Provitable Sector To Invest In 2019.docx

Jakarta Stock Industrial Clasification (JASICA) is a sectoral classification system used to categorize companies or issuers listed on the Indonesia Stock Exchange. This classification is useful for capital market players as a tool in making investment decisions. The Indonesia Stock Exchange (IDX) also makes Sectoral Index as performance indicators for each industry group. JASICA business segmentation is generally based on Indonesian Business Classification, which is published by the Central Statistics Agency (BPS) which is made based on International Standard Industrial Classification (ISIC). The purpose of JASICA is: ● ● ● ● ● ●

Providing basic knowledge for corporate capital market players listed on the IDX Standardize industry classifications, so as to allow comparisons between listed companies Assist investors in analyzing and evaluating registered companies Provide a classification system based on the Industrial sector of existing Issuers Providing convenience for investors in analyzing issuers in one sector. As a consideration of the performance of existing sectors

The group sector in JASICA is classified as Primary, Secondary and Tertiary. ●

Primary Sector (Extractive) 1. Agriculture (Agriculture / AGRI) ❖ Crops ❖ Plantation ❖ Animal Husbandry ❖ Fishery ❖ Forestry ❖ Others 2. Mining (Mining / MINING) ★ Coal Mining ★ Crude Petroleum and Natural Gas Production ★ Metal and Mineral Mining ★ Land/ Stone Quarrying ★ Others

●

Secondary Sector (Industry and Manufacturing) 3. Basic and Chemical Industry (Basic Industry / BASIC-IND) ➢ Cement ➢ Ceramics, Glass, Porcelain ➢ Metal and Allied Product ➢ Chemicals ➢ Plastics and Packaging ➢ Animal Feed ➢ Wood Industries

➢ Pulp and Paper ➢ Others 4. Miscellaneous Industry (MISC-IND) ➔ Machinery and Heavy Equipment ➔ Automotive and Components ➔ Textile and Garment ➔ Footwear ➔ Cable ➔ Electronics ➔ Others 5. Industrial Consumer Goods (Consumer / CONSUMER) ★ Food and Beverages ★ Tobacco Manufacturers ★ Pharmaceuticals ★ Cosmetics and Household ★ Houseware ★ Others ●

Tertiary Sector (Service) 6. Property, Real Estate and Building Construction (Property / PROPERTY) ➢ Property and Real Estate ➢ Building Construction ➢ Others 7. Infrastructure, Utilities and Transportation (Infrastructure / INFRASTRUC) ❏ Energy ❏ Toll Road, Airport, Harbor, and Allied Products ❏ Telecommunication ❏ Transportation ❏ Non Building Construction ❏ Others 8. Finance (Finance / FINANCE) ❖ Bank ❖ Financial Institution ❖ Securities Company ❖ Insurance ❖ Investment Fund ❖ Others 9. Trade, Services and Investment (Trade / TRADE) ➢ Wholesale (Durable and Non Durable Goods) ➢ Retail Trade ➢ Tourism, Restaurants and Hotel ➢ Advertising, Printing and Media ➢ Health Care ➢ Computer and Services

➢ Investment Company ➢ Others The definition of stock investment is investment activities in the form of purchasing shares of the company. So by buying company shares, you become the owner of the company. Well, companies that buy shares through the Indonesia Stock Exchange (IDX) are the companies that are bought or the cool terms are issuers (companies that sell their shares to the public). Each issuer has its own stock code and always consists of four letters. IDX functions is like a mall that provides a place for shareholders for transaction, buy and sell every share they have. Stock is one of the capital market products and long-term investment instruments. The minimum number of shares purchased from the issuer is 1 lot = 100 sheets. Benefits of Stock Investment: 1. Get capital gains or profit from rising stock prices 2. Get dividends or company profit sharing 3. Have the right to attend the General Meeting of Shareholders (GMS) held by the company on a regular basis. Risk of Stock Investment: 1. There is a capital loss or loss on the declining stock prices 2. The liquidation risk if the company is bankrupt 3. Don't get dividends. Stock is an investment that is classified as high risk high return (high risk, high yield). Based on IDX data, during January to December 19, 2018 (year to date), the IDX Composite fell 4.31%, and the LQ45 index (list of 45 selected stocks with high market capitalization) slumped further by 10.07%. In the midst of this weakening, there are a number of shares in the LQ45 index that scored the highest share price increase (ytd) quoted from rti.co.id, including: ● ● ● ● ●

PT Indah Kiat Pulp & Paper Tbk (INKP) 122.22% PT Bukit Asam Tbk (PTBA) 72.36% PT Aneka Tambang Tbk (ANTM) 21.6% PT Bank Central Asia Tbk (BBCA) 19.06% PT Perusahaan Gas Negara Tbk (PGAS) 18.86%.

The IDX Composite is forecast to climb to 6,700 levels during January-April 2019. These projections are supported by various domestic sentiments, one of which is the presidential and vice-presidential election (democratic) party for the period 2019-2023. Precisely on April 17, 2019.

The IDX Composite has the opportunity to reach level 6,700 or exactly 6,723 from January to April 2019. It is supported by euphoria window dressing (the practice of accounting engineering to beautify financial statements), January Effect, and elections.

The estimated rate of IDX Composite is reflected in the previous election experience. Where 6 months before the election, the IDX Composite will peaked. After that, the market would adjust by selling. What needs to be observed after the presidential election, the market will make adjustments due to selling pressure because the impact of rising interest rates related to the slowing down of the economy and a decline in the performance or net income of issuers has been seemed. For information, the Central Bank of the United States (US), The Federal Reserves, has raised its benchmark interest rate four times throughout 2018 to 2.25% -2.5%. The policy helped boost the BI 7 Day Repo Rate to a level of 6% with an increase of 6 times in 2018. The benchmark interest rate (The Fed) will rise at least two times in 2019, so that the impact will continue until 2020. Strategy to Invest in Stock As an investor in the capital market, a number of methods and strategies should be known and then applied to choose shares in the right company. More accuracy in sorting and selecting stocks before they are put into a portfolio can produce promising profits for investors. Choosing low-priced stocks is not enough. Smart investors should do a fundamental valuation so that the selected shares are not fried, but are of good quality. To be able to read the prospects of the issuer, you can use 5 important ratios for fundamental analysis in choosing the right stocks, namely: 1. Earnings Per Share (EPS) ratio The first ratio for stock valuation is EPS or net income per share. As long as this EPS ratio increases and grows, the company's performance will improve. This condition occurs because the possibility of sales and profits of the company continues to grow. But on the contrary, if EPS shows a decline, then the company's performance is not too good and the profit and the amount of sales will decline. The lowest growth ratio of EPS is 10 percent to 20 percent per year. Don't forget to pay attention to the stability level of the ratio. Therefore, it's best to look for companies with earnings per share (EPS) ratios that increase over time. 2. Price Earnings Ratio (PER)

The second important ratio in choosing stocks is Price Earning Ratio (PER). The ratio is a comparison between the share price and the company's net profit. One focus of the PER calculation is the issuer's net profit, so if you already know the PER of an issuer, you can find out whether the price of a stock is real or not in real terms, not just based on estimates. There are two types of PER Ratios that can be selected and used in determining stocks, namely Trailing PER and Forward PER. Trailing PER compares stock market prices per specific date with earnings per share (EPS) last year, so that profit is the last year's profit that has been realized (trailing). Meanwhile, Forward PER compares the price of the issuer's stock on a certain date with the profit estimated or projected (forward) until the end of the year. The profit projection is a fullyear profit projection that has not yet been realized. By utilizing the PER ratio when choosing shares, investors can find out how long it takes to get a return on capital that has been spent. The P/E ratio shows what the market is willing to pay today for a stock based on its past or future earnings. A high P/E could mean that a stock's price is high relative to earnings and possibly overvalued. Conversely, a low P/E might indicate that the current stock price is low relative to earnings.

3. Price to Book Value (PBV) ratio If the PER ratio focuses on the company's net profit, the Price To Book Value (PBV) ratio looks more at the company's equity value. Therefore, PBV can be defined as a ratio that compares the market value of a stock (stock's market value) to the book value per share (the value of shares when the shares are sold for the first time to investors). The PBV ratio is very useful, especially in the valuation of shares in the financial industry such as banks, financial institutions, securities companies, and insurance. This is because as many as 90 percent of the company's assets in the financial sector are in the form of cash, securities, and bills. For example PBV is twice, meaning that the share price has doubled compared to when the money was invested in the company. Shares with low PBV compared to the average of other companies in similar industries are usually in demand by investors because the low PBV can be an indicator to look for cheap or undervalued stocks. Conversely, a high PBV is likely triggered by a market price that is already too high and should be further analyzed immediately. Normally a company that has no problem has a PBV ratio above one. But different things happen in the issuers of banks because the greater the market capitalization value of the

bank, the higher the PBV ratio that investors are willing to pay. So, the better prospect of an issuer and favored by many investors, the higher PBV of the share. P/B ratio provides a valuable reality check for investors seeking growth at a reasonable price and is often looked at in conjunction with return on equity (ROE), a reliable growth indicator. Large discrepancies between P/B ratio and ROE often send up a red flag on companies. Overvalued growth stocks frequently show a combination of low ROE and high P/B ratios. If a company's ROE is growing, its P/B ratio should also be growing. 4. Return on Equity (ROE) ratio Next, choosing stocks needs to pay attention to the Return On Equity (ROE) ratio, which is the ratio between net income and total equity or the same as the EPS ratio divided by the PBV ratio. This fourth ratio is a parameter of income or income that can be obtained by the owner of the company (shareholders) in investing their funds in a particular company. ROE can show investors about the ability of capital owned by the company itself (equity) to generate net income, profit after interest, tax or commonly called earning after interest and tax. In short, the ROE ratio reflects the ability of companies or issuers to manage their equity. The ROE ratio is also an important indicator to find out how efficiently a company is run. For example, the ROE of a company is 20 percent, so every Rp 200 of its own capital invested in the company is able to provide a net profit of Rp. 40. There are two ways to find out whether the ROE ratio of 20 percent is good or not. First, comparing the ROE ratio of certain companies with other companies engaged in the same sector. Furthermore, comparing the ROE ratio of a company in a period of time to be able to see the trend, note whether the trend tends to fall or rise. The higher ROE ratio the better. However, companies with high ROE ratios usually also have a high risk because the company has a large debt ratio. In addition, companies with high ROE ratios also tend to have high PBVs. Therefore, choose stocks that have a stable ROE ratio and a minimum of 10 percent.

5. Debt To Equity Ratio (DER) All ratios described above are ratios related to company profits. While the Debt To Equity Ratio (DER) functions to measure the financial risk of a company or issuer. The DER ratio compares the total amount of the company's debt to the company's capital. Therefore, the higher the DER ratio, the higher the risk level of the company. Investors should not ignore

DER when choosing stocks, because this could be a warning when the company will have problems. There are two ways to determine what the DER value of a company is, first by comparing the composition of short-term debt to equity or long-term debt to equity ratio with equity (company capital). Generally a non-banking company or a healthy financing company has a DER ratio of less than one because the company has a debt that is smaller than the company's equity. If the DER ratio of a company is more than one, the company has a large financial risk. Besides that, the DER ratio of more than one company can disrupt the quality of the company's performance. If the company's performance decreases, it will also have a negative effect on the growth of its share price. Therefore, some investors tend to avoid companies that are not engaged in finance such as banks, or investment companies with more than one DER ratio. Higher leverage ratios tend to indicate a company or stock with higher risk to shareholders. Promising Stock Sector Seeing the opportunity for the IDX Composite to reach the level of 6,700, it is suggested that market participants take advantage of the momentum to maximize investment in the capital market, including the stock market from now on. For investment, it is suggested that it will be encouraged from now until April. After April, there will be a decline in the performance of issuers and investors will certainly adjust to sell. So don't get trapped at the top level. That's the strategy.

Several sectors that will shine in this year : 1. Consumer Sector As for selected stocks in the consumer sector or consumer goods with large market capitalization, including:

Issuer

EPS (TTM)

PER (TTM)

PBV

ROE (TTM) (%)

DER (Quarte r)

PT Indofood CBP Sukses Makmur 363.56 Tbk (ICBP)

28.61

5.81

20.3

0.11

PT Mayora Indah Tbk (MYOR)

79.01

33.16

7.66

23

0.92

PT Nippon Indosari Corpindo Tbk 24.49 (ROTI)

49.41

2.73

5.5

0.3

PT Ultra Jaya Milk Industry & 58.18 Trading Company Tbk (ULTJ)

21.14

3.12

14.7

0.01

PT Gudang Garam Tbk (GGRM)

4208.1 6

21.58

4.07

18.9

0.22

PT H.M Sampoerna Tbk (HMSP)

111.96

33.94

14

41.5

-

PT Kalbe Farma Tbk (KLBF)

51.81

29.14

5.03

17.4

0.02

Sido Muncul PT Herbal Pharmaceutical Industry (SIDO)

and 44.26 Tbk

22.71

120.2

0.06

PT Unilever Indonesia Tbk (UNVR)

22.9 5.25

1193.9 0

41.80

49.99

Based on above table, the more promising issuers are ICBP, GGRM and UNVR. 2. Telecommunications Sector Selected shares in the telecommunications sector include: Issuer

EPS

PER

PBV

ROE

DER

●

PT Telkom Tbk (TLKM)

183.09

20.37

4.14

20.4

0.52

●

PT Indosat Tbk (ISAT)

442.38

-6.13

1.32

-21.5

2.23

●

PT XL Axiata (EXCL)

308.47

-8.27

1.48

-18

0.68

●

PT Smartfren Telecom Tbk -15.80 (FREN)

-21.65

8.40

-40

2.03

Based on above table, the more promising issuer is TLKM. 3. Mining Sector Selected stocks in the metal sector, including: Issuer

EPS

PER

PBV

ROE

DER

PT Aneka Tambang Tbk (ANTM)

45.74

21.10

1.22

5.7

0.55

PT Vale Indonesia (INCO)

88.19

40.59

1.31

3.2

0.02

PT Merdeka Copper Gold Tbk 270.71 (MDKA)

12.74

2.64

20.6

0.51

PT Timah Tbk (TINS)

71.34

18.08

1.47

8.2

0.38

PT Adaro Energy Tbk (ADRO)

189.11

7.69

0.88

11.4

0.39

PT Indo Tambangraya Megah Tbk 3357.1 4 (ITMG)

6.79

1.83

26.9

-

Based on above table, the more promising issuers are ADRO and ITMG. 4. Finance Sector Issuer

EPS

PER

PBV

ROE

DER

PT Bank Central Asia Tbk (BBCA)

1048.6 8

26.13

4.45

17.1

0.01

PT Bank Negara Indonesia Tbk 805.16 (BBNI)

10.99

1.53

13.9

0.01

Based on above table, the more promising issuer is BBNI. 5. Basic Industry and Chemical Sector Issuer

EPS

PER

PBV

ROE

DER

PT Indah kiat Pulp & Paper (INKP)

1722.9 1

5.35

0.92

17.1

1.27

6. Trade, Service and Investment Sector

Issuer

EPS

PER

PBV

ROE

DER

PT Matahari Department Store Tbk 376.07 (LPPF)

9.84

5.95

60.4

-

PT United Tractors Tbk (UNTR)

8.78

1.82

20.7

0.19

2982.6 3

Based on above table, the more promising issuer is UNTR

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Hayes, Adam and Will Kenton. 2019. Debt-to-Equity Ratio – D/E Definition. Accessed from https://www.investopedia.com/terms/d/debtequityratio.asp on March 14th, 2019 at 18.45.