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!
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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?
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.