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BRI Danareksa Equity Snapshot - 19 Januari 2021
January 19, 2021 10:44

Bank Rakyat Indonesia: Growth Opportunities Abound (NOT RATED)
The micro segment will remain as the growth engine for BBRI going forward supported by the bank’s participation in channelling the Government’s micro grant program and KUR super micro (max IDR10mn ticket size). We also believe that BBRI will continue its partnership with P2P lending to explore the digital ecosystem further. Furthermore, the extension of OJK’s policy on loans restructuring relaxation until March 2022 should also help BBRI to oversee its loans portfolio in a more manageable way.
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MARKET NEWS

 

MACROECONOMY

Govt optimistic of economic recovery in 2Q21

The Ministry of Finance foresees economic recovery taking place in 2Q21 rather than in 1Q21 as social distancing restriction measures are still in place to combat the pandemic, resulting in weak aggregate demand. Moreover, the festive season marked by Ramadan and Lebaran in 2Q21 should help stimulate demand. The government’s vaccination program is essential to restore confidence in society, especially among the upper middle income class to stimulate consumption. The govt is also optimistic that Indonesia will record a better trade balance this year as economic recovery is expected to start earlier in some trading partners such as the US, Europe, and China. As aggregate demand has started to pick up, the govt foresees recovery in investment, particularly in the banking sector as the demand for credit will increase. The govt is still optimistic that the 5% economic growth target in the govt’s budget will be achieved. (Kontan)

 

Govt to reallocate IDR58tn of expenditures for vaccinations

The Ministry of Finance stated that there will be budget reallocation from ministries/institutions expenditures for the vaccination program amounting to IDR58tn. This decision is stipulated in the Circular Letter of the Ministry of Finance No.S-30/MK/02/2021. The target reallocation is for spending on non-operating goods and capital for ministries and institutions. Hence, with this decision the total expenditure budget for ministries/institutions will be reduced by ~6% from IDR1,032tn to IDR974tn. (Kontan)

 

Omnibus Law: Discussions on three Labor law regulations completed

The Ministry of Manpower stated that the govt is now preparing 4 derived regulations in the employment section of the Omnibus Law. Of the 4 derived regulations, the govt has finished discussing 3 of them with the tripartite team (workers, businessmen, and govt). The three regulations are: the regulation of foreign workers, the regulation of contract labor (PKWT), outsourcing, off-duty and termination, and the regulation of compensation. The remaining regulation in the pipeline is the regulation of job termination allowances (JKP). (Kontan)

 

SECTOR

Fundraising continues on digital platforms - Grab explores IPO in US market

According to Reuters Grab is exploring IPO of at least US$2bn in US market. A lot of background activity from Indonesia's giant digital platforms from Tokped, Gojek, Grab, TravelokA, SEA. Companies maybe meeting some required profitability levels. Given also the general sentiment to synergize, and taking corporate actions, it appears those digital platforms may have completed their greenfield investments and necessary expansions. The next investments are expected to be used for more ecosystem investment building a more integrated/unified/seamless offering that includes ecommerce tapping into e-groceries and financial services with much wider scope for mid-low segments - grassroots. In relation to financial services, Grab was also recently awarded banking license in Singapore. Moreover Grab’s financial services arm Grab Financial Group raised over $300 million led by South Korea’s Hanwha Asset Management in its Series A round. In a similar move. Singapore-based internet major SEA Ltd has acquired Indonesia’s Bank Kesejahteraan Ekonomi with the objective of ultimately transforming the local lender into a digital bank. The deal can be seen as part of NYSE-listed Sea's ongoing plan to increase customer retention on its e-commerce platform Shopee by doubling down on its payments app ShopeePay.

 

CORPORATE

CENTRATAMA CENT IJ: Digital Colony is close to striking its first acquisition deal in Asia

TMT Finance has learnt that global infrastructure investor Digital Colony is close to striking its first acquisition deal in Asia, with the investment firm said to be close to agreeing to buy Indonesian tower operator Centratama [CENT]. Three sources told TMT Finance that the acquisition is in advanced stages with two sources saying a deal has been signed and will close soon. Digital Colony is understood to be acquiring Centratama in two steps, according to the two sources. Firstly, it will buy a significant minority stake in the business – said to be around 40%; and secondly it will buy the remaining majority stake in the next few years if the towerco meets some of the agreed milestone targets.