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Danareksa Equity Snapshot - 15 November 2019
November 15, 2019 10:39 WIB

FROM EQUITY RESEARCH

 

Astra International: Market share is buoyant at 53% in 10M19 (ASII IJ IDR. 6,575 BUY TP IDR. 8,000)

Wholesale domestic car sales volume reached 96,030 units (+3.3% mom, but -9.5% yoy) in October 2019. Cumulatively, car sales volume declined by 11.8% yoy to 849,609 units in 10M19 reined in by soft commodity prices and the general elections in April 2019. The October 2019 sales figure is within our expectations. Astra International (ASII), nonetheless, still managed to increase its market share to 52.7% in 10M19 (10M18: 50.3%). Maintain BUY with a target price of IDR8,000 (based on SOTP valuation).

To see the full version of this report, pleaseclick here  

 

Bank Tabungan Negara:  Upside emerges (BBTN IJ IDR. 1,835 BUY TP IDR. 2,700)

We maintain our BUY call on BBTN with an unchanged GGM-derived TP of IDR2,700 (implying 1.08x 2020F PBV) post the release of the 9M19 results. At the bottom line, net profits reached IDR801bn, or inline with our FY forecast of IDR1.2tn (64.3%) given that 9M’s net profits were 60.6-80.0% of the full year net profits in the past four years. Our net profits projection is based on the assumptions of 3.2% gross NPLs and a 77.1% coverage ratio by the end of 2019F. As such, we believe our valuation implies limited downside for BBTN going forward.

To see the full version of this report, pleaseclick here

 

To see the full version of this report, pleaseclick here

 

 

MARKET NEWS

SECTOR

Gaming usage impacts smartphone sales

The IDC International Data Corporation monitors smartphone shipments, and according to its 3Q19 information, the low-end smartphones in the price range (USD100-USD200) have lost ground with 42% of total shipments vs 48% in 2Q19. By comparison, mid-range smartphones (USD200-USD400) gained ground with 38% of total sales in 3Q19 vs. 31% in 2Q19.  Ultra low-end smartphones (<USD100) accounted for 17% of sales in 3Q19 vs. 16% in 2Q19, whereas high-end smartphones (>USD400) accounted for 4% of the market. The main driver of demand for midrange smartphones such as the VIVO Z1 Pro is the need for gaming features. The second reason is the significant supply from Chinese makers Oppo and Vivo in the midrange segment, which now have respective market shares of 26.2% and 22.8%. Samsung lags with market share of 19.4%. (IDC, Bisnis Indonesia).

 

Comment: This is a positive trend which should drive growth for data volumes for telcos. Those telcos that exhibit strong network performance stand to benefit the most. (Niko Margaronis)

 

Industrial Estates: Hyundai to build an EV factory in Indonesia

The Coordinating Minister of Maritime Affairs and Investment stated that Indonesia would sign an agreement with the Korean-based company Hyundai to invest in electric vehicles with ~USD1bn investment value. The company will build the factory in Karawang, West Java on a site covering 600 ha. The Minister also instructed the company to use raw materials from Indonesia. (Bisnis Indonesia)

 

Property: Relaxation in the balanced-housing regulation

The government will relax the balanced-housing regulation which requires middle-sized and small houses to be built together with luxury houses. The new regulation states that if the developer wants to build one luxury house, there must be two middle-sized houses and three small houses built at the same location. With this regulation, the government expects that property developers will have alternatives to build houses depending upon their capabilities. (Kontan)


Danareksa Equity Snapshot - BBTN, 15 November 2019
November 15, 2019 10:39 WIB

Bank Tabungan Negara(BBTN IJ)

Upside emerges

 

We maintain our BUY call on BBTN with an unchanged GGM-derived TP of IDR2,700 (implying 1.08x 2020F PBV) post the release of the 9M19 results. At the bottom line, net profits reached IDR801bn, or inline with our FY forecast of IDR1.2tn (64.3%) given that 9M’s net profits were 60.6-80.0% of the full year net profits in the past four years. Our net profits projection is based on the assumptions of 3.2% gross NPLs and a 77.1% coverage ratio by the end of 2019F. As such, we believe our valuation implies limited downside for BBTN going forward.

 

9M19 highlights. The net profits of IDR801bn are inline with our FY forecast (64.3% of FY19F). The loans growth already normalized at 16.7% yoy in September 2019 supported by 25.5% yoy growth in subsidized mortgages. NIM still declined by c.80bps on a yoy basis to 3.4% due to the pressure on the blended CoF. The credit costs of 117bps in 9M19 were still below our forecast of 147bps in FY19F. The gross NPLs ratio stood at 3.5% as of September 2019 and are expected to decline to 3.2% as of December 2019F.

 

More conservative guidance. BBTN’s management shared its new guidance which is more conservative in our view. Loans growth is expected to range between 8-12% this year, which, we believe, should come in at the higher bound (we assume 12.3% yoy loans growth this year). The gross NPLs ratio should be within the 3.1-3.2% range by the end of the year. Funding should be easier for BBTN following the 100bps policy rate cuts and the few relaxation policies introduced by BI, including offshore long-term borrowings as part of the funding instruments. Another point is the subordinated debt issuance plan as tier 2 capital given the implementation of PSAK 71 in January 2020. Please note that an extraordinary AGM will be held on 27 November 2019, with the appointment of the new CEO as one of the main agendas.

 

Expect 3.8% NIM next year. Post the 100bps policy rate cutsby BI, we expect more upside in its NIM next year. This is because of the significant contribution of TD instruments at 59.8% of total customer deposits as of September 2019. In 9M19, the blended CoF expanded by c.120bps to 5.9% compared to 9M18’s figure. All in all, we expect NIM to reach 3.8% with a 4.8% blended CoF and flattish asset yields at 8.4% for FY20F.

 

BUY with a TP of IDR2,700. Maintain BUY with a GGM-derived TP of IDR2,700 assuming a CoE of 11.0%, a sustainable ROAE of 11.6% and 3% long-term growth. Our TP implies 1.08x 2020F PBV (-0.5SD of 10-yrs mean).

 

… read more 20191115 BBTN


Danareksa Equity Snapshot - ASII, 15 November 2019
November 15, 2019 10:38 WIB

Astra International(ASII IJ)

Market share is buoyant at 53% in 10M19

 

Wholesale domestic car sales volume reached 96,030 units (+3.3% mom, but -9.5% yoy) in October 2019. Cumulatively, car sales volume declined by 11.8% yoy to 849,609 units in 10M19 reined in by soft commodity prices and the general elections in April 2019. The October 2019 sales figure is within our expectations. Astra International (ASII), nonetheless, still managed to increase its market share to 52.7% in 10M19 (10M18: 50.3%). Maintain BUY with a target price of IDR8,000 (based on SOTP valuation).

 

Slight monthly improvement in car sales volume. Monthly domestic car sales volume continued to trend higher to 96,030 units in October 2019 (+3.3% mom, but -9.5% yoy). While we expect the car sales volume in November to remain buoyant, we also predict seasonally soft car sales in December. Cumulatively, domestic car sales declined by 11.8% yoy to 849,609 units in 10M19 hit by the impact of soft commodity prices (mainly coal), the high interest rates environment in 1H19 and the general elections in April 2019. The October 2019 sales figure is within our expectations (81% of our full year forecast).

 

Solid market share for Astra at 52.7% in 10M19. Although ASII’s car sales volume dropped 7.7% yoy, its market share remained buoyant at 52.7% in 10M19 (10M18: 50.3%) as the decline in sales of car brands under ASII, namely Toyota and Daihatsu, only fell by 6.1% yoy and 10.7% yoy, respectively, compared to Honda, Mitsubishi and Suzuki which posted sales declines of 16.1-19.5% yoy. We maintain our forecast on ASII’s market share at around 51% in 2019 and 2020.

 

Recovery in domestic car sales expected in 2020.  We expect a recovery in car sales by 3% yoy to 1.08mn units in 2020 owing to: a) modest economic growth of 5.2% in 2020 vs this year’s expectation of 5.10% and b) the recent BI rate cuts by 100bps to 5.00% during 2019 which will lower financing costs and improve the purchasing power of consumers.

 

Maintain BUY. We expect the stiff competition in the domestic car market to persist. The recent launch of Mitsubishi Xpander Cross with 20mm higher ground clearance and a price range of IDR268 – 287mn compared to IDR210 – 265mn for its current Xpander will further add to the competition in the low-end SUV market. Nonetheless, the recent 100bps cuts in the BI rate and relaxation on the LTV for automotive purchases with 5 – 10ppt lower down payments should help to lift domestic car sales next year (by 3% yoy to 1.08mn units, in our estimate). The stock is currently trading at below -1SD. Our TP implies 14.8x 2020F PE.

 

 

read more 20191115 ASII