Stocks: SIDO, TBLA, TELE, SRIL, SMSM
SIDO (Sido Muncul)
Q1 2020 gross margin is higher than Q1 2019, but there is no change in product mix. For some reasons, raw materials expense is lower. I bet that is only temporary. SIDO might be less impacted by this pandemic, but it is unlikely SIDO is in a position to boost its EVA further. Sales growth has stalled. The major reason why SIDO EVA improved so much was because of accelerating sales in its herbal drink. That growth is no longer there. But the market is still expecting crazy improvements (EVA momentum of 7%). This is a strong indication that SIDO is at its extreme optimism phase. No change from previous assessment.
SIDO Share Price Breakdown
TBLA (Tunas Baru Lampung)
In that previous analysis, I explain why it is a mistake to think TBLA is undervalued just because it’s PBV is less than one. Such ‘value trap’ is easy to spot if you understand economic profit. I was pessimistic about its future performance, and lo and behold, Q4 2019 result shows worse condition for the exact reasons I mentioned: declining gross margin (most likely due to rising CPO price) and fixed asset expansion. The situation in this year is unlikely to be better.
TBLA EVA
TELE (Tiphone Mobile Indonesia)
This one is shocking to me. I have shown you that TELE performance has been deteriorating since 2017, but honestly, I did not expect TELE to be suspended. IDX just suspended TELE in June. It appears that this pandemic hit very hard for handheld distributors. In previous analysis, I said “the key is whether sales continue to contract this year..”. It seems like this year sales contraction is very serious for TELE. ERAA investors should pay extra caution.
On a brighter note, I believe this stock suspension would soon be lifted. It’s not really bad prior to COVID-19. Given the chance, I believe its creditors are better off letting TELE continue to roll, pay them back later in one way or another. The reason I say this is because TELE Q3 2019 (LTM) EVA margin is only -0,8%. Its ROIC is 9%. Just fell a bit short from being a wealth-neutral. Well...if the banking sector got screwed, I don’t know.
SRIL (Sritex)
After SIDO, this is another stock that I personally care from this list. I basically said in February that SRIL was undervalued. Then a month later came coronavirus. The big question is, does it change things? It would be irrational to think SRIL would go unscathed. But, it appears SRIL adapts quickly to meet protective gears demand, and I’m sure SRIL is selling them at a high price. Some gain, some loss. The overall picture does not seem to change dramatically to me. I’ll show you an update of Q4 2019 EVA below. It was really good. I doubt SRIL could achieve that level again because the major source was insurance money from a bit of fire in a warehouse.
I still believe that SRIL should be valued as a wealth-neutral company. I still do not see how COVID-19 changes that landscape considerably. The market is still valuing SRIL well below that. Of course, data would change my mind. Q2 2020 report would give us a better picture how this pandemic affects SRIL.
SRIL EVA
SMSM (Selamat Sempurna)
Auto got screwed, so does its spare part manufacturers. But before all that, I identified SMSM was in a late cycle (extreme optimism) and counted a fifth wave in Elliott Wave. Aren’t you lucky if you cancel the buy order after reading that post?
SMSM is a case where extreme optimism meets crushing reality. Personally, I do believe that even without this pandemic, SMSM would still enter a bear market, although maybe more slowly. It is now more reasonable at IDR 1.045/share if we anchor ourselves with 2019 result. Too bad this year is very different. I expected a decline in EVA this year back then. It looks like it would be worse than that. There is a strong support near IDR 900/share. That is a level where no EVA growth is expected and that would be a record low expectation for SMSM.
SMSM Share Price Breakdown
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