Between Trump, Indonesia’s Political Situation, and The Fall of JCI

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.

Bumi Resources, and The Rising Coal Price

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?

Harum Energy

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).

Bank CIMB Niaga

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.

Between Medco, Newmont, and Bumi Resources

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 & Right Issue: Opportunity!

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?

Analysis of IPO Waskita Beton Precast

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.

Agung Podomoro Land, and Reclamation Case

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?

Value Opportunity: WOM Finance

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.

Investment Strategy, For Now

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.

Central Omega Resources – Reborn?

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.

Coal-Related Stocks: Outlook

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.

How to Educate Children to Invest in Stocks

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?

What is BI 7-day Rate? And its Impact on Banking?

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.

Panama Papers, Tax Amnesty, and the National Economy

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.

Stock Investment: The Most Relaxing Job in The World

Someone once said, 'If you're happy with your job, every day is a holiday.' So if your work is to analyze and invest in the stock market, and you like it, then you actually never worked for a minute. But here's the reality: If the market is in a friendly condition where the stocks are rising, most investors will do the stock analysis with pleasant. But what if the market crashes and some of your stocks crumbled? Are you still able to manage your portfolio with a joyous feeling without grumble and lamentation?

The Rise of Rupiah: Opportunity!

Throughout 2015, the Indonesian stock market has almost always haunted by frightening stories about the economic slowdown, one of which related to our beneamata currency, Rupiah, which continued to slide down from Rp12,500 at the beginning of the year, until almost reached Rp15,000 per US Dollar in September. And the Jakarta Stock Exchange (JCI) itself continued to drop from 5,500’s to as low as 4,120 on Sept., when the market psychology was so bad to the point that almost everyone thinks that Indonesia could fall into a crisis like in 1998 (but I myself had said that there will be no crisis, you can read the article in here).

Undervalue Opportunity: Bank Bukopin

Last week hundreds of taxi drivers, especially from two cab companies ie Blue Bird (BIRD) and Express Transindo Utama (TAXI), rallied in downtown Jakarta to protest against Uber and Grabtaxi, which almost led into a riot. Shortly thereafter, the issue of ‘online versus conventional taxi’ became a headline in the media. While in the stock market, the stocks of BIRD and TAXI became the center of attention, in which TAXI, which previously freefall from Rp1,200 per share to below 100, suddenly is now above 200 again. Similarly, BIRD, which in last January dropped to Rp5,400 per share, but it is now traded at 6,800.

Indonesia, Ten Years from Now

Berkshire Hathaway has released the annual letter for the year 2015 on February 27 (luckily, at the age of 85, Warren Buffett is still in good health and still regularly writes), and there are some interesting points in the annual letter. One of them, which we will discuss in here, is about Buffett’s viewpoint about the US economy, which, in my opinion, we can use it as a reference to look at the economy in Indonesia in the future. Okay, let’s get it on.

'Smart Money' of Stock Market

On January 8, when the Jakarta Composite Index (JCI) was on 4,500’s, I wrote an article entitled ‘After the Despair, Then What?’, where the point is that JCI was in a period of consolidation, and this period can lead to a bull or further bear market. But considering the economic conditions etc., I said that the consolidation would lead to a bull market, or at least the JCI would move several percent higher (you can read again the article in here). And here we are: When this article was written, the JCI has gained significantly and is now on 4,800's.

Net Interest Margin of Indonesian Banking is Too High?

Thursday, February 18, head commissioner of the Financial Services Authority (FSA), Muliaman Hadad, said that the average of net interest margin (NIM) of banks in Thailand was 3 – 4%, or higher than in Indonesia. To be more comparable with other countries in the ASEAN region, the NIM of Indonesian banks will be directed to be 3 – 4% as well, whereby the FSA will require banks to lower the interest rate for loan. A day later, Minister of State-Owned Enterprises, Rini Soemarno, also appealed to the state-owned banks to lower their NIM to around 4% by way of sharing the IT systems and ATM, thus lowering operating costs, and consequently the performance of the banks will be more efficient.

Indonesia Stock Exchange: (soon) The Largest in Southeast Asia

You may hear the news that Indonesian Bank Central Asia (BBCA) has taken over the position Development Bank of Singapore (DBS) as the largest lender in Southeast Asia, in terms of market cap. And based on the experience, when a company has obtained a ‘largest’ title either in terms of market cap, asset, or the value of the equity, it must mean something. Moreover, you may rarely hear that Indonesian company was able to ‘beat’ the Singapore company, and that’s because in terms of capital market development, like or not, we are still far behind our little annoying neighbor. And maybe the question, what is the position of Indonesian companies and its Stock Exchange in Southeast Asia?

What is LQ45?

In January 25, the Indonesia Stock Exchange (IDX) released the latest list of stocks that become constituents of LQ45 indices. In the list there are three new stocks, ie Aneka Tambang (ANTM), HM Sampoerna (HMSP), and Hanson International (MYRX), where they replaced XL Axiata (EXCL), Indo Tambangraya Megah (ITMG), and Wijaya Karya Beton (WTON). Soon I received many questions: As of third quarter of 2015, ANTM suffered a loss of Rp1 trillion (about US$ 90 million), or in other words it had poor fundamentals, right? Then how could it became constituent of LQ45?

About the Decline in Oil Prices..

For nearly a decade, we almost always seeing oil prices to rise steadily until around US$ 100 per barrel, except on 2008 which it dropped to US$ 45, but later went up again to the range of US$ 100 – 120 per barrel. Entering 2015, oil prices began to fall and.. all of a sudden, it is now on the level of about US$ 30 per barrel. The question, what happen? Does the decline in oil prices related to the decline in the stock markets in China, United States, and also the Jakarta Composite Index in this early of 2016?

‘Qualitative Value’ of Stocks

As an investor, I regularly read the Berkshire Hathaway Annual Letter written by Warren Buffett, which usually published in January or February each year, to gain a lot of investment wisdom directly from Buffett himself. In the latest edition of 2014, Buffett shared his experience when acquiring See's Candies, a manufacturer of candy, sweets, and chocolate, in 1972, which after a few decades later, this investment successfully generate huge profits for Berkshire.

Elnusa

The Jakarta Composite Index (JCI) began its journey in 2016 through a bumpy road. When this article was written, the index is still dropped 1.5% in year to date. Although the decline is still much better than the decline in China and United States, where the Shanghai Index and the Dow Jones fell 18.0 and 8.2% respectively, but several stocks in the oil and gas and mining sectors had fallen significantly, in line with the decline in price of oil to as low as US$ 30 per barrel. One of the stocks, Elnusa (ELSA), recently closed at Rp200 per share, dropped almost 20% since the beginning of the year.

After the Despair, Then What?

Last August, precisely August 24, 2015 when the Jakarta Composite Index (JCI) dropped 4% in a single day and closed at 4,164, and triggered a moment of panic selling, I wrote an article entitled Between Euphoria and Despair. In the article I presented several phase of the period of bear market, namely denial, bull trap, return to ‘normal’, fear, capitulation, and finally, despair. And by referring to the fact that JCI had tumbled significantly from its peak, ie 5,500’s until reached 4,100’s, and also has passed through several phases ranging from denial to fear (or capitulation), then at the end of the article, I ask, are we in the phase of despair yet?

Impairment of Rupiah = Crisis of 1998? Maybe Not

Indonesia experienced a severe economic crisis in 1998, which was preceded by the fall of Rupiah against US Dollar since August in the previous year (1997). And currently, as the Rupiah continues to dropped from Rp9,000’s to now Rp14,000’s per USD, some people may ask: Will we see the crisis like in 1998 once again?

About ASEAN Economic Community..

ASEAN Economic Community (AEC), is an integration/unification of economic activity of the member countries of ASEAN (Association of Southeast Asian Nations), where trade and import-export activities between countries, including the movement of labor and investment, are no longer constrained by country’s regulations (or is still constrained, but the regulations are much looser than before). For example, if you go to Singapore and came home to Indonesia with a souvenir, you may have to pay import duties at the airport in Indonesia, so that some people may be unwilling to buy goods from abroad. But after this AEC applies, the duty tariff can be lowered, or even removed altogether.

2015 Evaluation: A 'Grown Up' Market

In evaluating the investment performance in last year of 2015, most of analysts and investors in the Indonesia stock market usually only focus on the fact that the Jakarta Composite Index (JCI) had been dropped significantly, in this case about 13% year on year, and it makes 2015 as a bad and difficult year. However, there are several reasons that 2015 was actually one of the best years in the history of the development of the capital market in Indonesia. Related to this, I’m comparing 2015 to 2008, ie the year in which the stock index also fell significantly (JCI also dropped in 2013, but the decline was only 1%).