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Midi Utama Indonesia (MIDI IJ) Eyeing major expansion ahead (NOT RATED)
February 09, 2023 15:18 WIB

Midi Utama Indonesia (MIDI IJ)

Eyeing major expansion ahead

MIDI should be quite resilient amid higher minimum wages given its non-cyclical retail business focus ahead of the elections. MIDI has sound profitability with a 25.4% gross margin in 9M22 with more SKUs giving greater flexibility to manage its product mix. MIDI is looking to open 200 Alfamidi outlets and 500 Lawson stores in 2023 with its main focus on outer Java areas for Alfamidi and Java for Lawson. Its 29x PE multiple based on the latest filings, MIDI offered attractive multiple than AMRT’s PE 23F at 36.8x.

Targeting the less crowded segment. MIDI is targeting the minimarket category with a bigger area than Alfamart or Indomaret at 200-400sqm space/outlet and offering fresh produce items, i.e. fruits and vegetables. As of September 2022, MIDI owned 2,094 Alfamidi, 39 Alfamidi Super, 107 Lawson and 9 Midi Fresh outlets. Alfamidi Super should compete with Superindo in terms of SKUs yet with no fish or seafood given the more complex waste management system needed. Lawson was already divested into a separate subsidiary back in 4Q18 mainly to provide more flexibility for expansion with more ready-to-eat and ready-to-drink product offerings. Lastly, Midi Fresh are smaller store outlets (30-60sqm) located in either office buildings, hospitals or apartments, focusing on fresh fruit, pre-sliced fruit and ready-to-drink items.

Higher margins business. MIDI enjoys higher profitability given a better product mix. This year it plans to open 200 new Alfamidi outlets and 500 Lawson outlets (50-50 between standalone and shop-in-shop). In 9M22, MIDI’s gross, operating and net margins stood at 25.4%, 4.2% and 2.7%, respectively. This year, MIDI provided guidance for 8-10% topline growth given historical CAGR-5yrs growth at 8.6% with a stable margins outlook, providing less downside risk in our view. Regarding the expansion plans for Lawson, MIDI is also looking for a potential strategic partner as the master franchise agreement with Lawson Japan will last until 2036.

Aggressive expansion plans. The upcoming rights issue with targeted proceeds of a minimum IDR1tn would be mainly used to support MIDI’s massive expansion plans comprising 700 outlets and 3 new warehouse facilities in Central Java, Southeast Sulawesi and North Sulawesi. It is worth noting that the average capex is IDR3bn/outlet for Alfamidi, IDR1-2bn/outlet for stand-alone Lawson, IDR500mn/outlet for shop-in-shop Lawson outlets, and IDR100bn/facility for warehouses. Aside from the expansion needs, MIDI will also conduct a 1:10 stock split in early March 2023 pending shareholders’ approval. By doing so, MIDI hopes to increase share liquidity in the market as AMRT will not exercise its rights.


Bank Rakyat Indonesia (BBRI IJ) Jump higher (NOT RATED)
February 09, 2023 10:06 WIB

Bank Rakyat Indonesia(BBRI IJ)

Jump higher

BBRI’s FY22 net profits of IDR51.2tn are inline at the higher bound of the consensus (104% of FY22F) backed by 9.2% yoy loans growth and lower credit costs of 252bps. BBRI’s management focus is to grow its CASA deposits both in the retail and wholesale markets by offering more features. Meanwhile, the maximum IDR270tn KUR disbursement per year set by BBRI’s management should provide more room for non-KUR micro products such as Kupedes to grow. As such, ROAE is expected to reach 20% by 2025F assuming gradual normalization of the payout ratio beyond 2023F.

FY22/4Q22 highlights. BBRI booked strong FY22 net profits of IDR51.2tn backed by: 1) a 7.9% NIM driven by fully consolidated PNM and Pegadaian despite one-off impact from lower loan yields on corporate borrowers with a 30bps drop in the blended CoF to 2.1%, 2) 9.2% yoy loans growth and financing growth coming from 13.9% yoy growth in micro loans, 3) 252bps credit costs (FY21: 394bps). The lower blended CoF reflects BBRI’s strategy to grow its CASA deposits. On a qoq basis, 4Q22’s earnings of IDR12.0tn are down by 16.4% qoq and 16.6% yoy mostly due to the restructuring of corporate borrowers done in 4Q22 (48bps lower NIM) with seasonally high qoq opex growth. 

Looking to build sustainable CASA deposits. With a more challenging macro-economic outlook, BBRI is looking to build more sticky CASA deposits. Indeed, CASA deposits already improved to 66.7% of total customer deposits as of December 2022. Aside from the conventional approach, BBRI also looked for another growth engine coming from its 627k BRILink agents as BBRI’s extended marketing channel with a sharing income scheme. Additionally, BBRI also aims to further grow the wholesale market, particularly current accounts by offering more transactional products and services to its customers. By doing so, BBRI targets higher CASA velocity as well as fee-income generation in the future.

De-leveraging its equity to boost ROAE. Post the rights issue in 2H21, BBRI has excessive capital with 25.5% CAR as of December 2022, above the regulatory requirement of 17.5% at a minimum assuming full Basel 3 implementation. To keep the ROAE attractive, BBRI’s management is also looking to maintain a similar dividend payout ratio at 85% for FY22. This is reasonable in our view given ROAA also rose to 2.9% in FY22, mainly driven by higher exposure to the micro and ultra-micro businesses. Control of operating expenses is another key factor to support decent bottom-line growth, particularly for PNM as the existing business process still involves several labour-intensive methods, such as regular meetings of groups of borrowers with field staff. 


BRI Danareksa Sekuritas Equity Snapshot - February 09,2023
February 09, 2023 08:41 WIB

FROM EQUITY RESEARCH

 

Telco: Sector restoration; not in concert but the will is there (OVERWEIGHT)

Each telco player is approaching the sector and price levels from a different angle. 2 from 4 players have acknowledged rising prices which, we believe, are long overdue. We see Telkomsel (TSEL) being conservative towards pricing in the short-term prior to its merger while XL is flexing for price increases at the end of Feb. We prefer EXCL for its strong grip on its subscriber base. Sector Overweight.

To see the full version of this report, pleaseclick here

 

Bank Rakyat Indonesia: Jump higher (NOT RATED)

BBRI’s FY22 net profits of IDR51.2tn are inline at the higher bound of the consensus (104% of FY22F) backed by 9.2% yoy loans growth and lower credit costs of 252bps. BBRI’s management focus is to grow its CASA deposits both in the retail and wholesale markets by offering more features. Meanwhile, the maximum IDR270tn KUR disbursement per year set by BBRI’s management should provide more room for non-KUR micro products such as Kupedes to grow. As such, ROAE is expected to reach 20% by 2025F assuming gradual normalization of the payout ratio beyond 2023F.

To see the full version of this report, pleaseclick here

 

To see the full version of this snapshot, pleaseclick here

 

MARKET NEWS

 

MACROECONOMY

Government Prepared Commodity Downstreaming Roadmap

According to Ministry of Investment, Indonesia has prepared commodity downstreaming roadmap with Investment value worth USD 545.3 bn. Among the most strategic commodities mentioned in the Ministry of Investment notes; coal, nickel, tin, copper, bauxite, steel, silver, petroleum, natural gas, palm oil, and biofuels. Sectoral investment allocation; Minerals and coal USD 431.8 bn., Oil and natural gas USD 68.1 bn., plantations, marine, fishery, forestry USD 45.4 bn. (Investor Daily)

 

Indonesia Consumer Confidence Strengthen in Jan-23

Consumer Confidence Index (IKK) in Jan'23 jumped to 123.0 from 119.9 in the previous month, supported by leap in Consumer Expectation Index (IEK) to 133.9 from 127.3 previously. Consumer Expectation for the next 6 months increases across components (Income, Job Availability, and Business Activity). Expectations on job availability increased for the first time since Sep'22, with the highest expectations coming from consumer with IDR1-2 mn. expenditure group.

 

Meanwhile, Current Economic Condition (IKE) slightly decreased by 0.3 point to 112.1 in Jan'23 caused by the current income condition which fell by 2.6 points to 117.7. Other sub-components such as Job Availability and Purchase of Durable Goods increased by 1.2 & 0.3 points, respectively. Furthermore, saving-to-income ratio rose to 16.7% (vs Dec'22: 15.2%) while consumption proportion fell to 73.6% (vs Dec'22: 75.6%). Loan repayments also rose by 0.5 p.p. to 9.7%. (Economic Research – BRIDS)

 

Macro Focus Today (2/8): Retail Sales Survey Dec-22

 

SECTOR

Getaci Toll Road Project worth IDR 56 tn. will be Reauctioned in April-May 2023

The Ministry of Public Works and Housing will re-bid the Gedebage-Tasikmalaya-Cilacap (Getaci) Toll Road project worth a total of IDR 56 t.ns in two months or April-May 2023. Director General of Highways from the Ministry explained, the Getaci Toll Road auction was repeated as it did not receive fulfillment financing (financial close) from a financial institution at a stipulated time. The official also said that construction process will begin early next year. (Investor Daily)

 

CORPORATE

July 2020 Gapki: Exports and Domestic consumption improved

CPO production reached 4.2mn tons (-2.1% yoy -6.2% mom) while exports of CPO inched down by -3.2%yoy and -2.8%mom in Jul20 to 656k tons, with refined product exports at 2.5mn tons (+10.5% yoy and +18.2% MoM). Domestic consumption stood at 1.4mn tons (-0.6% yoy and +7.3% MoM) driven by higher FAME absorption. The final stocks for Jul 20 reached 3.6mn tons (+2.9% YoY, -8.3%MoM). China and Middle East exports surged +43% MoM and 65% MoM, respectively, to 629k tons for China in Jul20 while Middle East exports reached 273k tons in Jul20. (GAPKI)

 

ADMR Provides USD 110 mn. Loan Subsidiary

PT Maruwai Coal (MC) has entered into Loan Agreements with PT Lahai Coal (LC), PT Juloi Coal (JC), PT Kalteng Coal (KC), and PT Sumber Barito Coal (SBC), all of which are limited liability companies with 99.99% its shares are indirectly owned by ADMR. MC, as the Lender, provides a loan facility of USD 50 mn to LC and JC, and USD 5 mn to KC and SBC. The loan facility will be used for investment purposes and other corporate purposes, and maturing in no later than five years from the date of the first loan disbursement. (IDX)

 

Gojek Tokopedia New Board Formations

Our take: aiming faster GOTO integration, relationships, opportunistic fundraising

  • New commissioners: recruiting the big guns The appointment of new commissioners is centered on the goal to gain more effectiveness in international corporate finance, improve liaison with the local financial authorities and drive fintech partnerships with local players. Marjorie Lao should provide experience from foreign markets and supervise in a potential listing of GOTO in US.
  • New Presidents: all about authority in a big ecosystem The appointment of new presidents should mainly center on continuing the integration of GOTO using ecommerce, on-demand and Fintech as key pillars. The 3 new presidents is positive step to provide them authority on the group level. This should also provide flexibility for the Pres. Dir. to drive GOTO faster.
  • In a nutshell: The boards become larger mainly to expedite the GOTO integration, source/nurture new relationships and business partnerhips and opportunistically seek new funding / new stock trading venue / accomodate exits.

(Niko,BRIDS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Mayora Group Builds Plastic Recycling Factory worth IDR 183 bn.

Mayora Group through PT Bumi Indus Padma Jaya (BIPJ) is building a Food Grade PET (Polyethylene Terephthalate) plastic recycling plant worth IDR 183 billion in Jombang, East Java. The factory had a capacity of 22,000 tons of Recycled PET Plastic (rPET) per year, inaugurated by Ministry of Industrial Affairs yesterday (2/8). (Investor Daily)

 

TPIA Prepares IDR 100 bn. for Maturing Loan Repayment

Citing from IDX Information Disclosure, TPIA has prepared IDR 100 bn. to pay the principal for its Sustainable Bonds I Phase II of 2018 series B, maturing on March 1, 2023. (IDX)