Daewoo Indonesia Flash Focus
(August 24, 2015)
Taye Shim (taye.shim) +62-21-515-3281
We expect further correction to the JCI as concerns over global growth should continue to weigh. Price looks reasonable cheap as the composite lost more than 21% from the peak (March 30, 2015). According to Bloomberg, JCI’s 12M trailing P/B is @ 2.12x. Over the past 10yrs, 2008 was the only year when JCI was trading below 2x book (10yr avg. P/B 2.67x). The fundamental question is… 1) how low would the commodities go? and 2) how high would the USD go? In terms of flow, we are asking 3) how much more would foreigners sell off Indonesia? Here are some trend updates that might help us look into the future:
1) Oil price fell below USD40 (marked USD39.86) intraday on Friday as sluggish China manufacturing data and softening global growth outlook weighed on price. Furthermore, increased supply added to the weakness.
2) The dollar index is up 5.7% YTD vs. USD/IDR which is up 12.5% YTD. A clear indication that Rupiah is depreciating at a faster pace than the greenback. We would expect strong dollar to persist given escalating uncertainties. Our full-year average USD/IDR stands @ IDR13,500 vs. YTD avg. @ IDR13,093.
3) Contrary to market belief, foreigners have NOT YET sold off Indonesian equities. We expect JCI to continue to experience foreign net selling pressure. see https://goo.gl/GEyQMf
Foreign net purchase on single stocks (HOTS screen #0141)
TOP BUY: WIKA, EXCL, MIKA, WSKT, UNTR
TOP SELL: BBCA, TLKM, ASII, BBRI, BBNI
Most actively traded stocks (HOTS screen #0102)
BBRI, BMRI, TLKM, BBCA, BBNI
Daily write up: SSIA’s 1H15 revenue improvement by Maxi Liesyaputra
– SSIA recorded revenue growth of 15% YoY to IDR2.5tr in 1H15
– The average industrial estate sales price improved 17% YoY to US$143.7/m2 in 1H15 from US$122.8/m2 in 1H14
– The construction business, which is the highest contributor to total revenue, booked revenue growth of 15% YoY to IDR1.8tr through subsidiary PT Nusa Raya Cipta Tbk (NRCA)
– SSIA’s hospitality business, the smallest contributor to total revenue (11.7%), recorded a slight decline in revenue of 2% YoY to IDR293bn in 1H15
JCI: 4,335.9 (-2.38%)
DJIA: 16,459.7 (-3.12%)
FTSE100: 6,187.6 (-2.83%)
USD/IDR: 13,941 (+0.41%)
10yr GB yield: 8.83% (+11bp)
Foreign net purchase: -IDR770.1bn
Businessmen is asked to delay layoffs (Media Indonesia)
The Government continues to welcome investors who build plants in Indonesia and as much as possible to absorb labors.
Keep the rupiah under IDR14,000 (Kontan)
Condition of rupiah this year is different from the crisis of 1997-1998.
Time for local investors to enter the market (Investor Daily)
Data KSEI shows, stocks asset value of foreign investors in January 2015 reached IDR1,882tr, but in July become IDR1,758tr (down IDR124tr).
Hope left in spending (Bisnis Indonesia)
The Government insisted that the activity of household consumption and investment will soon rise in line with the acceleration of government spending in the rest of the year.
Threatened protein source (Kompas)
The production of protein source, especially animal protein, is threatened as a result of farm and fisheries face many problems.