FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

BRIDS FIRST TAKE

Widodo Makmur Unggas:  Capacity in Place, Utilization the Key to Recovery (NOT RATED)

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RESEARCH COMMENTARY

JCI: Signs of Capitulation?

·         JCI fell by a sharp 3.5% today, with price action showing signs of capitulation, particularly in policy-sensitive sectors. While total transaction value of Rp18tr was lower than the previous two days and Banks outperformed, the breadth of the sell-off was still severe, with sharp declines across sectors (Energy -6.9%, Basic Materials -6.5%, Consumer Cyclical -6.0%, Infrastructure -5.5%, Industrials -5.3% and Transportation -4.9%).

·         Foreign investors turned net sellers again today at around US$29mn. While not a disorderly outflow, the reversal indicates a sentiment shift after two days of brief inflows. The composition of today’s foreign selling points to large-cap/index de-risking and MSCI-sensitive names, including ANTM, BBRI, BMRI, TLKM, DSSA, BBCA, AMMN, ASII and AADI. Interestingly, foreign buying was still visible in selected high-beta commodity and conglomerate names, including BUMI, BRPT, BRMS, MDKA, DEWA and ADRO.

·         Ironically, the equity sell-off happened as the rupiah appreciated. Negative sentiment remains driven by concerns over the proposed single SOE commodity export body, despite Danantara’s assurance that existing contracts will be honoured. S&P’s warning that the plan could hurt exports, revenue and the balance of payments has reinforced market concerns.

·         Our conversation with domestic and foreign investors today also suggests that the concern is less about near-term margin erosion and more about policy direction. In particular, the key concern is whether the government could take a more aggressive step, including intervention in or confiscation of private-sector assets.

·         Overall, Banks’ relative resilience and lower turnover might be a silver lining that the market is not seeing a full liquidation. However, the pressure in other sectors points to continued de-risking and confidence loss. Thus, we believe more policy clarity is needed before the market can see a bottom. (Erindra Krisnawan, CFA – BRIDS)

BBTN (Buy, TP: Rp1,500) - Bank- Only: Apr26 Results

Apr26 Insights:

·         Earnings normalized from Mar26 high base: BBTN booked net profit of Rp277bn in Apr26 (-27% mom, +160% yoy), with the mom decline mainly reflecting normalization in provision expenses from Mar26’s low base, alongside lower NII and higher opex.

·         NII declined on lower NIM: NII fell 8% mom to Rp1.1tr, as NIM declined to 3.2% (-25bps mom), while loans were relatively flat mom.

·         NIM pressure from lower yield: EA yield declined to 6.4% (-27bps mom), while CoF was broadly stable at 3.2% (-2bps mom), resulting in narrower margin.

·         PPOP softened: PPOP declined 9% mom to Rp494bn, as the 48% mom increase in other operating income from gain on sale of financial assets and 45% growth in other income was offset by lower NII and 6% mom higher opex.

·         Provision normalized from low base: Provision expenses rose to Rp146bn from Rp37bn in Mar26, bringing CoC up to 0.5% (+38bps mom), although still lower than Apr25’s 1.2%.

·         Higher LDR while CASA ratio improved mom: Deposits declined 2% mom while loans were flat, pushing LDR higher to 96.2% (+163bps mom). CASA ratio improved to 50.0% (+183bps mom).

4M26 Insights:

·         Note on comparability: 4M26 bank-only figures exclude BTN Syariah following the spin-off, while 4M25 still included Syariah numbers; hence, yoy comparisons for NII, loans, deposits, and operating income are not fully comparable.

·         Cumulative earnings still grew: BBTN booked net profit of Rp1.2tr in 4M26 (+15% yoy), forming 33% of our FY26F and 31% of consensus’ FY26F, above 4M25’s run-rate of 29%.

·         NII remained under pressure: NII declined 5% yoy, mainly due to a 5% yoy decline in loans and lower NIM of 3.4% (-11bps yoy).

·         Lower yield partly offset by lower CoF: EA yield fell to 6.6% (-114bps yoy), while CoF improved to 3.2% (-98bps yoy), limiting the NIM decline.

·         PPOP declined: PPOP fell 9% yoy, as lower NII and 8% yoy lower other operating income outweighed the 3% yoy decline in opex.

·         Lower provisioning supported earnings: Provision expenses declined 35% yoy, bringing CoC down to 0.8% (-35bps yoy), helping offset weaker PPOP.

·         Liquidity remained tight: LDR increased to 96.2% (+285bps yoy), as deposits declined 8% yoy compared with a 5% yoy decline in loans. CASA ratio declined to 50.0% (-131bps yoy).

Summary:

·         Overall performance: BBTN’s Apr26 results showed earnings normalization from Mar26’s high base, with mom pressure from lower NII, softer NIM, higher opex, and higher provisions, while cumulative earnings remained supported by lower credit costs. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

MARKET NEWS

Fed Minutes Signal Potential Rate Hikes if Inflation Persists

Fed minutes showed a growing number of officials are considering potential rate hikes if inflation remains persistently above the 2% target, reflecting rising concerns over inflation pressures from the Iran war and elevated oil prices. Many policymakers preferred removing the Fed’s easing bias and signaling that the next policy move could be a hike rather than a cut. While the Fed kept rates unchanged at 3.5%-3.75% in April, markets are now pricing in a meaningful chance of a 25bps rate hike by end-2026, supported by resilient labor market data and stronger-than-expected inflation. (Bloomberg)