Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

The LQ45 Index is a market cap weighted index of the 45 most liquid stocks listed on the Indonesia Stock Exchange. The LQ45 Index covers at least 70% of the stock market capitalization and transaction values in the Indonesia Stock Market.The next rebalance of the LQ45 Index will be effective after the close of trading on 29 January and will be announced latest by 26 January, though it is likely that it could be announced as early as 22 January post market close.Stocks that could be included in the index are <a href="https://www.smartkarma.com/entities/bank-brisyariah-tbk-pt" target="_blank" data-smartkarma-citation="entities:26981:1" rel="noopener">Bank Brisyariah (BRIS IJ)</a>, <a href="https://www.smartkarma.com/entities/kimia-farma-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:8524:1" rel="noopener">Kimia Farma Persero (KAEF IJ)</a>, <a href="https://www.smartkarma.com/entities/timah-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:11174:1" rel="noopener">Timah Persero (TINS IJ)</a> and <a href="https://www.smartkarma.com/entities/pp-london-sumatra-indones-pt" target="_blank" data-smartkarma-citation="entities:9039:1" rel="noopener">Pp London Sumatra Indones (LSIP IJ)</a>, while stocks that could be deleted from the index are <a href="https://www.smartkarma.com/entities/sri-rejeki-isman-tbk-pt" target="_blank" data-smartkarma-citation="entities:20178:1" rel="noopener">Sri Rejeki Isman (SRIL IJ)</a>, <a href="https://www.smartkarma.com/entities/summarecon-agung-tbk-pt" target="_blank" data-smartkarma-citation="entities:5693:1" rel="noopener">Summarecon Agung (SMRA IJ)</a>, <a href="https://www.smartkarma.com/entities/wijaya-karya-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:1877:1" rel="noopener">Wijaya Karya Persero (WIKA IJ)</a> and <a href="https://www.smartkarma.com/entities/jasa-marga-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:12747:1" rel="noopener">Jasa Marga (Persero) (JSMR IJ)</a>.Given the subjective nature of stock inclusion and exclusion, plus the short time frame between announcement of the changes and the implementation, the adds outperform the deletes between announcement and implementation.Though passive assets tracking the index are limited, the LQ45 is a very popular benchmark for mutual funds and pension funds and active managers will also be trading the stocks to realign their portfolios to the new index names.

The LQ45 Index is a market cap weighted index of the 45 most liquid stocks listed on the Indonesia Stock Exchange. The LQ45 Index covers at least 70% of the stock market capitalization and transaction values in the Indonesia Stock Market.The next rebalance of the LQ45 Index will be effective after the close of trading on 29 January and will be announced latest by 26 January, though it is likely that it could be announced as early as 22 January post market close.Stocks that could be included in the index are Bank Brisyariah (BRIS IJ), Kimia Farma Persero (KAEF IJ), Timah Persero (TINS IJ) and Pp London Sumatra Indones (LSIP IJ), while stocks that could be deleted from the index are Sri Rejeki Isman (SRIL IJ), Summarecon Agung (SMRA IJ), Wijaya Karya Persero (WIKA IJ) and Jasa Marga (Persero) (JSMR IJ).Given the subjective nature of stock inclusion and exclusion, plus the short time frame between announcement of the changes and the implementation, the adds outperform the deletes between announcement and implementation.Though passive assets tracking the index are limited, the LQ45 is a very popular benchmark for mutual funds and pension funds and active managers will also be trading the stocks to realign their portfolios to the new index names.

LQ45 Index Rebalance Preview: Potential Candidates for Change

Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/kimia-farma-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:8524:1" rel="noopener">Kimia Farma Persero (KAEF IJ)</a> share price astronomic rise has benefited from the COVID-19 panic reaction and its position of being the government distributor for surgical masks throughout the country. Investors were expecting that the surgical masks to be sold at a premium price but the reality is the government instructed the company to sell at Rp 100,000 per box, instead of the overhyped price at Rp 500,000 to 850,000 previously. 
Since its lows (Rp 600) on the 19th of March 2020, the share price has increased by 458% when it reached its high of Rp 3,350. After a couple of days of profit-taking, investors who bought at Rp 600 still made 3x at today's close price. 
At the beginning of the pandemic, people made their own masks from cloth. As surgical masks' availability has improved, some people still like cloth-based masks although clearly, this is not as effective as surgical masks. <a href="https://www.smartkarma.com/entities/sri-rejeki-isman-tbk-pt" target="_blank" data-smartkarma-citation="entities:20178:1" rel="noopener">Sri Rejeki Isman (SRIL IJ)</a> launched non-surgical but anti-microbial and water-resistant masks based on their own technology with a history of manufacturing army uniform with the same functionalities that I discussed in <a href="https://www.smartkarma.com/insights/sritex-sril-undervalued-with-more-products-and-b2c" target="_blank" data-smartkarma-citation="insights:43490" rel="noopener">Sritex (SRIL): Undervalued with More Products and B2C</a> .
The most expensive stock in LQ45, <a href="https://www.smartkarma.com/entities/perusahaan-gas-negara-perser" target="_blank" data-smartkarma-citation="entities:1584:1" rel="noopener">Perusahaan Gas Negara Perser (PGAS IJ)</a> , is trading at 81x PER so Kimia Farma is really expensive at 190x PER on the back of the surgical mask distributors across Indonesia although the margin is very questionable given the market price for surgical masks have plummeted. 
For existing shareholder - it is really time to get out before the stock price plummets
For long-short investors - the stock is worth shorting for short term gains if there is borrow. Given the small market capitalization, borrow may be tough but the liquidity has improved (USD 5 million ADTV) thus there is a chance for borrow availability.

Kimia Farma Persero (KAEF IJ) share price astronomic rise has benefited from the COVID-19 panic reaction and its position of being the government distributor for surgical masks throughout the country. Investors were expecting that the surgical masks to be sold at a premium price but the reality is the government instructed the company to sell at Rp 100,000 per box, instead of the overhyped price at Rp 500,000 to 850,000 previously. 
Since its lows (Rp 600) on the 19th of March 2020, the share price has increased by 458% when it reached its high of Rp 3,350. After a couple of days of profit-taking, investors who bought at Rp 600 still made 3x at today's close price. 
At the beginning of the pandemic, people made their own masks from cloth. As surgical masks' availability has improved, some people still like cloth-based masks although clearly, this is not as effective as surgical masks. Sri Rejeki Isman (SRIL IJ) launched non-surgical but anti-microbial and water-resistant masks based on their own technology with a history of manufacturing army uniform with the same functionalities that I discussed in Sritex (SRIL): Undervalued with More Products and B2C .
The most expensive stock in LQ45, Perusahaan Gas Negara Perser (PGAS IJ) , is trading at 81x PER so Kimia Farma is really expensive at 190x PER on the back of the surgical mask distributors across Indonesia although the margin is very questionable given the market price for surgical masks have plummeted. 
For existing shareholder - it is really time to get out before the stock price plummets
For long-short investors - the stock is worth shorting for short term gains if there is borrow. Given the small market capitalization, borrow may be tough but the liquidity has improved (USD 5 million ADTV) thus there is a chance for borrow availability. 

Kimia Farma (KAEF): National Service Is Charity

Expand when your peers retreat. That is what <a href="https://www.smartkarma.com/entities/sri-rejeki-isman-tbk-pt" target="_blank" data-smartkarma-citation="entities:20178:1" rel="noopener">Sri Rejeki Isman (SRIL IJ)</a> management has done in this COVID-19 period. It has launched more products from daily wear to COVID-19 related products such as non-medical masks (B2C) and PPE (B2B). It has won a mandate to become a PPE supplier to chain hospitals such as <a href="https://www.smartkarma.com/entities/siloam-international-hospital" target="_blank" data-smartkarma-citation="entities:878:1" rel="noopener">Siloam International Hospital (SILO IJ)</a> and <a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> .
Among LQ45 constituents, Sritex has the lowest PER while other COVID-19 related stocks such as <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> and <a href="https://www.smartkarma.com/entities/mitra-keluarga-karyasehat-tbk" target="_blank" data-smartkarma-citation="entities:288:1" rel="noopener">Mitra Keluarga Karyasehat Tbk (MIKA IJ)</a> trade at 27x and 50x PER respectively. Compared to other PPE and gloves manufacturers in Malaysia such as <a href="https://www.smartkarma.com/entities/top-glove-corp-bhd" target="_blank" data-smartkarma-citation="entities:20759:1" rel="noopener">Top Glove Corp (TOPG MK)</a> and <a href="https://www.smartkarma.com/entities/hartalega-holdings-bhd" target="_blank" data-smartkarma-citation="entities:10230:1" rel="noopener">Hartalega Holdings (HART MK)</a> , Sritex is trading at a deep discount.

Expand when your peers retreat. That is what Sri Rejeki Isman (SRIL IJ) management has done in this COVID-19 period. It has launched more products from daily wear to COVID-19 related products such as non-medical masks (B2C) and PPE (B2B). It has won a mandate to become a PPE supplier to chain hospitals such as Siloam International Hospital (SILO IJ) and Mitra Keluarga Karyasehat Tbk (MIKA IJ) .
Among LQ45 constituents, Sritex has the lowest PER while other COVID-19 related stocks such as Kalbe Farma (KLBF IJ) and Mitra Keluarga Karyasehat Tbk (MIKA IJ) trade at 27x and 50x PER respectively. Compared to other PPE and gloves manufacturers in Malaysia such as Top Glove Corp (TOPG MK) and Hartalega Holdings (HART MK) , Sritex is trading at a deep discount. 

Sritex (SRIL): Undervalued with More Products and B2C

For a while, the global audience has expressed their disbelief that Indonesia has 0 results for Covid-19 infection but recently, prices for ginger, turmeric, and curcuma have gone up - indicating that Indonesians are seeking a home remedy to combat Covid-19. 
Sido Muncul's top product, Tolak Angin (contains ginger), is a market leader in Indonesia. Despite trading at a premium compared to its closest peer, TSPC, it is still trading at a discount to its hospital operator peers and on par to other pharmaceutical companies such as <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> and <a href="https://www.smartkarma.com/entities/kimia-farma-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:8524:1" rel="noopener">Kimia Farma Persero (KAEF IJ)</a> .

For a while, the global audience has expressed their disbelief that Indonesia has 0 results for Covid-19 infection but recently, prices for ginger, turmeric, and curcuma have gone up - indicating that Indonesians are seeking a home remedy to combat Covid-19. 
Sido Muncul's top product, Tolak Angin (contains ginger), is a market leader in Indonesia. Despite trading at a premium compared to its closest peer, TSPC, it is still trading at a discount to its hospital operator peers and on par to other pharmaceutical companies such as Kalbe Farma (KLBF IJ) and Kimia Farma Persero (KAEF IJ) . 

SIDO Muncul (SIDO): Remedy for Covid19 Scare

This is my inaugural worthy-news-stock-moving note on what is in Indonesia discussing on the latest development of <a href="https://www.smartkarma.com/entities/kalbe-farma-tbk-pt" target="_blank" data-smartkarma-citation="entities:6303:1" rel="noopener">Kalbe Farma (KLBF IJ)</a> on developing biopharma products that can potentially cure dengue, <a href="https://www.smartkarma.com/entities/kimia-farma-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:8524:1" rel="noopener">Kimia Farma Persero (KAEF IJ)</a> first export to the Middle East, IMEI regulation did not get signed by the relevant ministries, the plan to relocate the capital from Jakarta to Kalimantan, government stimulus to help companies to continue with the health care reform (JKS), and why <a href="https://www.smartkarma.com/entities/gudang-garam-tbk-pt" target="_blank" data-smartkarma-citation="entities:722:1" rel="noopener">Gudang Garam (GGRM IJ)</a> and <a href="https://www.smartkarma.com/entities/bentoel-intl-investama-pt" target="_blank" data-smartkarma-citation="entities:5979:1" rel="noopener">Bentoel Intl Investama (RMBA IJ)</a> are not yet keen to invest in vaping business despite the proven success in China, which has a similarly big cigarette market. A quick look on <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> has shown that e-cigarette eco-system is forming up nicely in Indonesia. 
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This is my inaugural worthy-news-stock-moving note on what is in Indonesia discussing on the latest development of Kalbe Farma (KLBF IJ) on developing biopharma products that can potentially cure dengue, Kimia Farma Persero (KAEF IJ) first export to the Middle East, IMEI regulation did not get signed by the relevant ministries, the plan to relocate the capital from Jakarta to Kalimantan, government stimulus to help companies to continue with the health care reform (JKS), and why Gudang Garam (GGRM IJ) and Bentoel Intl Investama (RMBA IJ) are not yet keen to invest in vaping business despite the proven success in China, which has a similarly big cigarette market. A quick look on Tokopedia PT (1087142D IJ) has shown that e-cigarette eco-system is forming up nicely in Indonesia. 

Thank you for reading this insight!  Please give this a thumb-up by clicking the APPRECIATE button if you find this useful and FOLLOW me on Smartkarma for more original and actionable insights. Your continuing support renders a continuity of more original and actionable insights in Asian Equities. 
Please feel free to post your queries by commenting or private messaging me.


Worthy News Stock Moving - Indonesia - 28 Aug 2019

Indonesia

PT Kimia Farma Tbk is a leading Indonesian pharmaceutical producer and distributor. The company manufactures, commercializes, and distributes a wide range of pharmaceutical products including finished drugs, herbal medicines, and cosmetics. It also provides integrated health services, encompassing manufacturing, research and development, marketing, distribution, retail, clinical laboratories, and clinics. Kimia Farma is headquartered in Jakarta, Indonesia, and was founded in 1971 as PT Kimia Farma (Persero) through the nationalization of Dutch East Indies pharmaceutical firms.

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Kimia Farma (KAEF IJ)

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The LQ45 rebalance will be effective after the close of trading on 29 January and the announcement will be made in the next few days. There could...

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Kimia Farma (KAEF): National Service Is Charity

•Get a mandate to distribute mask throughout Indonesia - Estimated revenues and margin, How much compared to the last year’s earnings •Share Price...

Henry Soediarko

Sritex (SRIL): Undervalued with More Products and B2C

Expand when your peers retreat. That is what Sri Rejeki Isman (SRIL IJ)

Henry Soediarko

SIDO Muncul (SIDO): Remedy for Covid19 Scare

For a while, the global audience has expressed their disbelief that Indonesia has 0 results for Covid-19 infection but recently, prices for ginger,...

Henry Soediarko

Worthy News Stock Moving - Indonesia - 28 Aug 2019

This is my inaugural worthy-news-stock-moving note on what is in Indonesia discussing on the latest development of Kalbe Farma (KLBF IJ) on...

Henry Soediarko

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