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MARKET MAKER : IHSG - 27 April 2018
April 27, 2018 07:37 WIB

Kinerja Indeks Harga Saham Gabungan (IHSG) cenderung terbatas untuk menguji kisaran level 6.050 hingga 5.900. Download artikel selengkapnya(589.46 Kb)

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Danareksa Equity Snapshot - BJTM 27 April 2018
April 27, 2018 09:46 WIB

BPD Jatim(BJTM IJ)

Modest growth

 

We maintain our BUY call on BJTM with a GGM-derived TP of IDR830, liking the bank for its strong foothold in East Java’s civil servants multipurpose lending segment even though more players are competing in this segment. That said, CAR will remain healthy at 24.4% with 7.5% loans growth expected this year. The bank’s commercial lending will be driven mainly by the syndicated loans scheme as the bank seeks to achieve a more manageable risk profile. As such, we assume a gross NPLs ratio of 4.4% and a 97% coverage ratio by the end of the year with 77bps credit costs.

 

1Q18 highlights. 1Q18’s net profits of IDR377bn are inline with our forecast and its seasonal pattern as the 1Q results were 29.0-30.4% of the full year figure in the past three years. NIM contracted to 6.6% on the back of lower asset yields as BJTM adjusted down its lending rates by 100-200bps in general. The gross NPLs ratio and coverage ratio were flat at 4.8% and 95.4%, respectively, on a yoy comparison, with a 74bps credit cost (vs 132bps in 1Q17). All in all, we maintain our forecasts of 7.5% loans growth and 8.6% net profits growth this year.

 

Consumer lending will continue to be the driver. While multipurpose loans will continue to account for most of BJTM’s loans, the bank can also leverage its strong customer-base covering regional civil servants to boost its mortgage lending. As for commercial lending, it may only be driven by the syndicated loans scheme (along with other big SOE banks) on certain infrastructure projects, i.e. the Pasuruan-Banyuwangi toll road. This year, we estimate that consumer loans will grow by 8.6%, thus pushing up the contribution from consumer loans to total loans to 70.8% by the end of the year.

 

Lower NIM projection. Amid tight competition in multipurpose lending with BBRI as its closest peer, BJTM recently cut its lending rate in this segment to 11-12% (previously 13-14%). Nonetheless, we still expect the bank’s funding structure to remain secure thanks to strong support from the local government, both institutional and retail customer-based. Taking these factors into account, we project a compression in NIM to 7.8% given a lower assets yield of 11.4% for 2018.

 

BUY with a TP of IDR830. We maintain our BUY call on BJTM with a GGM-derived TP of IDR830 assuming 11% CoE, 14.9% sustainable ROAE and 3% long-term growth. Our TP implies 1.5x 2018F P/BV.

 

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