USD Index Surging Soon

Today we've seen that the USD has been going up and down, since I saw the latest job report that the consensus was wrong in predicting that the jobless claim would be up, I see that the US economy is recovering. Because the job creation is getting better with the QE, and the economy seems to grow better than previous 1-2 years. 

It's very nice actually to have that kind of claim, because once the workers got fired, then at least they can still eat even with others' tax. In US, people can get that kind of claim as the tax rate is very high, unlike in Indonesia. Besides of the high rate, the citizens pay taxes and the taxes paid is well managed by the government so that the government can create this kind of claim, while in the other hand, the tax officers in Indonesia aren't fully honest in managing the taxes, some of them still egoist in the tax management.

Back to the topic, why the USD will strengthened soon. Beside of the macroeconomic condition in US, the rumour that the Fed will taper QE seems to be so true and will happen very soon, which means that the government will stop assets purchases and stop the increment of money circulation in order to prevent the overheating of the economy.

While, the technical analysis shows that the DX seems to incline soon as the MACD Histogram is tapping the 3rd higher low and also there's a bullish divergence between the MACD with the price, and also the price is still inside the Darvas Box, which means that there's still no big indication of breaking up or down, but in short term, there's a strengthening possibility of USD Index (DX).

Happy Investing^^

Disclaimer ON!!!

Summarecon Agung (SMRA IJ, BUY, TP IDR1,720) Company Update: A Promising New Landbank - Daily Pack 26 September 2013

Good morning,

We like that ~28% of SMRA’s revenue is recurring and that topline is expected to grow by 16.0% FY12-15F CAGR, providing earnings stability amid an expected property sector slowdown. Its next landbank should serve as a catalyst, given the location and easy access. Maintain BUY, with our new IDR1,720 TP derived by applying a higher 40.0% NAV of IDR2,885 per share, implying 18.1-16.6x FY14-15F P/E

¨       Slowdown expected. Management was forced to postpone the launch of its new apartment project in Kelapa Gading, Jakarta, The Kensington, to next year, due to the temporary moratorium restriction on high-rise buildings imposed by the local Government. This leads us to revise downwards the FY13F pre-sales target to IDR4trn (from IDR4.5trn). Going forward we also expect an easing down in pre-sales growth to 10-15% per annum, given the: i) high base effect, ii) increase in mortgage rates as result of hike in key interest rates, and iii) Government’s regulations on curbing credit growth in the Indonesian property market. 

¨       Hidden values spotted. Based on information gathered from SMRA’s financial statements, we suspect that its undisclosed landbank in Southern Jakarta is located in Bogor, which is accessible through the Jagorawi Toll Road. It is also ringed with one hotel and two golf courses. So far, SMRA has secured around 99ha and a 51% stake in the firm that owns the land and licences in the area. This translates to an investment of ~IDR472bn, or IDR117,000 psm. We have yet to take into account the potential revenue from this new landbank, as the land acquisition is still ongoing. Nonetheless, note that the land’s current market value ranges between IDR300,000 and IDR1m psm. 

¨       Maintain BUY, new TP IDR1,720. We expect easing in FY14F-15F net earnings margins to 28-27%. This is due to a change in sales mix and higher interest expense from SMRA’s increased debt to finance its capex and land acquisitions, which will reach IDR2trn in FY13F. We do expect it to maintain its net cash position over the next 3-4 years, however, with total asset turnover (marketing sales/total assets) of 34-35% for FY14F-15F. SMRA currently trades at a 68% discount to its NAV, implying 9.7-8.9x FY14F-15F P/E and FY14F ROE of 27.6%. By comparison, its peers are trading at 12.5-10.1x FY14F-15F P/E and FY14F ROE of 18.6%. Maintain BUY.  (Lydia Suwandi)

FROM TRADING DESK: JCI today is expected to be traded at 4358.40 and 4442.26.

MEDIA HIGHLIGHTS: 
Mitsubishi eyes 160k car sales in FY13
Bank Indonesia to implement new LTV regulation
SOE firms to be allowed to hedge their forex exposure

Best regards,
RHB OSK Indonesia Research Institute

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