Expect JCI to weaken today as market cools off awaiting Fed meeting result this week. USD/IDR also hit Rp14,000 level last Friday.
Good news from China: factory output and retails sales data suggests a sign of economic stability. We therefore remain bullish on JCI next year as supported by stabilizing IDR post Fed rate hike and improving China’s economy.
We re-initiate cement sector: Neutral due lukewarm cement demand in 2016 and looming overcapacity. Our top pick is SMGR (Buy, Rp12,500) on its diversified location and its ability to tap into growing infrastructure demand. We also have a Buy on SMBR with Rp320 TP.
Possible regulation change to allow foreign ownership own telco tower business up to 49% (vs. currently not allowed) – negative for tower companies (TBIG, SUPR, TOWR); positive to TLKM, ISAT, EXCL. BBRI will held EGM today on which the agenda is to request shareholders’ approval for acquiring Bringin Life.
Data on Saturday showed factory output growth in China accelerated to a five-month high in November (6.2% YoY vs 5.6% in the previous month), while retail sales expanded at an annual 11.2 percent pace – the strongest this year.