BCAS Vista 16 Mar-20

The Fed cut interest rate by 100bps and plans to conduct quantitative easing

The Fed has cut the benchmark U.S. interest rate by 100bps, from 1 – 1.25% to 0 – 0.25%. In addition to the rate cuts, the Fed announced that it plans to restart the crisis-era program of bond purchase known as “quantitative easing” and plans to purchase at least USD700bn of government and mortgage-related bonds, as part of a wide –ranging emergency action to protect the economy from the impact of coronavirus outbreak. (Washington Post)

Government advances pre-employment card program for workers

The government is set to move up the disbursement of training funds for workers through the pre-employment card to late March as part of the broader efforts to cushion the economy from the impact of the COVID-19 pandemic. According to President’s guide, government will issue the pre-employment card in the fourth week of March in three tourism-oriented regions, including Bali, Manado and Riau. The government has allocated IDR10.3tn this year, targeting 2mn people to join and would provide IDR500k per each participant to cover their accommodations and transportation during training program. (Jakarta Post)

Three Banks allocate IDR5.28tn to conduct buyback

Three conventional Banks, namely Bank Negara Indonesia (BBNI), Bank Rakyat Indonesia (BBRI) and Bank Panin (PNBN), announced their plans to conduct buyback with the total value of IDR5.28tn. BBNI allocates IDR1.8tn to gradually buyback its shares within the next 3 months, starting 16 Mar-20 until 15 Jun-20. The fund is allocated from company’s internal cash, while the company’s asset and equity will potentially decrease by 18%. BBRI allocates IDR3tn from its internal cash to conduct the buyback, which has been started from 13 Mar-20 until 12 Jun-20, while PNBN allocates IDR480bn for this matter. (Investor Daily)

Comment: Note that as of FY2019, BBNI, BBRI and PNBN has cash of IDR15.3tn, IDR30.2tn and IDR1.3tn respectively.

Corruption Eradication Commission (KPK) recommends 6 steps to ease BPJS healthcare deficit

KPK has given 6 recommendation to ease BPJS healthcare up to IDR12.2tn without increasing premium; mostly through claim efficiencies. These recommendations include: formation of National Guidelines for Medical Services (PNPK) for claims with highest contributions, limitation for catastrophic diseases claims, better collaboration between BPJS healthcare and private insurances (CoB), improvement on co-payment scheme with members, better hospital classification, and better claim verification to avoid frauds. (Investor Daily)

Ministry to require miners allocate exploration budget

The energy ministry is planning to require all miners to set aside an exploration fund given the minimum increase on the investment realization while reserves continue depleting. Bambang Gatot, the ministry’s director general, stated that they are currently calculating the amount of the budget, which will depend on CoW contract. Additionally, the government will invite junior mining companies for mining exploration, which will be regulated in the upcoming mining regulation revisions. Note that a junior mining company is a small company which focuses on the exploration and development of coal and minerals, but not necessarily act as the miner. (Investor Daily)

Government plans to simplify value added tax (VAT) for retail sector

Government is currently assessing the new regulation for value added tax (VAT) for retail sector, including the use of other value tax base as the alternative in VAT calculation. Note that, other business that has been required to use other tax base in the VAT calculation is gold jewelry business, where the VAT is calculated with the tax base of 20% of the gold jewelry’s selling price. However, the VAT from other value tax base can’t be credited by the entrepreneurs. (Bisnis Indonesia)

ACE Hardware Indonesia (ACES) Feb-20 YTD sales: in line

The company booked Feb-20 sales of IDR641bn (+13.2% YoY, -9.6% MoM). This brought 2M20 sales to IDR1.4tn (+11.9% YoY), which is in line with our FY19 estimates of 14.9% vs. 3-year and 5-year historical average of 14.3% and 14.7%, respectively.

We believe Outer Java's strong SSSG of 5.9%, despite from a high base last year of 11.2% in 2M20, was driven by new store contributions added in 2018 (5 stores) and 2019 (3 stores), which totals 10 stores.

Given lower new stores addition target (10-15 new stores) this year vs. 23 new stores addition in 2019, we estimate ACES' revenue will grow softer this year, around 8% YoY, in line with company's guidance.

Source: Company, BCA Sekuritas

Kalbe Farma (KLBF) plans of share buyback

KLBF plans to conduct a maximum of 1.9bn share buyback with a maximum price of IDR1,500 (IDR18.8bn). The buyback period will start from 16 Mar-15 Jun. (Kontan)

PTPP Property (PPRO) collaborated with apartment rental platform, Mamikos

PPRO has collaborated with Mamikos, an apartment rental platform, to assist customers (apartment buyers) to lease their units. PTPP believed that the collaboration could boost apartment sales by up to 20%. PPRO's Director of Realty, Galih Saksono, stated that there are currently 7 apartments collaborated with Mamikos including Gunung Putri Square Apartment, Evencio, Alton, Ayoma, Begawan, Grand Kamala Lagon (GKL), and Grand Dhramahusada Lagon (GDL). He also mentioned a future collaboration plan with Travelio, another property rental platform. (Kontan)

Comment: Note that, PPRO contributes to around 10% to total PTPP’s revenue in 2019F and PTPP expects around 8% contribution from PPRO to 2020F revenue.