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?
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In stock investing, there are many advantages if you choose to use the ‘super method’ of value investing. First, you can buy stocks and then left it just like that without the need to look at the stock price developments (except, say, once a month), so you have plenty of time to do whatever you like. Second, you always have the opportunity to find the 'hidden pearl', ie stocks which may offer extraordinary profit to hundreds of percent, in a relatively short time.
You may notice that Jakarta Composite Index (JCI) moves nowhere lately, that it does not go up, but tends to decline, but with slooow movements. In April the index was closed at 4,839, and when this article was written, it was at 4,753, or dropped but only 1.7%. If this position lasted until the end of the month, this month of May would be the first month in 2016 where the JCI went down, but with a decline of 1 – 2% only, so we could not say that the market has entered its bear period.
Date: Thursday, June 09, 2016
In April 2012, I found a ‘hidden pearl’ in stock of Central Omega Resources (DKFT), which then priced at Rp1,670, or equal to Rp334 per share after stocksplit, and the analysis was simple: DKFT posted net income of Rp177 billion in 2011, which is entirely derived from the export of nickel ore from two mines in Morowali (Central Sulawesi), and Konawe (Southeast Sulawesi), where the two mines were still in an early stage of exploration. So if later the company carried out further exploration, then DKFT would produce more ore, and the company's revenue would significantly increased. The management themselves had targeting a net income of Rp475 billion in 2012, and Rp792 billion in 2013, and it was of course very attractive.
Until Tuesday, April 26th, 2016, the Jakarta Composite Index (JCI) closed at 4,814, gained 4.8% since the beginning of the year, but the index of the mining sector, including coal mines, rose higher at 20.5%. The cause of these substantial gains is pretty clear: The rebound in oil prices, which two months had been as low as US$ 27, but today the oil traded at US$ 42 per barrel. On the other hand, one of the largest mining service company, United Tractors (UNTR), has released its financial statements for the first quarter 2016, and its profits dropped 55.3% from the same quarter of 2015. While another coal company, Resource Alam Indonesia (KKGI), its net income rose but only because of gain in Rupiah exchange rate, while the revenue is still down.
In my book 'The Calm Investor' (published in Bahasa Indonesia), I said that a child can be taught to invest in stocks since the age of as early as six years. And a friend then asked, how? Because, even an adult usually find it hard to learn about stock investing, let alone a young children? But what if I told you that a young children can learn more quickly than adults, and are more likely to make a significant profit in the future?
On Friday, April 15, Bank Indonesia (BI) as the central bank of Indonesia, introduced a new benchmark rate for banking in the country that called the BI 7-day Reverse Repo Rate, which will replace the previous rate known as the BI Rate. This is the first time the BI changes one of its well-known policies, and it certainly unnerve investors (let ‘BI 7-day Reverse Repo Rate’, some of you may not even understand what is 'BI Rate'), and consequently the banking stocks fell heavily on that Friday, as investors became unsure about how the impact of this new policy on the bank’s financial performance.
A few days ago, Minister of Finance, Bambang Brodjonegoro, said that the Government of Indonesia is considering lowering the rate of corporate income tax from 25% to only 20%. This is of course a good news for the companies, but because there were stories that the government has failed in achieving the target of tax revenue in last year, the market saw that the tax rate reduction could have negative impact on state finances and of course the national economy as a whole, and consequently the Jakarta Composite Index (JCI) fell more than 1% in Tuesday. But here we're not going to discuss this JCI.
Date: Thursday, April 14, 2016