FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Poultry: Lebaran demand disappointed, weighing on sector outlook despite a still decent 1Q25 earnings est. (OVERWEIGHT)

·         LB prices during 2025 Ramadan and Lebaran fell short of expectations, reflecting weak demand and softer economic activity.

·         Despite margin pressure from lower LB prices during Ramadan, we still expect decent 1Q25 earnings, with downside risks anticipated in 2Q25.

·         Maintain OW rating on sound fundamentals and cheap valuations. Pecking order: MAIN, JPFA, CPIN.

To see the full version of this report, please click here

To see the full version of this snapshoot, please click here

BRIDS FIRST TAKE

·         Bumi Serpong Damai: 1Q25 Pre-sales In-Line with Our and Company’s Expectations (BSDE.IJ Rp835; BUY TP Rp1,550)

To see the full version of this report, please click here

·         Ciputra Development: Update Call KTA: Strategy Remains Aligned with Winning Developers’ Traits (CTRA.IJ Rp870; BUY TP Rp1,700)

To see the full version of this report, please click here

RESEARCH COMMENTARY

BBTN (Buy, TP: Rp1,100) - BBTN 1Q25 Results and Concall KTA

1Q25 Insights:

·         Spectacular 1Q25 NP rebound from 2M25 low base: BBTN booked a net profit of Rp904bn in 1Q25 (-2% qoq, +5% yoy) from only Rp252bn in 2M25, achieving 31%/29% of our/cons FY25F i.e., above.

·         Changes in accounting standard: The bank changes its accounting treatment for its tiered mortgage rate, allowing it to record higher interest income in early stages. According to the management, the bank has ~Rp30tr in such loans which contribute to ~Rp700bn in interest income in 1Q25 and ~Rp2-3tr for FY25F.

·         CoC spiked to 1.1%: The changes in accounting standard also resulting in a higher CoC which reach 1.2% in Mar25 bringing its 1Q25’s CoC to 1.1% (+35bps yoy), still within management’s target of 1.0–1.1% for FY25F (vs. FY24’s 0.6%).

·         Higher NIM supported by contained CoD: NIM improved to 3.6% (+30bps yoy) thanks to the changes in accounting standard and Cost of Deposit which slightly improved to 4.05% in 1Q25 from 4.09% in 4Q24 owing to the lower contribution from big institutional clients. However, we note that this is also caused by the less working days.

·         Lower LDR to 94%: Loan grew 5% yoy driven by mortgage and corporate loans, lower than the 8% yoy deposit growth. Hence, LDR dropped to 94% in 1Q25 from 96% in 1Q24, but remained stable with 4Q24’s. Comfortable LDR level remained at 93-97%,

·         Rising NPL and LaR: NPL ratio rose to 3.3% in 1Q25 from 3.2% in 4Q24 with an uptick in non-subsidized mortgage loan which rose to 4.9% from 3.7%, partly offset by the non-housing loan which NPL improved from 2.4% to 1.2%. Consequently, NPL coverage decreased to 105% (from 115%) but management indicated that the changes in accounting standard will bring coverage up to 135% by FY25F.

Summary:

·         BBTN’s 1Q25 results were robust, as the new accounting standard allows the bank to record positive earnings amid the higher interest income and provisions, which will trigger FY25F earnings revisions in our view. However, asset quality deterioration is in line with our view and should be closely monitored. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

CLEO (Not Rated) – KTA FY24 Earnings Call

FY24 Performance Highlight:

·         Revenue: +29% yoy to Rp2.7tr (FY23: +25% yoy), outperforming industry growth of 4%.

·         Segment performance: bottled products: +34% yoy and non-bottled products at +24% yoy.

·         Net Profit: +46.3% yoy, with a net margin of 17.6% (FY23: 15.5%).

FY25 Guidance:

·         Targeting double-digit growth in revenue and net profit.

·         Net margin guidance: ~18%.

·         Capex: ~Rp600bn (similar to FY24).

·         CLEO increased its market share to 12%, benefiting from the decline of its competitors. The key priorities are expanding new factories and distribution. In 2025, it plans to build three new factories in Palu, Pontianak, and Pekanbaru.

·         The mgmt. noted intense competition and weak consumer purchasing power, evident in less enthusiastic Lebaran sales compared to the previous year. Despite 3–5% annual ASP increases, the growth was limited as CLEO followed the market leader’s cashback promotions. (Natalia Sutanto & Sabela Nur Amalina - BRIDS)

UNVR (Hold, TP: Rp1,500) – 1Q25 Net Profit declined 14.6% yoy due to lower revenue and margins, partially offset by reduced royalty expense

·         UNVR reported 1Q25 revenue of Rp9.5tr, down 6.1% yoy, driven by HPC (-9.1%), while FNR was relatively flat (-0.8%) due to support from festive events.

·         UNVR implemented a price adjustment in Feb25, which supported margins, especially for palm-related products.

·         In 1Q25, Volume (UVG) declined by 7% yoy, while price (UPG) grew 1.5% yoy.

·         UNVR reported lower royalty payments in 1Q25, which partially offset the decline in gross margin and negative revenue growth.

·         UNVR posted 1Q25 net profit of Rp1.24tr, down 14.6% yoy, accounting for 37% of our FY25F and 38% of the consensus estimate. We view the result as in line, given that royalty payments typically normalize in subsequent quarters. (Natalia Sutanto & Sabela Nur Amalina - BRIDS)

MARKET NEWS