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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