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BTPN Syariah (BTPS IJ.IDR 3,210 BUY TP: IDR 4,200) - 22 April 2021
April 22, 2021 14:10 WIB

Decent results with further improvements expected


We maintain our BUY call on BTPS with an unchanged GGM-derived TP of IDR4,200 (implying 4.7x 2021F P/BV) with an inline 1Q21 set of results. 1Q21’s net profits of IDR375bn were driven by the pick-up in financing growth by 5.1% yoy, flattish growth in opex and 454bps credit costs. We expect earnings to rebound by 70.3% yoy to IDR1.4tn mainly driven by stronger yoy financing growth of 13.4% in 2021F, a 31.4% NIM equivalent and lower credit costs of 506bps. Downside risks relate tothe formation of SOE micro-holding plans, a possibilitygiven thesignificant number of borrowers that needasecond restructuring scheme and sudden tightening in the system’s liquidity. 


1Q21 highlights. The 1Q21 net profits declined by only 6.5% yoy to IDR375bn, inline with our forecast (25.8% of FY21F). The NIM equivalent stood at 30.2% with an all-time low blended CoF of 4.3% based on our calculation. The operating expenses were flat due to the optimization of its 12K field staff through deployment of its new application for them. Credit costs of 454bps remain within the bank’s management guidance of a maximum 4.7% in FY21F.  


A more holistic relationship with the borrowers. We expect a pick-up in the bank’s financing growth by 13.4% yoy this year on the back of the gradual economic recovery in Indonesia. Moreover, BTPS’ management highlighted that the bank would continue to push its financing to selective sectors, i.e. basic necessities and primary products. Aside from that, BTPS also assumes that the reopening of schools and tourism areas in 2H21 would support its financing growth this year. As we know, there are several derivative sectors in MSME for these areas such as handicrafts, F&B, 2W rentals, small retailers and many others. 


Assets quality remains under control. Given the current conditions, as of March 2021, the restructured loans bucket had declined to IDR2tn from IDR3tn in December 2020. From IDR2tn in the restructured category, IDR998bn are still in the delay payment scheme and the remainder are already regarded as ‘normal’. Additionally, BTPS’ management wrote off IDR203bn in 1Q21 and maintained its IDR850bn write-off target for FY21F. As such, we assume a lower cost of financing of 506bps in FY21F with a 1.7% gross NPF ratio by December 2021F. 


Maintain BUY: TP of IDR4,200. We upgrade our call to BUY with an unchanged GGM-derived TP of IDR4,200 (implying 4.7x 2021F PBV). We assume a CoE of 8.2%, a sustainable ROAE of 27.4% and 3% long-term growth. 

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Astra Agro Lestari (AALI IJ.IDR 10.300 BUY TP: IDR 17,500) - 22 April 2021
April 22, 2021 14:09 WIB

Solid Core Profit, Blemished by Forward


AALI’s core profits of ID496.3bn (+54.0% yoy, and +3.1% qoq) are above our estimate and the consensus by virtue of the CPO price surging 8.9% yoy to IDR9.9k/kg as price continues to surge. CPO Production was 351.5k ton in 1Q -0.7 yoy, still at –11.0 qoq on seasonality figure, sales volume of 1.5mn ton (-6.8% yoy, -13.8% qoq) mainly due to pre Covid-19 base. Reported profits are below the consensus and our estimate driven by forward sales mark to market losses totaling IDR384.0bn leading to IDR162.4bn of net profits (-56.2% yoy and -35.2% qoq). We still Maintain BUY with same TP of IDR17,500 while keeping all of our forecast unchanged. 


In-line top line. The top line was aided by a price at IDR9.9k/kg in 1Q21 (+8.9% yoy, 15.7% qoq) compensating for -0.7% yoy CPO production which led to 299.3 k tons (-14.4% yoy, -24.8% qoq) of total CPO sales. FFB production of 1.1mn tons is still negative at -3.3% yoy and -13.5% qoq, but the March production is already good at 390.2k tons, or a 7.9% yoy increase and 24.7% mom increase. We believe the trend will continue going forward as rains have been abundant. All in all, the IDR5.0tn of sales (+5.0% yoy, -8.2% qoq) are in line with our estimate and the consensus. 


Above core earnings, below reported profits. Operationally, the GPM inched down to 18.5% in 1Q21 from 19.3% in 1Q20, driven by the price surge and EBIT of IDR657.9bn (+2.9% yoy, -11.6% qoq) reflecting a 13.1% margin (-0.2p.p yoy) leading to IDR162.4bn of reported profits (-56.2% yoy and -35.2% qoq), below our estimate and the consensus. Reported earnings were dragged down by a loss from forward contracts fair value totaling some IDR384.0bn as per 1Q21 in relation to MYR174mn for delivery up to May 2021. Excluding the item, core profits reached IDR496.3bn (+54.0% yoy +3.1% qoq) or above our estimate and consensus. 


The same earnings level, despite forward losses. As the forward position has been trimmed from MYR523mn in 4Q20 to a mere MYR174mn as per 1Q21, for up to May 2021 delivery. Post the delivery the gain or loss impact will be gone, thus reported profit will be normal vs its core profit, thus we believe our number remains relevant compared to its FY2021F performance. 


Maintain BUY with a TP of IDR17,500. Despite the cut, yoy growth in our new forecast is still healthy at 43.1% yoy, while core profits are also above our estimate and the consensus. We believe AALI lags far behind the commodity, and with the KPB Medan price continues to be above IDR9,000  despite the progressive levy and the CPO price continuing to surge, AALI still looks enticing in our view. 

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Astra International (ASII IJ. IDR 1,105 BUY TP: IDR 1,600) - 22 April 2021
April 22, 2021 11:29 WIB

Quarterly improvement


Astra International (ASII) reported net profits of IDR3.7tn (+75.4% qoq, but -22.5% yoy) in 1Q21. The result is slightly below our estimate (22%) and the consensus (21%). While there will be a slowdown in car delivery in Apr and May 2021 due to Ramadhan, we expect strong earnings to continue in 2Q21 with expansion of the luxury car tax incentives to help improve the profitability of the company’s automotive division. Maintain BUY.


Better quarterly net profits from the automotive, financial and mining divisions.  ASII reported 75.4% qoq better earnings of IDR3.7tn in 1Q21 mainly due to strong earnings in: a) the automotive division (+57.8% qoq) with 27.0% qoq higher car sales volume and an improvement in the automotive EBIT margin of 0.5% in 1Q21 (vs. a negative EBIT margin in 4Q20), b) financial services (+78.8% qoq), c) the mining division (+216.3% qoq) thanks to solid coal prices which lifted Komatsu sales and coal sales volume and rising gold sales volume and d) the property division (+600% yoy). The Agri business and infrastructure and logistics reported 35.5% qoq and 59.6% qoq lower quarterly net profits, respectively.  

Lower net profits from the automotive, financial and agribusiness divisions. Net profits were 22.5% yoy lower due to weak earnings from: a) the automotive division (-25.7% yoy) with 24% yoy lower ASII car sales volume, b) financial services (-30.5% yoy) with higher provisions and a reduction in the loans portfolio in the consumer-focused finance businesses, and c) agribusiness (-56.4% qoq) with lower CPO and derivative product sales. Nonetheless, net profits from the mining division rose by 3.4% yoy thanks to higher Komatsu volume and better coal and gold prices. The result is slightly below our estimate (22%) and the consensus (21%). 

Expect economic recovery to improve car volume and profitability in 2021.  We expect better earnings for ASII in 2021 which will be attributable to strong car sales volume: we forecast domestic car sales volume to recover by 46.6% yoy to 780k units supported by economic recovery and luxury car tax incentives (PPnBM). These two factors are expected to help boost the profitability of ASII’s automotive division. In 2021, we expect the company to book a positive automotive EBIT margin of 0.5%. 

Maintain BUY with a TP of IDR7,500 (based on the SOTP valuation). We like Astra given that: a) the domestic economic recovery will boost its automotive and financial businesses, and b) solid coal prices will help to improve the demand for heavy equipment not only in the mining sector but also in the construction sector. Our TP implies 17.7x 2021F PE. 

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