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Danareksa Equity Snapshot - BBCA 21 April 2017
April 21, 2017 09:56 WIB

Bank Central Asia: Cautious outlook but still comfortable (BBCA IJ. IDR17,325. BUY. TP IDR18,300)

  • Bank Central Asia (BBCA) reported IDR4,990bn of net profits in 1Q17 (-8.9% qoq; +10.7% yoy). This figure is 22.0% of our FY17F estimate, inline. Although the results are within expectations, there are some surprises such as a sharp decline in assets yield, a higher cost efficiency ratio and an increase in NPLs.  The decline in operational performance was offset by lower provisioning.  Overall, the message from the management is that the bank will remain cautious.
  • Key highlights from the 1Q17 results:

­    The decline in the assets yield was mainly driven by the corporate segment (-100bps yoy to 9.2% from 10.2% in 1Q16). However, the management also said that all corporate loans had been repriced at lower rates. Loans in other segments had also been repriced. For mortgages, the management foresees that further declines are highly likely due to the stiff competition in the market.

­    Operating expenses rose by 19.5% qoq mainly due to accrued bonuses that were paid in April 2017. Hence, the bank’s cost efficiency ratio rose to 52.8% in March 2017 from 49.6% in 1Q16 (43.9% in FY17).

­    Loans declined 1.8% ytd as corporate loans and commercial & SME loans slid by 1.5% ytd and 4.7% ytd, respectively.

­    NPLs increased to 1.5% driven by increases in the corporate segment (+40bps) and the commercial & SME segment (+60 bps). The management said that the increase in NPLs in the corporate segment was caused by the deterioration of a transportation company loan that had been restructured last year. The management said that NPLs risk is still high.

  • Despite higher NPLs and the decline in NIM, we are comfortable with the bank’s outlook, noting its good assets quality and strong franchise in the deposits and consumer segments. The decline in NIM, in our view, reflects the stiff competition in the sector as the NIM of other banks - especially in the corporate segment – had also declined.
  • Going forward, we believe that NPLs will decline due to the improvement in the macro economy. Despite this, however, NIM may be squeezed further on intensifying competition. We expect loans growth to accelerate in 3Q17 (after Lebaran) in all segments as government spending may also accelerate in this period.
  • We maintain our BUY recommendation on the stock with a TP of IDR18,300, implying 3.5x FY17 PB, (ROE:18.8%; Ke: 12%; and g=9.3%). The bank deserves its premium valuation.
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Danareksa Equity Snapshot - 21 April 2017
April 21, 2017 09:55 WIB

MARKET NEWS

Sector

  • Property: Savills Indonesia expects stronger demand for apartments

Corporate

  • Bank Jatim: booked IDR340bn of net profits in 1Q17
  • Bukit Asam: To conduct a feasibility study for underground mining
  • Indofarma: Allocates IDR68 bn for capex in 2017
  • Kimia Farma: Searching for IDR 2.2tn of fresh funds
  • Semen Indonesia: domestic ASP down by 1.3% mom in March

To see the full version of our snapshot, please click here

TECHNICAL ANALYSIS CORNER

Market Maker

  • JCI Index. IDR5,595. NEUTRAL. Target 5,620-5,576
  • Sectoral (Banking & Finance)-UPDATE
  • Sectoral (Infrastructure)-UPDATE

To see the full version of our technical analysis corner, please click here


Danareksa Equity Snapshot - ASII 20 April 2017
April 20, 2017 10:34 WIB

Astra International: Financial services boosted quarterly net profits

(ASII IJ. IDR8,375. HOLD. TP IDR9,000)

  • Astra International (ASII) reported net profits of IDR5.1tn in 1Q17 (+63.5% yoy, and +31.1% qoq). The 1Q17 revenues and net profits are 27% of our full year forecast and 25% of the consensus – i.e. inline.
  • Recovery in the financial services division boosted quarterly net profits.  While the 1Q17 revenues were flat, the strong net profits growth of 31.1% qoq was mainly attributable to a recovery in the net profits of Bank Permata, which is 44.6% owned by ASII, following a reduction in the bank’s gross non-performing loans (NPL) to 6.4% in 1Q17 from 8.8% in 2016. As a result, the equity income rose sharply. Nonetheless, the impact of 4.2% qoq lower ASII car sales and 11.1% qoq lower Honda motorcycle sales volume resulted in 27.8% qoq lower net profits in the automotive division. In addition, the 20.8% qoq lower net profits from the heavy equipment division was due to the unfavourable weather conditions which reduced coal production.
  • Most of the business divisions are set to book yearly net profits growth.  The automotive business reported 44.8% yoy higher net profits in 1Q17 due to strong domestic car sales (up by 26.8% yoy) following the aggressive launch of new popular models in 2016 and 1Q17. The financial services division also showed better net profits (up by 75.4% yoy) thanks to recovery at Bank Permata and in most of the other financing subsidiaries. The recovery in commodity prices also helped to increase net profits in the heavy equipment and mining businesses (+104.1% yoy) and in agribusiness (+91.6% yoy).
  • Maintain HOLD recommendation.  Although ASII will benefit from higher commodity prices (especially coal prices), we maintain our HOLD recommendation with a target price of Rp9,000 based on SOTP valuation as we maintain our conservative forecast for domestic car sales volume growth of only 5.0% yoy in 2017 given only moderate economic growth of an estimated 5.1% yoy which will limit further growth in domestic car sales.
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