday, taking it to finish at 5,174.

As the index lost grip of the 5,200 resistance handle once more, resistance mark, the next support to watch is 5,125 which is the 50-day EMA. Should we broke below this line, more supports are seen at 5,039 and 5,000.

On the upside, resistances are lining up at 5,251, ahead of the all-time record high at 5,262. Subsequently, the next psychological hurdle for the index at 5,300. 

The MACD has reversed direction away from the zero line, while RSI is now back at the neutral area again. Volume seems to be steady recently. While all these are somehow good signs for the index, we should remain cautious over the risk of another setback as we approach the upper end of the expected trading range.

Day Ahead

It looks like the consolidation range between 5,100 and 5,250 is likely to persist for now. Lack of key catalysts have put the index in a limbo, but still maintaining its upside potential near the recent highs. Absence of key macro indicators both from abroad and from domestic will shift the market’s attention to the individual stock news and developments.

Click here to download the full update (PDF)

Morning Dew - 23 September 2014

Conundrum

Stocks finished mixed on Monday as the JCI ended slightly down but the IDX30 and LQ-45 indexes finished slightly higher. Lack of fresh catalysts have put the investors to choose to stay on the sidelines for now.

Nickel producers continued to be under pressure by the tumbling nickel prices as the metal fell to a five-month low on the back of concern of declining demand in China. Recent comment from China’s FinMin is seen as dampening the prospects for another stimulus boost. Lou Jiwei confirmed that there won’t be major policy changes to respond to individual economic indicators. Nickel contract for 3-mos delivery fell to US$17,025 a metric ton after briefly touched US$16,924. Last May, the metal still stood at US$21,625, highest since 2012.

USDIDR slipped further to 11,972 on Monday after hitting 12,030 last Thursday. Recently, BI said that the exchange rate should be within the range of Rp11,600 to Rp11,900 against the US$ to support export growth.

SDRA, BCIC

SDRA to merge with Bank Woori Indonesia with shareholders of BWI will be able to own 55.56% of SDRA when the merge is effective. Based on the report dated 25 August 2014, the merge will produce a new commercial bank Bank Woori Saudara. An Extraordinary Shareholders Meeting is to be held on November 7th 2014 and the merge is expected to be effective on December 19th 2014.

BCIC is an acquisition target of J Trust Co. Ltd. with a deal worth Rp4.5trillion or more than three times BCIC’s book value. BCIC which was formerly Bank Century, was bailed out by the government during 2008 global financial crisis.

Technically Speaking...

Monday’s price action brought nothing new so far as the index was relatively steady at the start of the week.

The index is, once again expected to defend the recently reclaimed 5,200 resistance mark, aiming at taking back its recently won 5,251 resistance ahead of the all-time record high at 5,262. Subsequently, the next psychological hurdle for the index at 5,300. On the downside, we have 5,117, which is roughly the same as the 50-day EMA curve. Should we broke below this line, more supports are seen at 5,039 and 5,000.

The MACD has continued to approach the zero line, while RSI is now approaching the overbought area again, volume seems to be steady recently. While all these are somehow good signs for the index, we should remain cautious over the risk of another setback as we approach the upper end of the expected trading range.

Day Ahead

Too early to conclude that the downside is secured. Even as the index returns above 5,200 mark, it is seen struggling to break out of the recent range between 5,100 and 5,250. While the upside prospect has somewhat brightened, the downside risk remains. The coming week will feature manufacturing sector’s performance data in September from major world economies.

Click here to download the full update (PDF)

Morning Dew - 22 September 2014

Clearing the Barrier

JCI finished the week higher at 5,227.58 after a brief spell at 5,250.83. The index is still struggling to clear the hurdle at 5,250-5,262 as lack of significant catalysts brought uncertainties.

Recent FOMC meeting provided nothing new while domestic data also offers limited impacts both negative or positive.

Golden Plantations and Archi Indonesia are scheduled to conduct a mini-expose the coming week. Golden Plantations is involved in CPO business while Archi Indonesia is within the mining sector. Both plan to go public this year. Blue Bird is also another company scheduled for IPO this year. The taxi operator is seen to become the biggest IPO in Indonesia with US$450 million is to be raised from the IPO.

USDIDR slipped to 11,985 on Friday after hitting 12,030 a day earlier. BI official on Friday said that the exchange rate should be within the range of Rp11,600 to Rp11,900 against the US$ to support export growth.

AALI, UNTR, AISA

AALI is set to distribute its interim dividend for the FY14 worth Rp244 per share. The dividend is to be paid on October 28th 2014.

UNTR is also set to distribute its interim dividend worth Rp195 per share on October 28th 2014.

AISA plans to sell 10% of its shares to KKR & Co. Lp. amounting to Rp658b, effectively raising the ownership of KKR to 25%. The sales of 292.6 million shares will be conducted at the price of Rp2,250 per share. Proceeds from the deal will be used to fund the company’s expansion to overseas markets such as Malaysia and Vietnam.

Technically Speaking...

JCI posted gains last week, but still short of breaking through the upper barrier at 5,250. 

The index is, once again expected to defend the recently reclaimed 5,200 

resistance mark, aiming at taking back its recently won 5,251 resistance ahead of the all-time record high at 5,262. Subsequently, the next psychological hurdle for the index at 5,300. On the downside, we have 5,117, which is roughly the same as the 50-day EMA curve. Should we broke below this line, more supports are seen at 5,039 and 5,000.

The MACD has continued to approach the zero line, while RSI is now approaching the overbought area again, volume seems to be steady recently. While all these are somehow good signs for the index, we should remain cautious over the risk of another setback as we approach the upper end of the expected trading range.

Week Ahead

Too early to conclude that the downside is secured. Even as the index returns above 5,200 mark, it is seen struggling to break out of the recent range between 5,100 and 5,250. While the upside prospect has somewhat brightened, the downside risk remains. The coming week will feature manufacturing sector’s performance data in September from major world economies.

Click here to download the full update (PDF)

Morning Dew - 19 September 2014

Another Aim

JCI followed up its Wednesday rise as the index hit 5,216.58 and finished above 5,200, taking another aim at the opportunity to break free from the recent trading range between 5,100-5,250.

No significant changes from the FOMC meeting has brought relief to the market participants amidst lack of key catalysts from the domestic side.

As a reminder, the FOMC has continued its tapering program, leaving just US$15b left which means the entire stimulus will be removed this year. While the Fed officials seem to be reluctant in specifying the timetable of what goes beyond the tapering, the rate rise cycle is expected to kick in in about six months following the end of tapering. This brings mid-2015 as the likely moment when the Fed will start raising rates.

USDIDR has reached 12k with the Thursday closing price at 12,030, up from 11,908.

Auto Sales, META, BSLT

Indonesia car sales jumped 24.1% to 96,728 units in August (year-on-year), bringing the year-to-date total sales to 830,398 units, 5% above the sales during the same period last year.

META’s net profit in 1H14 soared 167% to Rp49.68b on year-on-year basis. Revenues grew 73% with tower business line dominating the company’s revenues.

Bank Sulut (BSLT) offered 11.35% to 12.35% coupon for its 5-year bonds. The bank seeks to raise Rp750bn from this offering. The bond is rated single A by Fitch Ratings Indonesia. Joint underwriters are BCA Sekuritas, Danareksa Sekuritas, Mandiri Sekuritas and MNC Securities.

Technically Speaking...

JCI seems to have fallen back into a consolidative phase. The index may see itself fluctuating between 5,100-5250 this week.

JCI is expected to defend the recently reclaimed 5,200 resistance mark, aiming at taking back its recently won 5,251 resistance ahead of the all-time record high at 5,262. Subsequently, the next psychological hurdle for the index at 5,300. On the downside, we have 5,117, which is roughly the same as the 50-day EMA curve. 

Should we broke below this line, more supports are seen at 5,039 and 5,000.

The MACD has continued to approach the zero line, while RSI is now approaching the overbought area again, accompanied by an uptick in volume. While this is somehow a good sign for the index, we should remain cautious over the risk of another setback.

Day Ahead

Too early to conclude that the downside is secured. Even as the index returns above 5,200 mark, it is seen struggling to break out of the recent range between 5,100 and 5,250. While the upside prospect has somewhat brightened, the downside risk remains. Technical indicators has somewhat improved, but we should remain cautious against another corrective dip.

Click here to download the full update (PDF)

Morning Dew - 18 September 2014

The Fed Factor

JCI bounced on Wednesday ahead of the FOMC meeting to be held later in the US session. The index has been vulnerable recently despite its efforts to stay afloat above the 5,100 mark.

In the US session, the FOMC slashed another US$10 billion from its bond purchasing program to US$15 billion, meaning that the tapering campaign is set to finish in October, as expected.

Fed officials have raised their median estimate for the rates to 1.375% at the end of 2015, higher than their June estimate of 1.125%. Then, for the end of 2017, rate will be at 3.75%.

How the Fed will reach their estimates will be highly conditional and will be highly dependent on the economy, there is no fixed mechanism on the time table. Further, the Fed also said that the labor market has yet to fully recover.

Note that while the Fed seems to continue using the phrase “to keep interest rates near zero for a considerable time after asset purchases are completed”, our take is that the rates may start to rise sometime around six months after the tapering is completed.

TLKM: Shopping Mood

TLKM said that it will acquire an Australian call center company named CCA through its subsidiary PT Telekomunikasi Indonesia International (Telin). TLKM has prepared at least US$12 million to support the plan.

The telco giant has recently said that it will acquire 27% of the ownership of Telecom New Zealand, a telco operator.  To finance the NZ deal, the company will use both internal and external funding. At the moment, TLKM has a current assets worth Rp40tn.

Technically Speaking...

JCI seems to have fallen back into a consolidative phase. The index may see itself fluctuating between 5,100-5250 this week.

JCI is expected to struggle in maintaining its hold above 5,100 where the 50-day EMA currently at. Further, it will aim at recovering its ground above 5,200, 5,251 before getting back on track to head towards the next resistance at the next psychological hurdle for the index at 5,300. On the downside, we have returned to prior congestion area around 5,150 where next support comes in at 5,135 (the former lower consolidation band as well as the 50-day EMA support), 5,039 and 5,000.

The MACD has stopped falling, at least for now despite it stays below the zero line. Both RSI and volume also ticked higher, meaning that the downside risk may have subsided for now.

Day Ahead

Post-FOMC meeting JCI is expected to take another attempt to regain the 5,200 resistance mark following a solid finish on Wednesday. Still, the index is seen struggling to break out of the recent range between 5,100 and 5,250. While the upside prospect has somewhat brightened, the downside risk remains especially in the short-term where technical correction may set in after recent gains.

Click here to download the full update (PDF)

Morning Dew - 17 September 2014

Coal and CPO Soft

Vulnerability continues as the market awaits for the FOMC meeting to conclude later this week. Hardly any significant catalysts to pull the JCI higher or lower has led the index back to its consolidation phase.

CPO prices fall again as oversupply remains. On Monday, the prices fell to 2,101 ringgit/mt while previously on September 2nd it hit 1,914 ringgit/mt, the lowest price since March 2009. Upside potential seems capped as supplies are abundant while US soybean crop hits record high. Gapki aims at 25 million mt production of CPO in 2014. According to Bloomberg, in August the Indonesian stockpiles of CPO may have reached 2.5 million mt (vs. 2.02 million mt in July). Exports declined to 1.8 million mt,  or fell 2.2%. Bloomberg data is based on five planters and one refinery.

Coal production hit 280 million tons with 224 million being exported abroad during the period of January-August. The government targets a total of 390 to 420 million tons of coal mined this year. HBA for September is set at US$69.69/ton, down from August US$70.29/ton.

CAD, IDR, MDRN

CAD to ease slightly this year, according to Bank Indonesia official. The CAD is seen down to 3.2% of GDP this year, just below the 2013 CAD level of 3.3%.

USDIDR took another round going up to 11,903 on Tuesday after on Monday it settled at 11,875. 

MDRN is aiming to continue developing the F&B business. The company also to add more items for each of its 7-Eleven outlets, which has reached a total number of 175 7-Eleven outlets.

Technically Speaking...

JCI seems to have fallen back into a consolidative phase. The index may see itself fluctuating between 5,100-5250 this week.

JCI is expected to struggle in maintaining its hold above 5,100 where the 50-day EMA currently at. Further, it will aim at recovering its ground above 5,200, 5,251 before getting back on track to head towards the next resistance at the next psychological hurdle for the index at 5,300. On the downside, we have returned to prior congestion area around 5,150 where next support comes in at 5,135 (the former lower consolidation band as well as the 50-day EMA support), 5,039 and 5,000.

The MACD continued to fall into the negative area after a brief spell on the positive side, while the RSI has stopped falling for now and currently hovers around the neutral area.

Day Ahead

Lack of fresh catalysts will bring the JCI back to the consolidation phase. The US Federal Reserve will meet on Sep 17th and the consensus is for another round of tapering. Post-meeting press conference will be the one awaited by the market as investors would want to hear if there’s anything new on the Fed’s policy. Until then, the JCI will stay rangebound.

Click here to download the full update (PDF)

Morning Dew - 16 September 2014

NPL Worries

JCI started the week looking vulnerable but eventually managed to settled the day higher at 5,114.90. Ahead of the FOMC meeting the index will find lack both of negative or positive catalysts, leading it back to the consolidation phase between 5,100 and 5,250.

From Bank Indonesia, the construction sector has become the most vulnerable sector in terms of non-performing loan (NPL) level in July as the gauge ticked higher to 4.43%. Three other sectors’ NPL also continued to rise: mining (3.09%), trade (3.06%) and social services (2.96%). The banking sector itself is currently at 2.24%, considered safe as it’s well below the 5% threshold.

BCIC is an acquisition target of J Trust, a Japanese company engaged in finance, real estate, IT and amusement sectors. Through a public bidding process conducted by LPS, J Trust has been chosen as the winner with a rumored bid value of US$300 million. OJK will still have to approve the sale, however.

US, China Data

Industrial production fell slightly in the U.S. by 0.1% in August after a 0.2% rise in July while the consensus initially forecast a 0.3% increase. Manufacturing production also dipped 0.4% during the same month, against the consensus 0.1% after the gauge rose 0.7% in July. Consequently, capacity utilization fell to 78.8% from 79.1%.

In China, industrial production slowed to 8.5% in August (YoY) while retail sales stayed strong at 12.1% pace for the same month (YoY).

Technically Speaking...

JCI seems to have fallen back into a consolidative phase. The index may see itself fluctuating between 5,100-5250 this week.

JCI is expected to struggle in maintaining its hold above 5,100 where the 50-day EMA currently at. Further, it will aim at recovering its ground above 5,200, 5,251 before getting back on track to head towards the next resistance at the next psychological hurdle for the index at 5,300. On the downside, we have returned to prior congestion area around 5,150 where next support comes in at 5,135 (the former lower consolidation band as well as the 50-day EMA support), 5,039 and 5,000.

The MACD continued to fall into the negative area after a brief spell on the positive side, while the RSI has stopped falling for now and currently hovers around the neutral area.

Day Ahead

Lack of fresh catalysts will bring the JCI back to the consolidation phase. The US Federal Reserve will meet on Sep 17th and the consensus is for another round of tapering. Post-meeting press conference will be the one awaited by the market as investors would want to hear if there’s anything new on the Fed’s policy. Until then, the JCI will stay rangebound.

Click here to download the full update (PDF)

Morning Dew - 15 September 2014

Eyes on the Fed

Indonesian stocks ended the Friday’s session mixed with the JCI and the LQ-45 indexes finished positive and the IDX30 index slightly lower.

Bank Indonesia said that it will adopt a tight monetary policy until the end of 2014 to maintain its inflation target, to reduce current account deficit as well as to anticipate the impacts of global economic policy. A raise in fuel prices by the new government may push up inflation again sometime in November or December. 

APLN recorded marketing sales amounting to Rp3.13T in the first eight months of 2014. Recently launched Plaza Kenari Mas contributed 6.4% of the total sales while Harco Glodok remains the top contributor with 26.6%, followed by Orchard Park Batam with 24.7%. Podomoro City extension brought 13.6% contribution while Grand Taruma delivered 6%. Borneo Bay Residences and Soho Pancoran each contributed 4.8% followed by Metro Park Residences (4.7%), Vimala Hill (3.7%) and Podomoro City Deli Medan (3.7%).

US Data

US Retail Sales grew 0.6% in August, in line with the consensus, but higher compared to July’s sales growth. Ex-autos, the pace was steady at 0.3%, in line with consensus as well as the same as the prior month. Ex-autos and gas sales were in line with consensus, up from 0.3% to 0.5%. 

University of Michigan’s confidence indicator showed confidence  ticked up to 84.6, from 82.5 and compared to 83.3 expected.

Technically Speaking...

JCI seems to have fallen back into a consolidative phase. The index may see itself fluctuating between 5,100-5250 this coming week.

JCI is expected to struggle in maintaining its hold above 5,100 where the 50-day EMA currently at. Further, it will aim at recovering its ground above 5,200, 5,251 before getting back on track to head towards the next resistance at the next psychological hurdle for the index at 5,300. On the downside, we have returned to prior congestion area around 5,150 where next support comes in at 5,135 (the former lower consolidation band as well as the 50-day EMA support), 5,039 and 5,000.

The MACD continued to fall into the negative area after a brief spell on the positive side, while the RSI has stopped falling for now and currently hovers around the neutral area.

Week Ahead

Lack of fresh catalysts will bring the JCI back to the consolidation phase. The US Federal Reserve will meet on Sep 17th and the consensus is for another round of tapering while keeping the interest rates steady. Post-meeting press conference will be the one awaited by the market as investors would want to hear if there’s anything new on the Fed’s policy.

Click here to download the full update (PDF)

Morning Dew - 12 September 2014

Slippery Road

Bank Indonesia kept the rates unchanged as it concluded its rate meeting on Thursday. The key interest rate is set at 7.5% while lending facility and deposit facility were unchanged at 7.5% and 5.75%, respectively.

The central bank’s policy remains consistent with the goal to bring inflation towards the target between 4.5% plus or minus 1% in 2014 and 4% plus one or minus 1% in 2015. Another goal is to reduce the current account deficit to a more healthy level.

National cement sales were up 37.4% (year-on-year) to 4.7 million tons in August 2014 as domestic property and infrastructure developers posted higher demand. Prior month, sales declined 25% (YoY) as Ramadhan usually brings lower demand. In Java, demand increased by 47%, while in Kalimantan and Sumatra saw an increase of 44% and 32.8%, respectively. This year, ASI targets cement sales to grow to 61 million tons. Year-to-date, sales have grown 2.45% to 37.5 million tons (YoY).

ANTM, WIKA

Pefindo maintained ANTM’s rating as well as its PUB I bonds at idA. The outlook for the miner remains at Negative to take into account of further decline on cash flow protection as well as the company’s capital structure due to lower commodity prices. Failure to meet the sales target is also seen as the trigger.

WIKA obtained a contract worth US$125 million to construct Pyay Tower and Residence in Singapore.

USD/IDR continued to climb higher on Thursday to 11,831 from 11,782.

Technically Speaking...

JCI slipped again on Thursday, making it the third consecutive session for the ailing index. The fall took JCI to 5,133.03 where JCI also settled the Thursday.

JCI is expected to struggle in maintaining its hold above 5,100 where the 50-day EMA currently at. Further, it will aim at recovering its ground above 5,200, 5,251 before getting back on track to head towards the next resistance at the next psychological hurdle for the index at 5,300. On the downside, we have returned to prior congestion area around 5,150 where next support comes in at 5,135 (the former lower consolidation band as well as the 50-day EMA support), 5,039 and 5,000.

The MACD continued to fall into the negative area after a brief spell on the positive side, while the RSI fell further to underline the bearish divergence pattern in effect at the moment. 

Day Ahead

BI event passed, leaving another vacuum of key catalysts for JCI. Taking a cue from the technical outlook of the index, it looks as if the weakness may have taken a brake, but not downside risk is not entirely eliminated. We may however, enter another consolidation phase between 5,100-5,250 while waiting for fresh catalysts to show up and provide direction.

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Morning Dew - 10 September 2014

Dizzying Heights

JCI surrendered its recent gains as new heights seemed to be too dizzying to endure for now. The index is now back below 5,200, triggered by heavy profit-taking after a brief spell above 5,251 prior resistance.

USDIDR bounced to 11,754 on Tuesday compared to Monday’s 11,722.

Steel producer KRAS aims at sales of 500k tons of steel this year. KRAS also setup a joint venture with Osaka Steel Co. through a company named PT Krakatau Osaka Steel. The JV will utilize a new steel manufacturing plant in Cilegon which cost Rp2.3t or US$220 million. KRAS owns 20% of the JV while 80% is owned by its Japanese counterpart.

PWON obtains loans worth Rp1.25t from BMRI and BBCA. The loans are aimed to finance PWON’s construction projects at Tunjungan Plaza, Surabaya. Each bank contributed Rp625b in this syndicated loan.

WTON set Rp600b for capex in 2015, somewhat lower than 2014 capex which worth Rp628b.

SRIL, ASII

SRIL has decided to delay its issuance of global bonds worth US$200 million. The reason behind the delay was unspecified , but the company intends to conduct its financing through bank loans.

ASII will distribute its interim cash dividend for FY2014 at Rp64 per share. Cum and ex dividend is set on 14 and 15 October 2014 in the regular/negotiation market and on 17 and 20 October in the cash market with the payment to commence in 31 October 2014.

Technically Speaking...

JCI tumbled as the index failed to hold above recent resistance at 5,251 and fell to 5,197.12, down 0.94% on Tuesday.

As for now, JCI is expected to aim at recovering its ground above 5,200, 5,251 and subsequently the focus will turn to the next resistance at 5,300, the next psychological hurdle for the index. Near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the former lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

The MACD turned negative again after a brief spell on the positive side, while the RSI fell to form a potentially bearish divergence pattern accompanied by higher volume. 

There are seven open recos with SMRA being the most recent entry. WSKT and ADRO still await for entries.

Day Ahead

Technical outlook underlines the potentially bearish implication of the RSI pattern which is showing a bearish divergence with failure swing while MACD which turned positive went back below the zero line. With no positive catalysts around, only bargain hunting will support the index on Wednesday to trigger a technical rebound. Else, we’re staring at an indeed a slippery road ahead.

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Morning Dew - 9 September 2014

Uncharted Waters

JCI finally set sail north to the uncharted waters, hitting a new all-time record high at 5,262 on Monday, starting the week on a solid footing. Despite the index settled back below prior peak at 5,251 at 5,246, the break is a good sign that the upside potential remains intact.

USDIDR slipped to 11,722 on Friday compared to Friday’s 11,770.

PT Karisma Aksara Mediatama Tbk. Plans to release as many as 535,821,500 shares to the public or 30% from the total shares issued and fully paid after the IPO. 

At the offering price between Rp175 to Rp240, the company will be able to raise between Rp93.7b to Rp128.6b of fresh funds from the IPO process.

PT KAM currently operates 58 bookstores spread all over Indonesia.

About 63.9% of the proceeds from the IPO will be distributed to four of its subsidiaries, while 21% will be used to pay debts and about 8% for working capital and another 7.1% for capex.

More on KAM

For 2014, PT Karisma Aksara Mediatama aims at revenues growth of 37% to Rp203.8b, bringing the net profit to Rp28b, up sharply from FY2013 net profit which amounted to Rp6.4b.

By the end of 1Q14, revenues were up 26% to Rp47.77b vs. Rp37.89b (1Q13), while the net profit soared to Rp6.6b from Rp1.73b (1Q13).

For its expansion, PT KAM plans to open 6 new stores this year while another 15 stores to be opened next year. 

Technically Speaking...

JCI made it through 5,251 previous all-time high and hit 5,262 intraday before settling back at 5,246. It is encouraging, but we should be aware that recent dissipating momentum requires the index to stay above 5,251 or risk another setback.

As for now, JCI is aiming to secure its ground above 5,251 and subsequently the focus will turn to the next resistance at 5,300, the next psychological hurdle for the index. Near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the former lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

SMRA has met its entry price on Friday, meaning there are seven open recommendations at the moment. WSKT and ADRO still await their entry prices to be filled.

Day Ahead

Another record high has been reached, and this set the JCI to sail north towards uncharted waters with psychological hurdle first seen at 5,300 beyond 5,262. Lack of domestic catalyst at the moment until Bank Indonesia meets on September 11th (Thursday). Even then, the central bank is expected to deliver nothing new. For now, the JCI maintains its upside potential.

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Morning Dew - 8 September 2014

Reserves Up Slightly

JCI made another attempt to storm through the all-time record high at 5,251 but the rise stalled once more at 5,224, just below Thursday’s peak of 5,232. Lack of catalysts have led to price consolidation recently.

On the domestic side, the cabinet formation is seen as the most important events as it will reflect the president-elect Jokowi’s commitment to avoid power sharing among his supporting parties.

Bank Indonesia said that the forex reserves inched higher in August 2014 to US$111.2 billion, compared to US$110.5 billion in July. Strong oil and gas export income were behind the rise. The reserves can cover 6.5 months of imports or 6.3 months of imports and servicing government debt repayment. International standard for reserves adequacy is at 3 months of imports.

US stocks are climbing to record highs recently, and in addition to less robust NFP data, the market already bet that the Fed may raise rates later than initially expected.

USDIDR slipped to 11,770 on Friday compared to Thursday’s 11,760.

US Data

US Nonfarm payrolls only added 142k jobs in August, well below the consensus of 230k and lower than the July’s addition of 212k jobs. The unemployment rate for the same period however, ticked down to 6.1% from 6.2%, in line with the consensus.

Elsewhere in Europe, Eurozone GDP was stagnant in the 2Q14 compared to the 1Q14, while it grew 0.7% against 2Q13. The preliminary estimate  supported the case of ECB’s rate cut on Thursday.

Technically Speaking...

JCI’s advance stalled at 5,224, just below the recent high at 5,232 as well as the index’s all-time record high at 5,251. The rise has negated the recent bearish engulfing pattern on the daily chart, but more commitment is needed if JCI is to break free from the record high.

As for now, JCI is aiming to secure its ground above 5,200 and subsequently the focus will turn to the next resistance at 5,251, the all-time record high while near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the former lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has edged closer to positive area on Friday whilst RSI has fluctuated just below the 70% mark. Volume was lower on Friday, suggesting that the setback could be shallow and temporary.

Week Ahead

Next week, key data releases will include China trade balance and money supply data as well as inflation data; UK trade balance; US jobless claims, retail sales and University of Michigan sentiment. Weak payrolls may spark speculation that the Fed will raise rate not as fast as recently expected. With JCI still close to the record high, more attempts are expected in the coming week.

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Morning Dew - 5 September 2014

Stepped Back

JCI stepped back after its attempt to break through the all-time record high at 5,251 got repelled and only managed to reach an intraday high of 5,232. The index settled lower at 5,205, still hanging on above the 5,200 mark for now. From a technical standpoint however, the fumble signaled a bearish implication which could spell trouble for the index in the short-term.

Lack of catalysts on the domestic macro shifted the focus on the corporate level where Pefindo reiterated MAPI’s rating at idAA- for both the company and its two bonds. The outlook stayed Stable for MAPI, reflecting MAPI’s strong position in the modern retail industry. The rating was capped by the size of company’s capex as well as more intense competition amidst limited commercial space in major big cities.

Another rating agency, Fitch Ratings said that local coal miners in Indonesia are expected to get an extra time to repay royalties imposed by the government. Currently, the Ministry of Energy and Mineral Resources set the deadline for repayment at the end of October 2014.

USDIDR slipped to 11,760 on Thursday compared to Wednesday’s closing price of 11,781.

US Data

Initial jobless claims were up in the week ending Aug 30. Claims were 4k higher than prior week’s 298k, just 2k higher than the consensus take which is at 300k. US ADP employment change showed 204k of private sector hiring.

ISM for non-manufacturing sector was up in August at 59.6 from 58.7 a month earlier to 59.6. The Markit version also saw the index up at 59.5 vs. 58.5 (consensus and prior).

Nonfarm payrolls figure is seen up to 230k from 209k. The data will be due this Friday.

Technically Speaking...

JCI’s advance stalled at 5,232.66, just below the index’s all-time record high at 5,251. The fall formed a bearish engulfing candlestick pattern which could trigger another bout of decline or two.

As for now, JCI is aiming to secure its ground above 5,200 and subsequently the focus will turn to the next resistance at 5,251, the all-time record high while near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the former lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has edged closer to positive area on Thursday whilst RSI has fluctuated just below the 70% mark. Volume was lower on Thursday, suggesting that the setback could be shallow and temporary.

Day Ahead

Lack of domestic data and catalysts, investors may look elsewhere for the next catalyst to watch. US nonfarm payrolls is set for release on Friday and so far the consensus is okay. From Europe, the recent ECB rate cut is to be seen as confined within the Euro-area and no significant impact on the JCI. On Thursday, the European rates were reduced by 10 basis points with deposit rate now at negative.

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Morning Dew - 4 September 2014

Another Day, Another Gain

Another day, another gain for the JCI. The index has stepped closer towards its all-time high level at 5,251 on Wednesday as it ended the session at 5,224. The rise was largely supported by all but the miscellaneous industry sector with agriculture and property leading the rally.

INAF’s rating on MTN I/2012 has been slashed from idBBB- to idBB+by Pefindo on the back of refinancing risk over the Medium-Term Notes (MTN) which is scheduled to be due on September 20th 2014. According to Pefindo, INAF is in process to conduct a corporate action to refinance the MTN.  

TOBA is set to distribute an interim dividend worth US$3 million. The dividend will be distributed on October 9th for shareholders registered on the DPS at the end of the trading day on September 25th 2014. 

AMFG plans to build a new glass factory to raise its production capacity to 210k tons. The investment is expected to cost the company US$154.94 million. Construction will start by the 4Q14.

USDIDR climbed again at 11,781 on Tuesday compared to Monday’s closing price of 11,734.

China and European PMI Data

Non-manufacturing activities improved in China in August. The PMI for the non-manufacturing sector ticked higher to 54.4 from 54.2 while the same data coming out of HSBC showed a faster expansion at 54.1 from 50.0. Overall, the composite PMI according to HSBC has improved to 52.8 in August from 51.6 a month earlier.

In Europe however, service sector has ticked down in Italy, France, Germany, as well as Eurozone. On the contrary, UK saw improvement instead in the service sector.

Technically Speaking...

JCI continued to push higher on Wednesday after the index bounced off low last Friday. Wednesday saw it settled once more above the stiff resistance at 5,200 ahead of the all-time high of 5,251. Still, more commitment is needed to secure the upside potential.

As for now, JCI is aiming to secure its ground above 5,200 and subsequently the focus will turn to the next resistance at 5,251, the all-time record high while near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the former lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has swung back to negative area but ticked higher on Monday and Tuesday whilst RSI has backed away from above the 70% mark but gradually crawled its way back up. Volume was up on Wednesday, however.

Day Ahead

Lack of domestic data and catalysts, investors may look elsewhere for the next catalyst to watch. US ADP Employment is set for release on Thursday and the private sector is seen adding 210k jobs in August, slightly lower than 218k seen in July. Other data on Thursday include the jobless claims, trade balance as well as the ISM for the service sector.

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Morning Dew - 3 September 2014

Forging Ahead

JCI forged ahead and managed to sneak above the 5,200 mark and settled there on Tuesday, thanks to macro data released on Monday. While the rise still yet to surpass the recent peak at 5,224, increasing volume suggests that more upside is likely in the coming sessions. All but the mining sector ended higher with agriculture being the top sector of the day.

On the corporate front, SRIL reported a drop in net profit to Rp138.67bn for the first half 2014, lower than Rp182.77bn reported last year for the same period. While revenues turned higher to Rp3.26tn from Rp2.09tn, cost of sales jumped from Rp1.66tn to Rp2.67tn. Finance costs almost doubled to Rp171.83bn from Rp92.58bn, hurting the bottom line.

HEXA aims at revenues of Rp4.8tn or US$488.98 million for the FY2014, just 2.22% higher than FY2013 revenues which were at US$478.33 million.  Also, the company’s annual general shareholders’ meeting approved the disbursement of 35% of FY13 net profit worth US$7.64 million as cash dividend (or Rp106.7 per share) .

USDIDR was up at 11,734 on Tuesday compared to Monday’s closing price of 11,710.

Rosy US Data

US manufacturing sector stayed robust in August as shown by the ISM Manufacturing index which ticked up to 59.0 from 57.1. Consensus actually forecast a slight decline to 57.0. The Markit version of manufacturing gauge showed a slight drop to 57.9 instead of staying unchanged as forecast at 58.0.

Construction spending also turned out better than expected in July as the month-on-month data showed a jump by 1.8% after a 0.9% drop in June. Consensus forecast a 1% increase in spending.

Technically Speaking...

JCI started the week (and the month) on a positive tone as the index bounced off low after it came under pressure last Friday. Tuesday saw it settled above the stiff resistance at 5,200 ahead of the all-time high of 5,251. Still, more commitment is needed to secure the upside potential.

As for now, JCI is aiming to secure its ground above 5,200 and subsequently the focus will turn to the next resistance at 5,251, the all-time record high while near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the former lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has swung back to negative area but ticked higher on Monday and Tuesday whilst RSI has backed away from above the 70% mark. Volume continued to tick down. 

Day Ahead

After PMI reports came out of the manufacturing sector, it’s going to be the service sector’s turn to show how the service sector performed in August. China, Eurozone, France, Italy, Germany, and England will release their numbers on Wednesday while US will have its turn on Thursday. JCI will find support from recent slate of macro data as well as positive mood on the global side. Geopolitics will remain a potential rally breaker, while the domestic front will continue to see issues surrounding the fuel subsidy as well as the forming of the new cabinet.

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Morning Dew - 2 September 2014

Inflation Eased

Inflation eased in August to 0.47% (month-on-month), pushing the year-on-year inflation down to 3.99% from 4.53% a month earlier. As the statistical impact of last year’s fuel price hike has worn off, the inflation rate has gradually decelerating recently. Last month, month-on-month inflation was at 0.93%. Core inflation – which omits volatile prices – also eased to 4.5% from 4.6% (year-on-year).

Trade balance improved in July to US$124 million as imports of machinery and mechanical instruments declined. Last June, the balance was in the red of US$306 million. Consensus saw a deficit of US$400 million, so the result was somewhat significantly higher. 

HSBC PMI fell to 49.5 in August from 52.7 in July, underlining a contraction in Indonesian manufacturing activity. A figure below 50 represents contraction whilst above it represents expansion. The result was the lowest pace within the last 12 months.

USDIDR was down at 11,710 on Monday compared to Friday’s closing price of 11,717.

PSAB, ANTM

PSAB booked revenue of US$174.39 million in the first eight months of 2014. Gold sales volume reached US$140,644 troy oz. with the average sell price of US$1,240 per troy oz. The whopping jump brought the company closer to its 2014 production target of 200k oz., thanks to Seruyung and Bakan sites which started its operation  last December.

ANTM is still in the red in the first half of 2014 as sales fell 34.92% to Rp3.98tn vs. last year’s Rp6.12tn.

Technically Speaking...

JCI started the week (and the month) on a positive tone as the index bounced off low after it came under pressure last Friday. Monday saw it back on track to challenge the stiff resistance at 5,200 ahead of the all-time high of 5,251.

As for now, JCI is aiming to secure its ground above 5,200 and subsequently the focus will turn to the next resistance at 5,251, the all-time record high while near-term supports are seen at 5,150-65 (congestion area) and then 5,135, the former lower consolidation band, 5,039 and 5,000, followed by 4,950, the former EMA-50 resistance now turned as support. 

MACD has swung back to negative area but ticked higher on Monday whilst RSI has backed away from above the 70% mark. Volume continued to tick down. 

Overall, the short-term outlook is somewhat precarious, and the index needs to break through 5,251 soon before the bearish signals become more evident.

Day Ahead

Despite mixed data, the overall balance is tilted towards positive mood swing for the JCI as the index started off the week on a solid footing. Tuesday may see some correctional pressure as the JCI takes a breather before attempting to break through the 5,200 barrier towards the all-time high of 5,251. 

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