FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Bank Mandiri: Inline 2Q24/ 1H24 earnings on resilient NIM, with intact sound asset quality (BMRI.IJ Rp 6,400; BUY TP Rp 7,400)

• BMRI reported 1H24 net profit of Rp26.6tr (+5% yoy) supported by 20% loan growth and lower CoC, offsetting the lower NIM.
• Mgmt revised its FY24 loan growth target from 13-15% to 16-18% while maintaining its CoC target at 1.0-1.2%.
• Maintain Buy rating with an unchanged TP of Rp7,400 based on 10.3% CoE (5-year avg.) and 20.9% FY24F ROE, implying 2.4x FY24F PBV.

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United Tractors: Lifting Our FY24-26F Forecast and TP Post 1H24 Beat; Upgrade Rating to Buy (UNTR.IJ Rp 25,800; BUY TP Rp 29,200)

• 1H24 earnings beat demonstrated Pama and UT’s coal business superior operational performance
• We raised our FY24-26F est. by 13-22% and SOTP-based TP to Rp29,200 on the better operational and coal price outlook
• We upgrade our rating to Buy on prospect of earnings upside in 2H24.

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Vale Indonesia: 2Q24 strong earnings as expected, albeit 1H24 still below seasonal achievements (INCO.IJ Rp 3,740; BUY TP Rp 5,700)

• 2Q24 net profit of US$31mn was still below estimate (39.5%/34.1% of our/ cons. FY24F), however the result was well anticipated.
• INCO has the potential to sell up to 14Mt of saprolite and 42.5Mt of limonite once all mines are fully operational in FY25-26.
• We maintain Buy rating with a SOTP-based TP of Rp5,700. Key risks to our call include lower nickel prices and a lower utilization rate.

 

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RESEARCH COMMENTARY

ACES 2Q24 result: Inline to achieve our and consensus FY24 estimates

2Q24 results:

• Net profit: – 22% qoq/+11% yoy.
• Revenue: +8%qoq/+11% yoy.

 

1H24 results:

• Net profit: +21% yoy (42% of BRIDS/Cons FY24F).
• Top line: +14% yoy (49% of BRIDS/Cons FY24F).
• 1H24 lifestyle revenue continued its double-digit growth of +21% yoy with increasing contribution to 43% (1H23: 41%). Meanwhile, Home Improvement rev. increased by 10% yoy (51% contribution vs 1H23: 53%).

 

Comment:

ACES reported improved gross margins for 1H24 and 2Q24 by 10bps, which we believe benefited from operating leverage and product mix. 1H24 SSSG reached 10.7%, higher than the company’s FY24 guidance of 7%.

In 1H24, Inventory days reached 240 (FY24 target: 250 days), lower than the 260 days in 1Q24, supported by thematic promotion with continued digital campaign. Further details will follow after the 2Q24 earnings call on August 5,2024. (Natalia Sutanto & Sabela Nur Amalina – BRIDS)

BBRI 2Q24 Concall KTA

• The company reiterated its focus (KPI) on maintaining loan quality, obtaining maximum loan recovery, and improving CASA. In all of its branches, recovery is a major part of KPI. Furthermore, the management gives more authority to the branches to waive penalties and prioritize the settlement of the principal amounts instead.
• From Jan24-Apr24, BBRI achieved collections of Rp1.4tr per month as the banks shifted its loan officers’ focus to recovery efforts. In May24 and Jun24, collections reached Rp1.8tr and Rp2.2tr, respectively. Thus, there has been a step up in BBRI’s overall ability to collect and obtain recoveries on loans.
• BBRI aspires to obtain Rp22-24tr in recoveries this year, with Rp8tr coming from insurance claims and Rp14-16tr coming from its collection activities.
• BBRI maintains its 3.0% CoC target. However, the company noted that it would depend on successful restructuring (success rate around 60-70%) and loan growth. If loan growth for FY24 is below 10%, CoC might exceed 3%. However, according to the company, the impact of successful restructuring is greater than the impact of loan growth on the CoC. Moreover, current restructuring efforts focus on tenor extension, not rate reduction.
• The bank noted that NPL for the micro segment picked up to 2.95% in 1H24 and could go above 3% in FY24 if the rate of write offs is lower than the rate of downgrades to NPL. It remains cautious on SML 2 and SML 3 loans, as the ability to restructure those loans is lower than restructuring SML1 and current stage loans.
• Moreover, BBRI has started to tighten its risk scoring as it saw a deterioration in its loan portfolio. The bank has started to regulate the procedure surrounding additional facility given by regional managers; additional facilities can only be given after the customers have completed at least half of their lending terms
• The company expects Rp500bn-800bn in modification losses for FY24-25, which may affect the NIM. However, as some companies fulfil their obligations on a cash basis (in March and September), BBRI anticipates around Rp400bn in interest income to be realised in 3Q24, which may benefit its NIM in 3Q24.
• The rate for BBRI’s CA remains elevated. Thus, going forward, the company seeks to improve its CASA position. As of 1H24, CASA growth was mostly attributed to CA growth, and micro savings growth remained flat yoy.
• In terms of insurance, the company maintained that there is no need to worry about the stop loss (70% for Kupedes and no stop loss for KUR) as the bank has already contributed around Rp10tr in premium payments to the insurance company and have only made claims for Rp4.7tr, still below the 70% stop loss. The insurance payments for Kupedes are still lagging. Thus, the concern remains on the insurance company’s willingness to reimburse the claims.
• The loan growth target for the year remains at 10-12%. The company did not provide specific guidance for deposit growth; however, it anticipates an increase in LDR this year (may reach above 84-86%), depending on the relaxation of reserve requirements. In general, the company expects loan growth to outstrip deposit growth.(Victor Stefano & Naura Reyhan Muchlis – BRIDS)

 

BDMN Jun24 Bank Only Results

• In 6M24, BDMN recorded an NP of Rp1.5tr (-4% yoy) due to a flat PPOP of Rp3.0tr, as CIR increased to 54.0% (+134bps), and a 10% rise in provisions.
• NIM experienced a 51bps yoy compression to 5.1% in 6M24, despite the 21bps rise in EA yield to 8.0%, due to a significant increase in CoF to 3.6% (+95bps yoy) as CASA ratio declined to 46.1% in 6M24 from 55.8% in 6M23.
• Loans and customer deposits grew 14% and 15% yoy, respectively, resulting in an LDR of 105.2% (-32bps yoy) in 6M24. On a monthly basis, in Jun24, loans and customer deposits grew 3% and 2% mom, respectively.
• In Jun24, NP declined to Rp145bn (-51% mom, -32% yoy) as CIR rose to 60.3% (+746bps mom, +581bps yoy) mainly due to a significant decline in other operating income to Rp305bn (-24% mom, -11% yoy). Loss from a decrease in fair value of financial assets amounted to Rp189bn in Jun24, from a Rp74bn gain in May24 and a lower loss of Rp44bn in Jun23.
• On a monthly basis, NIM fell 15bps mom to 5.0% in Jun24 as CoF was flat at 3.8% and EA yield declined by 15bps mom to 7.9%. Furthermore, CoC rose by 34bps mom to 1.9% as provisions increased by 23%.
• On a yearly basis, in Jun24, NIM declined 35bps yoy, despite the 30bps yoy rise in EA yield, as CoF rose by 81bps yoy. However, CoC improved from 2.2% in Jun23 to 1.9% in Jun24.
• Compared to FY23, NIM was 45bps lower in 6M24 due to a 69bps higher CoF as CASA was 606bps lower. CIR was 242bps higher in 6M24 and CoC was relatively flat.
• In our view, pressure on NIM (bank only) may continue if the bank does not return its CASA to the previous level, which may affect its CoF going forward. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

Bukalapak (BUKA IJ, TP:Rp320, BUY) – 2Q24 soft demand with EBITDA in negative territory, missed est

BUKA reported 1H24 core net profit Rp306bn from negative Rp136bn, primarily supported by rationalization in OPEX and gains in liquid investments.

• 1H24 net revenue of Rp2.4tr (+10.6%yoy) is broadly inline with est. amid transformation towards all-commerce platform incl. 1P retail for selected goods. This transformation has helped BUKA score higher take rates.
• Amid this transformation, COGS increased by a wide margin, leading to a lower GP in 1H24 at Rp461bn (-16.1%qoq).
• BUKA has made drastic changes in OPEX, allowing to cut adj. EBITDA loss to Rp26bn in 1H.
• Profits from liquid investments allowed BUKA to post 1H core net profit of Rp306bn.

 

BUKA reported 2Q24 positive core net profit Rp120bn but adj. EBITDA turned negative.

• Net revenue reached Rp1.2tr (+6.4%qoq, +5.9%yoy), amid transformation making gains in the blended take rate to 3.02%.
• GP grew to Rp251bn (+19.8%qoq) in 2Q24.
• However, normalization of G&A costs in 2Q24 weighed significantly on the earnings, hence adj. EBITDA declined to negative territory.
• Management suggests that the growth in GP was not high enough to accommodate the the G&A OPEX normalization, due to weakness in consumer spending.
• Profits from liquid investments allowed BUKA to post 2Q core net profit Rp120bn. (Niko Margaronis – BRIDS)

CPIN 2Q24 Results (Below): Robust qoq Improvement but below on higher tax rate

• CPIN reported net profits of Rp1.1tr in 2Q24 (-7% yoy, +49% qoq), below our lower estimate of Rp1.4tr for 2Q24. Despite that, the 1H24 net profits of Rp1.8tr represent 60% and 58% of our and the consensus FY24 forecasts.
• The lower-than-expected 2Q24 performance was caused by the processed food segment, which still reported net losses (versus our net profit estimate) and a higher tax rate of 35% during the quarter.
• Despite the 4% qoq decrease in feed revenues (+3% yoy), which we believe is due to the lower ASP, the feed segment recorded 18% higher operating profits in 2Q24 as the operating profit margin (OPM) increased to 7.3% from 5.9% in the previous quarter.
• The DOC segment's operating profit (OP) turned positive with an OP of 13.2% in 2Q24 (1Q24/2Q23: -5.8%/-9.2%), while the broiler OPM slightly decreased to 5.4% from 5.7% in the previous quarter.
• The processed food segment continued to report operating losses of Rp82bn in 2Q24, with an OPM of -2.7%, slightly better than -3.4% in 1Q24 but still down from +7.7% in 2Q23. Processed food revenues grew 2% qoq and 28% yoy.
• Consolidated gross revenues reached Rp30.3tr in 2Q24 (+4% qoq, +9% yoy), with OPM improving qoq to 5.7% from 3.6% in 1Q24, though slightly lower than 5.8% in 2Q23.
• In 1H24, CPIN booked a net profit (NP) of Rp1.8tr (+28% yoy), driven by 12% higher gross revenues and a 71bps OPM expansion.
• In our view, a positive aspect of CPIN's 2Q24 earnings is the improvement in the feed margin, as expected from its 1Q24 low base. However, the company continues to book losses in the processed food segment, which does not align with management's previous guidance. We currently have a BUY call with a TP of Rp5,900. (Victor Stefano & Wilastita Sofi – BRIDS)

CTRA 1H24 Results: In-Line with ours and consensus estimates

• CTRA reported net profits of Rp546bn in 2Q24 (+13%qoq; +49%yoy), bringing its 1H24 achievement to Rp1.03tr (+32%yoy), forming 45% and 49% of our and consensus estimates, respectively.
• Landed residential now contributes 71% to total revenue (vs.68% in 1Q24). We believe all major projects (e.g. CitraGarden City Jakarta, CitraLand Surabaya, CitraGarden Serpong) should contribute to overall 1H24 revenue recognition. We also reckon one project from last year's (1H23) marketing sales with strong take-up rate was coming from initial launch of CitraGarden Serpong (Rp1.3tr).
• Recurring income (malls, hotels, hospitals, golf) posted an average growth of 17%yoy in 1H24, except for office leased (-21%yoy) due to the weak market demand.
• Profitability margins improved across all levels, supported also by lower opex to sales. Company remained at a net cash position. (Ismail Fakhri Suweleh & Wilastita Sofi – BRIDS)

GGRM 2Q24 result: Below estimates

2Q24 earnings:

• Net profit: - 45% qoq/-75% yoy.
• Revenue: -10%qoq/-9% yoy.

 

1H24 earnings:

• Net profit: -72% yoy (23%/24% of BRIDS/Cons FY24F).
• Top line: -10% yoy (49%/46% of BRIDS/Cons FY24F).
• 1H24 SKM revenue decreased by 12% yoy, while SKT rev. +11% yoy.

 

Comment:

If we estimate a 4-5% ASP impact to 1H24 revenue growth, this translates to continued double digit negative yoy growth for 1H24 volume (FY23: -26% yoy).

1H24 gross margin decreased by 4.1%.

GGRM needs to adjust ASP further at the expense of volume. Amidst continued downtrading, higher volume from value products (lower margins) may also put pressure on margin. (Natalia Sutanto & Sabela - BRIDS)

ICBP 2Q24 result: Solid top line and improved margins support core profit growth

2Q24 results:

• Net profit: – 49.6% qoq/-33% yoy.
• Core profit: -27.6% qoq/+13% yoy.
• Revenue: -14.5%qoq/+11% yoy.

 

1H24 results:

• Net profit: -38% yoy (36%/38% of BRIDS/Cons FY24F).
• Core profit: +35% yoy (57%/60% of BRIDS/Cons FY24F).
• Top line: +7% yoy (51% of BRIDS/Cons FY24F).
• In 1H24, the revenue from noodles, snack food, Bev and Food Seasoning booked around 8% yoy growth, with improved EBIT margin in most segments except Food Seasoning and Nutrition.

 

Comment:

We believe that ICBP’s solid 2Q24 and 1H24 rev. growth was driven by volume.

Revenue from Middle East and Africa (22% of 1H24 rev.) grew 6.6% yoy in 1H24, while domestic revenue grew +5.6% yoy.

Further details will follow after the 2Q24 earnings call on August 1,2024. (Natalia Sutanto, Sabela Nur Amalina – BRIDS)

INTP 1H24 Result: Missed Consensus but ASP is recovering

• 1H24 NP reached Rp435bn (-38% yoy), 25%/26% of our/consensus estimate, a miss vs seasonality of 28%. 2Q24 NP reached Rp197bn (-17% qoq/-40% yoy).
• 1H24 NP was dragged down by lower GPM/EBITDAM, -220/-230 bps yoy, as higher USD cost led to an increase in raw material prices per ton (+8% yoy). Direct labor cost per ton also increased by 9% yoy.
• 1H24 revenue improved by 1.9% yoy (2Q24: +8% yoy), reaching 43%/43% of our/consensus estimate, inline with seasonality of 44%. Revenue was mostly driven by volume (1H24: +10% yoy, 2Q24: +13% yoy) due to additional volume from Grobogan acquisition, while ASP was still declining on yoy basis (1H24: -7%, 2Q24: -4% yoy). However, we observed a 3% qoq higher ASP in 2Q24, signifying better pricing situation compared to 1Q24 after INTP decided to raise bag price in May-24, despite higher bulk portion.
• Overall, it was a weak result due to higher cost per ton that dragged the margin. Yet, we observed better ASP in 2Q24, signifying better trajectory for cement. INTP will conduct an analyst meeting on August 2nd. We still have a BUY rating on INTP with a TP of Rp 8,400. (Richard Jerry, CFA & Christian Sitorus – BRIDS)

JPFA 2Q24 Results (Inline): Margin improvement across business segments

• JPFA reported net profits of Rp814bn in 2Q24 (+145% yoy, +23% qoq), relatively in line with our lower estimate of Rp870bn for 2Q24, despite the tax rate being higher at 32% in 2Q24. The 1H24 net profits of Rp1.5tr represent 82% and 87% of our and the consensus FY24 forecasts.
• JPFA recorded a 12% qoq decrease in feed revenues (+7% yoy), which we believe was due to lower ASP, resulting in a 7% qoq decrease in operating profits (+32% yoy). This was slightly offset by a small margin increase to 8.5% in 2Q24 from 8.1% in the previous quarter.
• The company reported almost double qoq operating profit from the DOC segment, supported by higher revenues (+21% qoq, +45% yoy) and a higher OPM of 20.5% in 2Q24 (1Q24/2Q23: 12.6%/-0.3%), driven by higher ASP during the quarter.
• Also supported by higher ASP, the broiler segment reported a 30% increase in qoq operating profits (+14% yoy), as the margin improved to 5.7% in 2Q24 (1Q24/2Q23: 4.5%/5.5%).
• The processed food segment's 2Q24 operating profit doubled qoq (tripled yoy), mainly due to the higher OPM of 5.9% in 2Q24 (1Q24/2Q23: 3.0%/2.0%).
• Consolidated gross revenues slightly decreased (-2% qoq) to Rp21.2tr in 2Q24 (+10% yoy), with OPM improving qoq to 8.6% from 6.7% in 1Q24 and 5.0% in 2Q23.
• In 1H24, JPFA recorded a net profit of Rp1.5tr (18x from the low base in 1H23), driven by 14% higher gross revenues and a 478bps OPM expansion.
• In our view, JPFA posted robust 2Q24 earnings momentum with slight improvement in feed margin and contained operating expenses (+1% yoy in 1H24). We could see some upside in earnings upgrades given the strong 2Q24 earnings and relatively resilient LB prices in July 2024. We currently have a BUY call with a TP of Rp1,800. (Victor Stefano & Wilastita Sofi – BRIDS)

JSMR 1H24: Beat Consensus

• JSMR recorded NP of Rp 2.3t in 1H24 (+104% yoy, 77% of cons - above) due to robust revenue and one-off gain from deferred tax reversal of Rp 749b. Excluding this gain, JSMR NP was still excellent at Rp 1.6t (+39% yoy)
• 1H24 revenue improved by 46% yoy (2Q24: +16% qoq/+57% yoy), 71% of cons estimate - above. Revenue was driven by 30% yoy higher toll operating revenues, as JSMR enjoyed higher traffic due to Mudik period, and result from multiple toll fare increases since last year. Some of notable hike include hike on toll road with high volume, such as Jakarta-Cikampek (+35%, since Mar-24) and Surabaya-Gempol (6-12% increased, since Sep-23). 1H24 construction revenue was also doubled in yoy basis
• 1H24 GP/EBIT/EBITDA improved by 48%/55%/52% yoy (2Q24: +73%/+90%/+79% yoy), bringing improvement to GPM/EBITM/EBITDAM in 1H24 by 30 bps/190 bps/160 bps
• Income from toll road JV improved by 5% yoy in 1H24
• JSMR would conduct analyst meeting on August 2th. (Richard Jerry, CFA & Christian Sitorus – BRIDS)

KLBF 2Q24 result: Above estimates

2Q24 earnings:

• Net profit: – 11.5% qoq/+25.8% yoy.
• Revenue: -4.8%qoq/+9% yoy.

 

1H24 earnings:

• Net profit: +18% yoy (63%/58% of BRIDS/Cons FY24F).
• Top line: +7.6% yoy (50% of BRIDS/Cons FY24F).
• 1H24 prescription revenue +7.6% yoy and distribution +17% yoy, While nutrition and OTC were flattish.

 

Comment:

• KLBF’ 1H24 gross margin decreased by 110bps, following lower margins in the prescription division, which we believe was driven by unbranded generics. Meanwhile, the gross margin of the Nutrition and OTC divisions improved yoy due to soft raw material prices.
• Lower opex (especially A&P and Salary) supported solid 1H24 net profit growth.
• 1H24 core profit increased by 12% yoy, supported by a forex gain (Rp23bn vs 1H23 Forex loss Rp61bn) and the absence of Covid-related written-off inventory (IH23:Rp56bn). (Natalia Sutanto & Sabela Nur Amalina – BRIDS

MAIN 2Q24 Results (Above): The first (oppor)tunity present itself

• MAIN reported stellar net profits of Rp205bn in 2Q24 (+384% yoy, +133% qoq), above our upper estimate of Rp156bn for 2Q24. The 1H24 net profits of Rp292bn represent 226% of our current FY24 forecast.
• The strong 2Q24 performance was driven by the DOC segment, which reported gross revenues of Rp714bn (+35% yoy, +32% qoq), with operating margins of 21.6% (compared to negative operating margins in both 2Q23 and 1Q24).
• Feed operating profit declined by 27% qoq (+12% yoy) in 2Q24 due to declining revenues (-11% qoq, -4% yoy) and a lower operating profit margin (OPM) of 7.1%, down from 8.6% in the previous quarter. We believe this was mainly due to the lower feed ASP (which contributed to a higher DOC margin).
• The broiler and processed food segments remained at a loss, though their impact was negligible compared to the feed and DOC profits.
• On the back of strong earnings and high operating cash flow, MAIN reduced its debt (mainly short-term), lowering its total net gearing to 59% in 1H24 from 75% in 1Q24.
• Operating expenses (opex) rose significantly to Rp269bn in 2Q24 (+83% yoy, +77% qoq), resulting in 1H24 opex of Rp422bn (+45% yoy). This increase was mainly due to salaries and employee benefits, which doubled yoy in 1H24.
• In our view, the positive earnings momentum can continue, albeit at a slower pace, as DOC prices have remained relatively high and feed costs are still on the lower side. We are reviewing our forecasts and target price (TP) given the robust 2Q24 earnings. We currently have a BUY rating with a TP of Rp850. (Victor Stefano & Wilastita Sofi – BRIDS)

MAPA 2Q24 result: Below expectation due to lower margins

2Q24 results:

• Net profit: +8% qoq/-21% yoy.
• Revenue: +13.6%qoq/+29.2% yoy.

 

1H24 results:

• Net profit: -9% yoy (37%/40% of BRIDS/Cons FY24F).
• Top line: +32% yoy (49%/47% of BRIDS/Cons FY24F).

 

Comment:

• We think the 1H24 rev. was in line to achieve our and cons FY24F, given the seasonality of strong 2H.
• However, the 1H24 gross margin was lower vs our and cons FY24F. Coupled with Rp41bn forex loss and higher financing costs (Rp94.6bn vs 1H23: 46.5bn), the 1H24 net profit down 9% yoy.
• We view the result as below expectations, with the risk of a downward margin revision and higher opex. (Natalia Sutanto & Sabela Nur Amalina – BRIDS)

MAPI 2Q24 result: Below estimates on lower margins due to aggressive promotions

2Q24 results:

• Net profit: +17% qoq/-26% yoy.
• Revenue: +5%qoq/+13% yoy.

 

1H24 results:

• Net profit: -14.4% yoy (42%/44% of BRIDS/Cons FY24F).
• Top line: +15% yoy (46%/47% of BRIDS/Cons FY24F).

 

Comment:

• Revenue in 1H24 and 2Q24 showed positive growth, supported by Specialty and Dept stores. For F&B revenue, 2Q24 showed a growth of 6% qoq.
• Overseas revenue (16% contribution to 1H24) continued its robust growth of 88% yoy in 1H24, while domestic (84% to rev.) reported an 8% yoy growth.
• The gross and EBIT margins showed a declining trend in 1H24 and 2Q24 compared to same period last year. We believe aggressive promotions and store expansions, especially under MAPA in 2Q24, led to lower EBIT margins for Specialty stores (83% contribution to 1H24 rev.). (Natalia Sutanto & Sabela Nur Amalina – BRIDS)

MEDC 2Q24 Result: above estimate

• 2Q net profit slightly grew to US$128mn, +76.6% qoq (vs. our preview of US$98mn), reaching 60%/57% of our/cons estimate.
• 2Q revenue grew to US$609mn, +9.4% qoq, (vs. our preview of US$557mn), reaching 52%/52% of ours/cons estimate.

 

Comment: We believe the strong performance was attributable to AMMN's contribution of US$66.5mn, +160% qoq, and dividends of US$18.8mn. (Timothy Wijaya – BRIDS)

NCKL 2Q24 Result: Above expectation due to strong HPL performance

• 2Q net profit grew to Rp1.8tn, +80.2% qoq (vs. our preview of Rp1.1tn), reaching 54%/49% of our/cons estimate.
• 2Q revenue reached Rp6.7tn, +12.2% qoq, (vs. our preview of Rp6.3tn), reaching 48%/47% of our/cons estimate.

 

Comments: Profits from associate, mainly from HPL reached Rp658bn in 2Q, +125% qoq, supported by strong MHP price. More operational info in tomorrow's analyst meeting. (Timothy Wijaya – BRIDS)

NISP 2Q24 Results (Slightly Above)

• NISP reported an NP of Rp2.4tr (+16% yoy) in 1H24, despite recording a 13% decline in PPOP, primarily supported by a provision reversal of Rp98bn. This result is slightly above (53%) consensus FY24 NP expectations. (Note: 1H23 NP of Rp2.1tr formed 51% of FY23 NP of Rp4.1tr).
• The decline in PPOP in 1H24 was largely attributed to a significant increase in CIR to 50.9% (+728bps yoy), driven by a 48% decline in other operating income (with fee-based income down 16%) and a 16% rise in opex. The rise in opex was due to a 17% and 15% increase in salaries expense and G&A, respectively.
• In 1H24, NIM fell 9bps yoy to 4.3%, despite a 200bps increase in LDR to 81.8%, due to a 40bps yoy increase in CoF to 3.8% and a flat loan yield of 7.7%.
• In terms of asset quality, NISP’s NPL improved yoy to 2.0% in 2Q24 from 2.3% in 2Q23, though it remained higher than the 1Q24 NPL of 1.8%.
• NISP’s 2Q24 NP reached Rp1.2tr (+5% qoq, +18% yoy), despite a higher CIR of 54.0% (+616bps qoq, +1,078bps yoy), due to a Rp110bn provision reversal.
• In 2Q23, NIM was relatively flat qoq (-3bps qoq) at 4.3%, as both loan yield and CoF remained relatively flat qoq. The stable qoq CoF is noteworthy as it represents one of the lowest qoq increases in CoF across the industry, despite a 58bps qoq decrease in CASA ratio to 56.0%.
• In 2Q24, loans and customer deposits reached Rp162.5tr (+6% qoq, +14% yoy) and Rp198.6tr (+10% qoq, +11% yoy), respectively, resulting in an LDR of 81.8% (-302bps qoq, +200bps yoy).
• In our view, NISP’s performance was largely driven by improved asset quality, as evidenced by the yoy decline in NPL and the bank’s confidence in lowering provisions to the point of recording a reversal. Furthermore, the bank’s ability to keep CoF stable qoq amid a high interest rate environment may help in maintaining a positive growth in NII going forward. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

PTBA 2Q24/ 1H24 Headline: improved 2Q24 operational performance, but 1H24 earnings a slight miss

1H24 earnings:

• Net profit: -27% yoy (36%/ 40% of BRIDS/ Cons FY24F) – a slight miss on lower non-operating income (interest and profit from JV).
• EBITDA: +6% yoy (42%/ 43% of BRIDS/ Cons FY24F) – a slight miss, as 2Q24 revenue improved but insufficient to offset higher cost in 1Q24.
• Revenue: +4% yoy (52%/ 51% of BRIDS/ Cons FY24F) – inline, implying on track production (limited impact from higher rainfall in Jun24) and flat coal prices.

 

2Q24 earnings

• Net profit: -23% yoy/ +57% qoq – lower interest income and profit from JV qoq.
• EBITDA: +6% yoy/ + 94% qoq – strong jump qoq reflecting normalizing cost from high-base in 1Q24.
• Revenue: +15% yoy/ +9% qoq - strong top line, implying on track production growth delivery.

 

We currently have a Buy rating on PTBA with a TP of Rp3,100. (Erindra Krisnawan & Christrian Sitorus – BRIDS)

SILO 1H24 Results: Below ours and cons expectation

• SILO reported Net profit of Rp301bn in 2Q24, bringing its 1H24 achievement at Rp314bn, forming 28% of our and consensus estimates, respectively. Excluding the 1Q24 write-offs, core net profit was recorded at Rp715bn in 1H24, only forming 42% of our estimates (i.e. Below).
• Net revenue in 2Q was down by -0.9%qoq, while opex to sales was up 260bps, causing weakened core net profit to decline by -4.1%qoq. We believe that this was related to higher 2Q opex seasonality, as reflected in higher salary cost (up by 390bps as a% to revenue in 2Q). We reckon that there was no more material impairment addition in 2Q24. (Ismail Fakhri Suweleh – BRIDS)

SMGR 1H24: Missed Estimate

SMGR 1H24 NP reached Rp501bn (-42% yoy, 24%/22% of our/consensus estimate - missed its seasonality of 38%, and weaker than our preview of Rp763bn), due to weak revenue and rising costs. 2Q24 NP only reached Rp30bn (-90% yoy).

• 1H24/2Q24 revenue declined by 4%/1% yoy, as sales vol (1H24/2Q24 sales vol -1% yoy/+1% yoy) and ASP (-5% yoy/-6% yoy) were weak. On a qoq basis, ASP still declined by 3%, as we suspect the price hike at end of May was not executed across the board.
• 1H24 GPM/EBITDAM declined by 240 bps/280 bps, as we observed rising raw material cost per ton (1H24/2Q24: +2%/+4% yoy) and labor cost per ton (1H24/2Q24: +7%/+2%). On a qoq basis, labor cost per ton jumped by 21%, while raw material cost jumped by 11%. Rising USD and higher price on raw materials were affecting cement players, including INTP.

 

Overall, it is a weak result. We will review our rating and estimates after SMGR's analyst meeting (somewhere between the end of this week or early next week). (Richard Jerry, CFA & Christian Sitorus – BRIDS)

Tower Bersama (TBIG IJ, TP: Rp2,500, BUY) – 1H Below est, amid focus on BTS towers

TBIG delivered 1H net profit of Rp731bn (+6.1%yoy), below our/cons. est., mainly owing to increased D&A charges and financial expenses.

• 1H Revenue reached Rp3.4tr (+4.1%yoy), in line with our/cons est., as it was rolling out a lot more BTS towers 1H YTD.
• However, 1H gross profit was down amid higher D&A charges, as TBIG was more focused on BTS towers (higher no. of BTS vs. collo) in ex-Java and deploying fiber.
• Financial expenses are trending than our FY24 est. amid rising TBIG debt.

 

TBIG delivered 2Q net profit of Rp381bn (+8.9%qoq, +6.8%yoy), with little topline growth for TBIG, whilst the lower tax charges supported the bottomline.

• TBIG 2Q revenue of Rp1.7tr was flattish as it delivered fewer BTS towers and collos to clients in 2Q on a qoq and a yoy basis. Similarly, EBITDA was flattish too.
• The increased financial charges were more than compensated for by the lower tax charge in the quarter. (Niko Margaronis – BRIDS)

TINS 2Q24 Result: Inline

• 2Q net profit grew to Rp405bn, +12.7x qoq, reaching 50.2% of our estimate.
• 2Q revenue improved to Rp3.2tn, +53.4% qoq, reaching 45.1% of our estimate, driven by stronger ASP (c.+21% qoq) and sales (35.5% qoq).

Operational

• Tin ore production slightly declined to 4,890 ton, -8.8% qoq, due to lower onshore output that was partially offset by stronger offshore production.
• Refined tin sales increased by 35.5% qoq to 4.7kt, whilst production also grew by +16.2% qoq to 5.2kt, signifying an improvement in run rate from 1.5kt/mo 

MARKET NEWS

MACROECONOMY

Bank of Japan Raised Their Policy Rate to Around 0.25%

Bank of Japan (BoJ) raised their policy rate to around 0.25% from 0.1%, basing on the recent economic activity and prices that’s been “developing generally inline with the Bank’s outlook”. BoJ also noted that the import price growth has turned positive and posed a risk for further inflation. Accompanying the rate hike is the reduction of the monthly size of JGB purchase by BoJ. Starting from Aug-24, the monthly purchase will decrease to JPY5.3tn and gradually reduced by JPY400bn per quarter until it reaches JPY2.9tn/month in Apr-26. (Bank of Japan)

 

Eurozone Inflation Tick up in Jul24 to 2.6% yoy

Eurozone inflation ticked up in Jul24 to 2.6% yoy (vs. Jun's 2.5%) with core inflation remaining unchanged at 2.9% yy. Both figures came above expectations. Service inflation, one indicator that remains elevated, fall for the first time in three months to 4% yoy. (Bloomberg)

 

Indonesia: July's Inflation will be Announced Today at 11am

July's inflation will be announced today at 11am. We expect further deceleration to 2.18% y-y (Cons: 2.37%) from Jun's 2.51% for the headline figure. For core inflation, we expect the y-y number at 1.89% y-y (vs. cons: 1.90%), a slight decrease from Jun's 1.9%. (Economic Research – BRIDS)

 

The Fed Left the Rate Unchanged at 5.25-5.50%

The Fed left the rate unchanged at 5.25-5.50%. Overall tone remains neutral with emphasize on balancing risks between cutting too soon or too late. The Fed Chair, Jerome Powell, stated that inflation has eased substantially, and the labor market has returned to the eve of the pandemic with no significant inflationary pressure. He also said that there's a possibility of September rate cut, and current scenario could be everywhere from no rate cut to several rate cuts. (FOMC)