Weekly Brief (October 29 November 02)

Transcription

1 NH Korindo Research NH 해외주식 인도네시아 Weekly Brief (October 29 November 02) Summary: JCI closed lower last week after posting rally within 2 consecutive weeks. The last-week slump was attributable to the sluggish global bourses. However, JCI s last-week drop was less massive than other Asia or global bourses. JCI still obtained positive sentiments from sluggish global crude prices and BI s stance of holding its benchmark rates unchanged. We estimate that JCI is likely to rebound within this week and be capable of cushioning volatility of lagging global bourses. Investors will keep their wary eyes on October s inflation after September s surprising deflation. Besides, investors will also digest the release of money supply. Investors are curious about the trend of hike in credit and time deposit s interest rates after BI s raise its benchmark rates by 150 bps since May. We recommend JPFA as top pick stock in this week due to the excellent performance marked by the poultry industry, sending their margin to soar. PGAS stocks are also profitable to collect amid the expectation of significant earnings growth. JCI - one month JCI - one year 1

2 Last Week s Recap Jakarta Composite Index (JCI) : 5, (-0.90%) Foreign Investor : net sell of IDR326 billion (vs. previous week s net buy of IDR1.2 trillion) USDIDR : (+0.20%) 10-year Government Bond Yield : 8.688% (+2.4 bps) BI Holds Its Benchmark Rates at 5.75% BI s Board of Governors Meeting on Monday and Tuesday, October 22nd and 23rd, 2018 decided to hold BI 7-day reverse repo rate unchanged at 5.75%, deposit facility at 5%, lending facility at 6.5%. Of note, BI has increased BI 7-day reverse repo rate by 150 bps since May It is estimated that BI will increase BI 7-day reverse repo rate once more before the end The increase aims at cushioning wobbling global bourses due to the expectancy of the Fed s interest rate hike in December. Corrections to Global Crude Prices Global crude prices underwent steep corrections last week when prices of brent and light sweet dipped 4%. Brent s prices were at USD76.33 per barrel, the lowest in October. Global crude prices faced headwinds of sluggish global bourses, the U.S. soaring crude stockpiles, and Saudi Arabia s commitment to supplying more crude if it is needed. Global Equity Market Sector Index Source: Bloomberg, NH Korindo Research Source: Bloomberg, NH Korindo Research 2

3 This Week s Outlook October s Inflation The Central Statistics Agency (BPS) will release the data of October s inflation on Thursday, 11/01/2018. In September 2018, Indonesia posted the deflation of 0.18% m-m, a lot deeper than August s deflation of 0.05% m-m. September s deflation mainly sourced from foodstuff expenditures posting the deflation of 1.62% m-m, much deeper than August s deflation of 1.10% m-m. On the other side, September s core inflation was at 2.82% y-y, lagging than August s core inflation of 2.90% y-y. The discontinued acceleration in core inflation showed the suppressed domestic demand. The expectancy of the rupiah depreciation affected the demand for domestic consumption. September s Credit and Deposit Interest Rates On Wednesday, 10/31/2018, Bank Indonesia (BI) will release the analysis of the money supply in September. The prior analysis disclosed that benchmark rate hikes of 125 bps had no significant impacts on August s credit and time deposit s interest rates. In August, credit s interest rate was at 10.94%, declining 0.1% from July. On the other side, interest rates of time deposit with 6-month tenor was at 6.37%, edging up 0.08% from July. We estimate JCI to rally at the range of within this week. The correction occurred last week are temporary. JCI is likely to post rally ahead of the end of October. Inflation (m-m & y-y) Benchmark Rate, Deposit Rate & Credit Rate Source: Indonesia Statistics, NH Korindo Research Source: Bank Indonesia, NH Korindo Research 3

4 Japfa Comfeed Indonesia (JPFA Poultry) Dec 2019 TP 3,250 Consensus Price 2,741 TP to Consensus Price +18.6% vs. Last Price +58.5% Last Price (IDR) 2,050 Price date as of Oct 26, wk range (Hi/Lo) 2,390 / 1,195 Free Float (%) 35.9 Outstanding sh. (mn) 11,727 Market Cap (IDR bn) 24,039 Market Cap (USD mn) 1,580 Avg. Trd Vol 3M (mn) Avg. Trd Val 3M (bn) Foreign Ownership 100.0% Sales Breakdown: Commercial Farm & Consumer Products 42.0% Animal Feeds 32.8% Others 25.2% IDR bn FY2017 FY2018E FY2019E FY2020E Sales 29,603 34,318 36,956 39,847 y-y 9.4% 15.9% 7.7% 7.8% EBITDA 2,933 5,256 5,659 6,205 Net profit 979 2,287 2,528 2,864 EPS (IDR) y-y -52.6% 133.5% 10.6% 13.3% NPM 3.3% 6.7% 6.8% 7.2% ROE 10.0% 21.3% 20.2% 19.8% P/BV 1.5x 2.2x 1.9x 1.7x EV/EBITDA 7.1x 5.4x 4.8x 4.2x Poultry Companies Marking Buoyant Performance In 2018, the poultry industry enjoys much the highest profit margin because of the buoyant selling price of broiler chicken. In 1H18, the selling price of broiler chicken from breeders edged up 21% from IDR16,490/kg in 1H17 to IDR20,040/kg in 1H18. Poultry companies in Indonesia are estimated to enjoy the buoyant performance in Buoyant Sales of 15,9% JPFA is projected to post the growth of 15.9% in sales from IDR29.6 trillion in 2017 to IDR34.3 trillion in The commercial farm & consumer products capable of posting the increment of 20% in sales from IDR12.2 trillion in 2017 to IDR14.7 trillion in 2018 is the pillar of JPFA s sales growth. Meanwhile, the animal feeds is estimated to grow by 8% from IDR10.7 trillion in 2017 to IDR11.6 trillion in Soaring Profit Margin JPFA s net profit is estimated to soar to 134% from IDR979 billion in 2017 to IDR2.2 trillion in The increment in net profit is underpinned by JPFA s gross margin estimated to edge up from 17% in 2017 to 22.8% in It sends JPFA s net profit to be a lot higher from 3.3% in 2017 to 6.7% in Share Price Performance Broiler Price

5 Perusahaan Gas Negara (PGAS Gas Distribution) Dec 2019 TP 2,600 Consensus Price 2,622 TP to Consensus Price -0.8% vs. Last Price +20.4% Last Price (IDR) 2,160 Price date as of Oct 26, wk range (Hi/Lo) 2,860 / 1,505 Free Float (%) 43.0 Outstanding sh. (mn) 24,242 Market Cap (IDR bn) 52,362 Market Cap (USD mn) 3,443 Avg. Trd Vol 3M (mn) Avg. Trd Val 3M (bn) Foreign Ownership 15.7% Sales Breakdown: Gas Distribution 78.1% Exploration Oil & Gas 18.9% Other 3.0% IDR bn FY2017 FY2018 FY2019E FY2020E Net Rev. 2,970 3,405 3,931 4,205 y-y 1.2% 14.7% 15.4% 7.0% EBITDA Net profit EPS (IDR) y-y -58.4% 151.7% 19.8% 6.5% NPM 4.9% 10.3% 10.8% 10.7% ROE 4.6% 10.6% 11.7% 11.5% P/E 21.4x 10.5x 8.8x 8.2x P/BV 1.0x 1.1x 1.0x 0.9x 3Q18 Review: Growth of 65% q-q in Net Profit In 3Q18, we estimate that PGAS posts the revenue of USD841 million (+2% q-q or +12% y-y), the growth of 65% q-q or 99% y-y to USD107 million in the net profit; the growth of 12.8% in the net profit margin (vs. 7.9% in 2Q18, and 7.1% in 3Q17). Meanwhile, on a cumulative basis, 9M18 s revenue grew by 13.7% y-y to USD2.46 billion. Prediction of Gas Distribution in 3Q18: Favorable Dry Season We predict that the gas distribution volume will be boosted by the growth in the number of electric consumption by the commercial segment (non-industry) in 3Q18, the prolonged dry season causing the hike in the use of air conditioners, and the decline in the electric supply by hydropower plant (PLTA) due to drying rivers. In addition, the average selling price (ASP) was at USD8.37/mmbtu (vs. USD8.33/mmbtu in 2Q18), increasing by 0.48% q-q and aligning with the soaring global gas prices. PGAS Strengthening Its Dominance over Gas Distribution PGAS plans to settle the remaining payment of 51% shares acquisition of PT Pertagas at the end of November. The payment was taken from its internal cash. It also plans to take over 4 subsidiaries of PT Pertagas. We are sanguine about the acquisition capable of expanding PGAS s business, giving a significant contribution, and strengthening its dominance over gas distribution and transmission business in Indonesia. Share Price Performance Revenue & Net Profit F 5

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