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July 01, 2022 13:48 WIB

Still looking promising


We reiterate our OVERWEIGHT call on the sector with BMRI (BUY, TP IDR9,500) as our top pick. The monthly results (bank only) for our banking universe are inline (44.5% of our FY22F) driven by 10.0% yoy loans growth, a 5.5% NIM and lower annualised credit costs of 190bps. Despite ample excess liquidity of IDR622.2tn as of June 23, 2022, we assume IDR194tn will be absorbed by Bank Indonesia once the average RRR elevates to 7.5% on September 1, 2022. All in, we maintain our FY22F net profits growth estimate of 21.1% yoy driven by 9.5% yoy loans growth and 196bps credit costs.


5M22 tracker: inline. The 5M22 net profits for our universe reached 44.5% of our FY22F owing to 10.0% yoy loans growth as of May 2022. The annualised NIM, meanwhile, touched 5.5% with a lower blended CoF of 1.4%. Yet, we believe room for a lower blended CoF is minimal due to BI’s tightening monetary policy stance through gradual hikes in the Reserve Requirement Ratio (RRR) and a higher policy rate outlook in 2H22. Additionally, credit costs declined to 190bps in 5M22 from 5M21’s figure of 280bps. Among the big banks, BBRI IJ (NOT RATED) is the only bank that booked NIM expansion by c.52bps to 7.2% in 5M22 due to flat asset yields and a 46bps decline in CoF.


Excess liquidity still ample. Based on our excess liquidity tracker, excess system liquidity reached IDR622.2tn (average-4 weeks) as of June 23, 2022. However, according to our calculations there will be IDR194tn of excess liquidity tightening on September 1, 2022 assuming 10% yoy system deposits growth by the end of August 2022 and a 7.5% average RRR (1.5% relaxation from 9% due to exposure towards priority sectors and the MSME segment). While the CASA deposits in our universe still grew at a decent rate of 17.0% yoy as of May 2022. With 9.5% yoy loans growth this year, we see that the four big banks are in a better position thanks to their sustainable CASA deposits with sizeable numbers of existing customers and ample liquid earning assets.


FY22F net profits estimated to grow 21.1% yoy. We expect FY22F’s earnings to grow by 21.1% on the back of: 1) a slight expansion in the NIM to 5.8%, 2) an increase in the CoF by 11bps to 2.0% thanks to manageable liquidity, 3) 8.1% yoy growth in operating expenses resulting in a 46.1% Cost-to-Income Ratio (CIR), and 4) lower credit costs of 196bps as most banks have already front-loaded their provisions in FY20-21. If we exclude the impact from the consolidation of PNM with Pegadaian into BBRI’s book, FY22F’s bottom line for the banking sector is estimated to grow by 18.9% yoy.


OVERWEIGHT: BMRI as our top pick. BMRI (BUY, TP IDR9,500) is now our top pick as the bank’s NIM will expand to 5.1% backed by its ability to manage sticky CASA deposits through digital apps and its strategy to pursue growth in the higher yield segments, i.e. non-corporate, by utilizing the value chain approach from its corporate borrowers.


… Read More 20220701 Banking

BRI Danareksa Sekuritas Equity Snapshot - Friday,July 01,2022
July 01, 2022 08:34 WIB






Indosat-Google Continue Collaboration on Digital Solutions

Indosat Ooredoo Hutchison (IOH), through Indosat Business, together with Google Cloud, continues to work together to provide customized solutions for customers to digitize their business operations. According to ISAT, Indosat Business continues to develop digital technology innovations based on the internet of things (IoT), advanced data analytics, cloud & collaboration tools, to support digital transformation for corporations, MSMEs, education, and government.

Indosat Business' partnership with Google Cloud have covered several areas of digital solutions. Among them are the One Stop Digital Business Ecosystem, a digital platform to connect and empower business players, including MSMEs; Google Cloud Platform by ISAT-Google which has been used by several college institution; Advanced Data Analytics, big data utilization for business decision making, including customer acquisition through smart digital advertising; and other IoT and AI solution for business effectivity. (Investor Daily)

JSMR Takes Over WIKA's Ownership in JKC

JSMR took over WIKA's share ownership in PT Jasamarga Kunciran Cengkareng (JKC), the operator of the Cengkareng-Batuceper-Kunciran Toll Road. JSMR acquired all of WIKA's 2.10% shares in JKC after the signing of sale-purchase agreement yesterday (6/29). Cengkareng-Batuceper-Kunciran is a 14.2 km length toll road, fully operated to complete the network of western-side of Jakarta Outer Ring Road 2, which connects people mobility around Jakarta-Tangerang.

Previously, shareholdings in JKC consisted of Jasa Marga (76.4%), Synergy Quest International Ltd. (21.1%), WIKA (2.1%), PT Nindya Karya (0.3%), and PT Istaka Karta (0.1%). Through the signing of this agreement, Jasa Marga's share ownership in JKC becomes 78.5%. (Investor Daily)

MCAS’s Volta: Electric Motocycle Business Updates

An update of selling prices on Volta, electric motorcycle project of MCAS through its subsidiary NFCX (previously showcased in IIMS 2020); Volta 401 Motorcycle – IDR 14.9 mn., Volta 100 Electric Bike – IDR 4.7 mn., Volta 203 Electric Bike – IDR 6.5 mn., Volta 301 & 302 Electric Bike – IDR 7-8 mn. For its motorcycle, it is powered by 60V battery, can reach up to 55km in full charged, need 6-8 hours for charging and IDR 35/km in operating costs. (Bisnis,Volta, Kumparan).

Comment: The EV motorcycles project is on track for the MCAS group and its subsidiary NFCX. Last time we checked, the group is considering to focus more on rentals and leases for those vehicles at first, targeting B2B and companies who wish to follow green energy initiatives. MCAS group has developed so far 128k footprint for EV batteey recharge stations. (Niko)

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Japfa Comfeed Indonesia (JPFA.IJ IDR 1,555 BUY.TP: IDR 1,800)
June 30, 2022 09:33 WIB

Growth locally, exports would be a bonus


JPFA is looking at growth opportunities in its Indonesian poultry business amid continued uncertainty in the future of feed margins. The potential to export chickens to Singapore is an interesting development, but the market only represents c. 7% of the group’s total production. We remain positive on the stock with a BUY rating and TP of IDR1,800.


Growth prospects in key operating countries. We hosted a conference call with Japfa Ltd., the parent company of the Indonesian listed company, JPFA. Japfa Ltd. is engaged in several animal protein businesses, i.e. poultry, swine, cattle and milk, across Asia. The company is eyeing growth in Indonesia`s poultry market, Vietnam`s poultry and swine markets, and China`s milk business. In Indonesia, despite the freezing of non-essential capex during the covid-19 pandemic, revenues were able to record substantial growth supported by spare capacity. Capex growth is expected this year and going forward. While expecting little growth in India and Myanmar, Vietnam is expected to show tremendous growth following recovery from the pandemic. China`s undersupply of milk will also remain as a growth driver going forward.

Exports are an opportunity rather than the core focus. While surging chicken demand caused by Malaysia’s chicken export ban is an interesting development, the magnitude of the chicken shortage (3.6mn birds per month) only comprises c. 7% of Japfa’s chicken production. Japfa’s main strategy is to produce locally, with consumption locally. As such, it will not shift its focus to the export market in the near future. Quality-wise, the company sees no problem for the export market.

The future feed margin is still unpredictable. JPFA`s feed operating margin slumped to c. 7% in 2021 (from 10-11% normally) as the company took into account farmers` ability to survive and the margin they got in the breeding business by not fully passing through higher raw material costs in the ASP. Raising the feed ASP to bring margins back to their old range is still uncertain as this would depend on the condition of the Indonesian economy and farmers in the future.

Maintain BUY with a TP of IDR1,800. Despite the recent share price rally, we maintain our BUY call on JPFA with an unchanged forecast and valuation multiple. The downside risk to our call is higher-than-expected raw material costs and lower-than-expected chicken prices. Upside potential comes from sales to the export market, even if they are not made by JPFA, as this would support domestic chicken prices.


… Read More 20220630 JPFA