FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Equity Strategy:  Welcoming Danantara

• We view Danantara’s formation as potentially aligned with investors’ interests as listed companies under its management may see improved efficiency and capital allocation.
• We believe that the overseeing body should help ensure clearer governance structure and transparency.
• We currently have Buy ratings on BMRI (TP Rp5,900), BBNI (TP Rp5,100) and TLKM (TP Rp3,680).

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Astra International: 4Q24E Earnings Preview: In-line with ours, slightly above consensus (ASII.IJ Rp 4,700; BUY TP Rp 5,900)

• We expect ASII to meet our FY24F revenue and earnings estimation, which are currently 4% and 3% above consensus, respectively.
• We expect higher-than-expected Komatsu sales, sustained Pama margin, and stable financial segment profit to drive the 4Q24F figures.
• We tweak our auto margin assumption from 1.5% to 1% in 4Q24F, reducing EPS by 0.4%. Reiterate BUY with an unchanged TP of Rp5,900.

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Macro Strategy: The Amalgam of Domestic Trends

• BI maintains rates citing global uncertainty, but we see moderating risks and a rising need to support domestic growth.
• Positive CAD and BOP trends support stability, but stronger fundamentals are essential provide buffer to capital flow dynamic.
• The extension of TD DHE will improve FX reserve outlook, reducing risk from weakening reserve adequacy and will provide room for easing.

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RESEARCH COMMENTARY

BMRI (BUY, TP: Rp5,900) - Jan25 Bank-Only Results

Jan25 Insights:

• Steady net profit growth: BMRI booked Rp4.0tr in net profit for Jan25 (+2% mom, +4% yoy), meeting 7% of both our and consensus FY25 estimates—aligned with typical January seasonality.
• NIM squeezed by rising CoF: Monthly CoF edged up to 3.0% (+8bps mom, +24bps yoy), pulling NIM down to 4.7% from Dec24’s high of 5.3% and Jan24’s 4.9%. Still, strong loan growth kept NII positive yoy.
• Opex and CIR stayed elevated: Opex dropped 34% mom but remained high at Rp3.6tr (+23% yoy), with salaries hitting a record high. CIR stood at 39% in Jan25 (vs. 52% in Dec24 and 35% in Jan24).
• LDR improvement: Despite flat mom and +19% yoy loan growth, LDR improved to 94% (from 99% in Dec24), supported by a 5% mom deposit growth—driven mainly by wholesale funding, as CA and TD grew 7% and 11% mom, respectively, while SA was flat.
• CoC remains low: Following a zero CoC in Dec24, BMRI’s CoC rose to 0.5% in Jan25, but it was still lower than Jan24’s 0.7%.

Summary:

• BMRI’s Jan25 results were largely neutral—NIM compression due to high CoF and persistent opex was offset by resilient other operating income and a still-low CoC. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

BRIS (HOLD, TP: Rp2,900) - Jan25 Bank-Only Results

Jan25 Insight:

·         Solid net profit growth: BRIS posted Rp590bn in net profit for Jan25 (-27% mom, +15% yoy), meeting 8% of our and 7% of consensus FY25 estimates—broadly in line with expectations.

·         Strong loan growth and resilient NIM: The mom decline was due to seasonality, while the solid yoy growth came from a 17% increase in loans and a stable NIM of 5.3%, despite higher CoF.

·         Higher EA yield offsets rising CoF: CoF climbed 20bps yoy to 2.7% amid tight liquidity, but this was countered by a 30bps yoy increase in EA yield, driven by a greater contribution from higher-yield loans.

·         Opex remains high, but CIR was stable: While opex fell 25% mom, it remained elevated at Rp938bn (+14% yoy). However, CIR held steady at 48%, remaining relatively flat yoy, offset by higher operating income.

·         LDR still ample: Despite a 2% mom decline in deposits and a 1% mom increase in loans, LDR edged up to 87% in Jan25, still at a comfortable level.

·         CoC held steady: Following an exceptionally low CoC in Dec24, BRIS’s CoC rose to 1.0% in Jan25 but remained flat yoy.

Summary:

·         BRIS’s Jan25 results were neutral overall—steady NIM amid higher CoF, contained NIM, and a manageable CoC. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

ESSA (Non-Rated) - FY24 Results

·         ESSA recorded NP of US$45bn (+30% yoy) in FY24, with improvement in margins due to better opex efficiency. NP is still improving despite revenue fallen by 12.6% yoy to US$301bn due to lower ammonia average price (-15% yoy) in FY24. However, revenue is still in-line with company guidance of US$300bn-310bn.

·         If we break down revenue for each segment, ammonia revenue declined by 14.5% yoy in FY24, while LPG & processing revenue was relatively flattish (-0.4% yoy). Interestingly, despite the ammonia price improvement in 4Q24 by 3% qoq, ESSA recorded revenue decline for ammonia segment by 11% qoq, possibly due to lower volume.

·         Margins improved, with a GPM of 35.8% in FY24 (+590 bps) and EBITDA margin of 42.6% (+670 bps), contributed mostly from lower opex cost, especially lower maintenance cost (-70% yoy). GPM for the ammonia segment improved by 550bps yoy to 34.4% in FY24, whereas LPG & processing margin improved by 750bps yoy to 44%.

·         ESSA is currently trading at a trailing PER of 17.8x, at +0.5 std dev of its 5-year mean. (Richard Jerry, CFA & Sabela Nur Amalina – BRIDS)

MBMA (BUY, TP: Rp530) Announces SLNC HPAL

https://assets.merdekabattery.com/dist/documents/250224_MBMA_SLNC_HPAL_vF.pdf

·         SLNC is a 90ktpa HPAL constructed in IMIP in Jan’25, with 18 months of construction phase.

·         The project is a JV between MBMA (50.1%) and Huayou (49.9%).

·         The US$1.8bn capex for the project has secured 7-yr US$1.4bn loan, an implies a capex of US$20k/ton.

·         SLNC will secure a 20-yr ore supply agreement from SCM mine.

·         MBMA will only consolidate SLNC after 1 year of HPAL operation with positive EBITDA, which should be c.mid 2027. (Timothy Wijaya – BRIDS

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