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.

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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.

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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.

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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)