In Friday, November 11, the Jakarta Composite Index (JCI) dropped 4.01% in a single trading day, which, of course, sparks some panic. But because the index was still in a relatively high position, ie 5,200’s, then the panic didn’t became a widespread. Because if you already bought some good stocks at the beginning of 2016, then you must be still in a profit position, although the profit is probably not as big as before.
You can contact the author by email, email@example.com. The author (Teguh Hidayat) live in Jakarta, Indonesia.
In one session of value investing training some time ago, a participant asked, ‘Mr. Teguh, what is your opinion about Bumi Resources (BUMI)? I read your article about the company’s management attempt to restructure their debts. If the attempt was a success, the stock will rise, no?’ And I replied, ‘Whether BUMI would successful or not in restructuring its debts, or whether the company’s financial performance will improved in the future, that only time will tell. But one thing for sure, the decision to buy BUMI at the price of Rp50 per share clearly offers a very different risk (and also different potential gain) than if we buy the stock at Rp1,000 per share. I'm not interested when BUMI was still trading at Rp1,000’s per share, but what if we can buy it at 50 only?
About a year ago, precisely in July 2015, I found a fact that when the Jakarta Composite Index (JCI) began to fall, in this case 7% for year to date (YTD), it turned out that mining stocks, especially coal, has dropped deeper, where the index of the mining sector have tumbled 26.3%, the worst than any other sector, and it aggravates the decline that has been occurred since the previous years. I was then asked myself, 'Is it possible that coal stocks will fall to the price of Rp50 per share, all of them???' (Note: Rp50 per share is the lowest possible price for any stock in Indonesia Stock Exchange).
Date: Monday, October 24, 2016
Bank CIMB Niaga (BNGA) caught my attention for the first time in early 2015 when the stock fell from Rp1,400 to 900’s per share, then because the company reported a net income of Rp2.3 trillion in 2014, dropped almost half compared to the previous year, because of the soaring burden of impairment losses. However, at the price of Rp900 per share, the PBV was below 1 times, and it was very cheap considering that BNGA is not a small nor unknown bank, but actually one of the ten largest banks in Indonesia.
On Friday, July 1, 2016, the management of Medco Energi Internasional (MEDC) announced that the company will acquire PT Amman Minerals International (AMI), which previously acquired a 82.2% stake in PT Newmont Nusa Tenggara (NNT) at US $ 2.6 billion or equivalent to Rp34.3 trillion (based on the exchange rate Rp13,200 per US Dollar), thus MEDC will become an indirect shareholder in NNT. Soon after that MEDC shares rose 24.7% in a single day onto Rp1,870 per share, drawing the attention of stock traders, but in this writing I will invite you to dig deeper about Medco's corporate action, complete with the investment opportunities that may arise. Okay, here we go!
Jasa Marga (JSMR) reported a net income of Rp849 billion during first half 2016, grew 28% over the same period of the previous year, thus JSMR becomes one of few major companies in the Indonesia Stock Exchange who still had a good financial performance in 2016 so far. But why does the stock fell instead?
The initial public offering (IPO) of Waskita Beton Precast may be the most discussed IPO on the Indonesian stock market in 2016, due to several factors. First, it’s a SOE, and if you look at the previous IPO’s of SOE where their share price has risen significantly, such as Wijaya Karya Beton (WTON) or PP Property (PPRO), then the Waskita Beton IPO is also predicted to be a success. Second, when the Jakarta Composite Index (JCI) gained a lot in the last three months, the stocks of second liner SOEs (whose share prices are in nominal of hundreds of Rupiah) has risen more, and the initial price of Waskita Beton also at the range of Rp400 - 500 per share. And third, Waskita Beton main business, ie the manufacture of precast concrete and ready mix for construction of highways, bridges, etc, is related directly to the development of infrastructure. And since one or two years ago, arguably there is no other story that is more consistent in the market except about these infrastructure things.
On April 1, President Director of Agung Podomoro Land (APLN), Ariesman Widjaja, named as a suspect by the Corruption Eradication Commission (Komisi Pemberantasan Korupsi, or KPK) regarding the bribery case of Jakarta Bay Reclamation. The aftermath for related stock is predictable: On Monday, April 4, APLN dropped from Rp300 to 270 per share, then sliding further to as low as Rp232 per share in mid-May. In recent weeks, APLN slowly but surely recovering, and when this article was written, the share price is stable at 248, where based on technical analysis, it appears that it will go up, while on the other hand its PBV is only 0.7 times at the price. An opportunity?