FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

RESEARCH COMMENTARY

ASII 1H24 Result - Slightly Above

• 1H24/2Q24 NP declined by 9%/4% yoy, 53%/53% of our/consensus estimate, slightly higher than seasonality average of 50%
• 1H24/2Q24 revenue declined by 1.5%/1% yoy, mostly due to weaker auto segment but offset by solid financial segment and decent HE segment. Equity income improved by 8% yoy, mostly due to solid income from AHM, as 2W growth was still relatively solid (only -1% yoy by 1H24, much better than 4W)
• 1H24 auto segment revenue/EBIT declined by 1%/49% yoy (2Q24 revenue/EBIT: -2%/54% yoy). 1H24 auto margin stood at 1.3% vs 2.5% in 1H23 (2Q24: 1.0% vs 1Q24 1.5%). Auto segment revenue beat the consensus but inline on EBIT level, despite weak 4W sales (-20% yoy). However, auto segment recorded lower GPM, possibly due to product mix changes
• 1H24 financial segment's revenue/EBIT improved by 12%/13% yoy (2Q24: +11%/+8% yoy). As expected, financial segment showed better performance (above its seasonality) due to carry over impact from strong financing growth over past few years (FIF recorded 19% yoy financing growth in FY23)
• 1H24 HE's revenue/EBIT declined by 6%/12% yoy (2Q24: -5%/-16% yoy). However, in qoq basis, HE performed quite decent (revenue/EBIT: -1%/+8% qoq) due to solid Pama production despite bad weather in 2Q24
• Overall, a solid 1H24 performance by ASII. We are still expecting better 4W sales in 2H24, yet 2W growth rate might slow down in 2H24. ASII would conduct analyst meeting on August 8th. We have BUY rating for ASII with TP of Rp 5,100. (Richard Jerry, CFA & Christian Sitorus – BRIDS)

BBYB 2Q24 Results (inline)

• BBYB's bottom line turned slightly negative at Rp20bn in 2Q24, in line with our expectations. The 2Q24 losses wiped out its 1Q24 net profits, resulting in a slight loss of Rp6bn for 1H24. These losses are still better than our and the consensus forecasts for FY24 net losses.
• The turnaround from 1Q24's net profits was driven by a lower NII (-14% qoq), as the bank reported a 4% qoq decrease in loans and an approximately 300bps drop in NIM, both attributed to the lower contribution from loan channeling to Akulaku Finance, in our view.
• The bank continues to report opex efficiencies at -13% qoq (-29% yoy) and lower provisions (-7% qoq, -6% yoy), but this was not enough to offset the decline in NII.
• Supported by a high CoC in recent quarters, BBYB managed to maintain its NPL at 3.9% in 2Q24 and improved its LaR to 13.8% (-352bps qoq, -81bps yoy), with decent NPL coverage of 139% and LaR coverage of 39%.
• Despite the lower provisions, CoC remained high at 26.6% in 2Q24 due to lower loan balances.
• LDR dropped to 61% in 1H24 from 66% in 1H23 and 65% in 1Q24, as the bank's loans still contracted. Meanwhile, customer deposits rose by 3% qoq to Rp14.8tr (-3% yoy), providing the bank with ample liquidity to support its 2H24 earnings.
• In our view, the bank's ample liquidity and potential loan disbursement through the resumption of channeling to Akulaku Finance and collaboration with Lazada will be key growth drivers in 2H24. However, the slow progress of both channels could potentially lower the FY24 loan growth target below the current management's target of 20% yoy. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

BNGA 2Q24 Results (Inline) and Meeting KTA

• BNGA reported net profits of Rp3.4tr in 1H24 (+5% yoy), in line with consensus (48%) FY24F. The 2Q24 NP came in at Rp1.7tr (+3% qoq, +4% yoy). (Note: 1H23 NP of Rp3.2tr formed 50% of FY23 NP).
• The NP growth was mainly driven by an improvement in CoC from 1.5% in 1H23 to 0.9% in 1H24. The CoC was below the bank’s expectation of 1.0%-1.1% for FY24 as it remained focused on responsible growth, reflected by the 38bps yoy decline in NPL to 2.2% and a historical low in LaR at 10.2% in 1H24.
• Furthermore, the bank saw no issue in the NPL across various segments, including Micro and mortgage, owing to its risk management focus and discipline in filtering for good loan quality. Although, a small rise in NPL was seen in the auto segment, which the management attributed to an uptick due to the change in OJK collection regulations.
• NIM saw a 43bps yoy decline to 4.3% in 1H24, due to a significant increase in CoF to 4.0%. Going forward, the bank remains focused on improving CASA ratio to combat the compression on NIM. In 1H24, the CASA ratio reached 64.5% (-4bps qoq, +22bps yoy). Additionally, the bank will utilize the GWM incentive given by the government and take full advantage of the GWM rate reduction.
• Furthermore, the bank was not reliant on only savings accounts as CA composition was slightly higher than SA in 1H24. Also, the bank claimed that most of its current accounts did not come from special rates customers.
• Loans and customer deposits grew 3% and 1% qoq, respectively, resulting in an LDR of 86.9% (+158bps qoq, -8bps yoy). On a yoy basis, loans and customer deposits both grew 6% yoy.
• The loan growth was driven by 10% and 6% yoy growth in SME and consumer segments, respectively, followed by a 5% growth in corporate loans.
• Loan yield fell slightly (-3bps qoq) in 2Q24 to 8.3%. However, the bank was able to maintain its interest income, as the current rates from marketable securities are deemed to be favorable for the bank and resulted in a higher yield from marketable securities. Thus, the bank was not solely reliant on loan yields.
• CIR reached 43.6% (-136bps qoq, +44bps yoy) in 2Q24 and 44.2% (-7bps yoy) in 1H24. The bank aims to maintain its CIR below 45% in FY24, and to push it down further, if possible, to improve profitability. However, the management maintains that it will not shy away from investing in human capital, digital capabilities, and cybersecurity.
• In our view, BNGA’s 1H24 results reflected the bank’s commitment towards better asset quality and responsible growth, despite the challenging condition which resulted in a compression on the NIM. As BNGA’s Current Accounts has remained one of its greatest strengths, we believe that its NIM has reached its bottom for the year. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

Blibli (BELI IJ, TP: Rp520, BUY) – 1H inline result – ample improvement in GP and OPEX.

Blibli delivered 1H24 net loss of Rp1.18tr, significantly improved by +33%yoy, mainly due to steady gross revenue performance, and substantial OPEX improvements.

• 1H Gross revenue and net revenue grew steady by +4% / +1%yoy respectively, having altered the revenue mix opting for more profitable offerings, hence we see greater weight in 3P (includes Tiket.com), Institutions and Physical stores while 1P retail has consolidated.
• Consequently this led to upbeat 1H GPBD Rp2.35tr and Gross Profit Rp1.55tr growing by 33%/30%yoy generating ample improvement.
• In parallel, Blibli has reduced OPEX by 7%yoy mostly from S&M.

 

In similar fashion, Blibli delivered 2Q24 net loss of Rp489bn, significantly improved by +30%qoq, with steady gross and net revenue performance, and substantial improvements in OPEX. Key highlights include:

• Optimization in Revenue mix continued from 1P shifting 3P, Physical stores.
• 2Q Gross Profit stands now at Rp 803bn growing by 8%qoq/31%yoy generating ample improvement.

Blibli was reduced OPEX by another 3%qoq, 8%yoy. (Niko-BRIDS)

DMAS 1H24 Results: Above Consensus Estimates

• DMAS reported 2Q24 net profits of Rp803bn, bringing its 1H24 achievement to 65% of consensus estimates (i.e., Above).
• Its revenue in 2Q24 grew by 19% qoq, with ~86% (Rp561bn) coming from the data center land sales recognition (i.e. from Microsoft, total 1H24 revenue was recognized at Rp810bn, data center marketing sales in 1H24 ~Rp825bn).
• Gross margin improved by 1%, while opex to sales dropped by 120bps in 1H24. Company remained at a net cash position. We will revisit our forecast to adjust overall 1H24 achievement and 2H24/FY25F outlook. We currently have a BUY rating with a TP of Rp220. (Ismail Fakhri Suweleh – BRIDS)

GOTO Gojek Tokopedia (GOTO IJ, TP:Rp125, BUY) - 1H24 EBITDA loss broadly inline

In 2Q24, group core GTV increased to Rp63.2tr (+17%qoq, +54%yoy). This was owed to:

• Increase in ODS GTV, as management saw good traction in ODS orders with mass market products (Hemat) as well as subscriptions in Gojek Plus. (Available in all ODS products).
• Core fintech GTV (excl. merchant payment gateway) grew by 16.1%qoq, +64.8%yoy, on strong downloads no. 30mn+ on cumulative Basis, and growth in outstanding loans at Rp3.5tr, +30%qoq.

 

2Q24 proforma gross revenue increased to Rp4.3tr (+2.5%qoq, +39%yoy), whilst net revenue reached Rp.3.5tr (+14.3%qoq), on the back of significant reduction in promotions.

 

Group adjusted EBITDA loss was reduced by +53.5%qoq, 94.6%yoy to Rp48bn. This was supported by keeping steady the recurring cash fixed costs to Rp1.3tr (slightly up by ~+1.8%qoq, down -5.0%yoy). The 2Q24 Fintech EBITDA loss showed the most improvement, followed by Ecommerce adj. EBITDA whilst ODS adj. EBITDA declined in 2Q24, mainly due to competition (lower take rate, but having larger market share currently than GRAB). The management suggested that 2H24 earnings have seasonally been higher for GOTO. (Niko Margaronis - BRIDS)

Indosat Ooredoo Hutchison (ISAT IJ, TP:13,300, BUY) – Well inline 1H net profit, soft 2Q revenue but still projecting 2-digit growth yoy

IOH reported 1H24 net profits Rp2,7tr (+43.3%yoy), achieving 51.5%/52.9% of ours/cons est. on the back of strong revenue growth and margin expansion.

• IOH 1H24 net revenue reached Rp27.97tr (+13.4%yoy) inline with ours/cons est.
• Moreover, EBITDA margin expanded by 180bps yoy in 1H24 to reach 47.9%, with an EBITDA of Rp13.4tr (+17.8%yoy).

 

IOH reported 2Q24 net profits of Rp1.44tr (+11.2%qoq, 47.0%yoy) on the back of revenue growth and margin expansion.

• 2Q24 Revenue grew by +2.2%qoq, +11.1%yoy, owed to data traffic growth and ARPU increase to Rp38.4k, whilst the customer base is seen flat.
• IOH experienced a margin expansion of 180bps qoq in 2Q24 to reach 48.8%, delivering an EBITDA of Rp6.9tr (+6.0%qoq, +14%yoy) by realizing operational leverages and reporting lower network costs and marketing. (Niko Margaronis - BRIDS)

Key takeaways from MIDI’ 2Q24 earnings call

• Guidance: Following strong 1H24 result, MIDI increased its SSSG target to 8% (up from 6% prev.) and its top and bottom-line growth guidance to 13% (up from 11% prev.), while maintaining a gross margin of approximately 26%.
• July SSSG: SSSG remained in the low-teens (2Q24: 9.6%).
• Store Opening – Alfamidi: MIDI is on track to open 200 new Alfamidi stores this year. In 1H24, MIDI opened 75 new Alfamidi stores and has 119 stores in the renovation process, slated to open in 2H24.
• Store Expansion: MIDI will add new stores in 2 additional provinces in 2H24 (1H24: 21 provinces). In 1H24, MIDI opened new stores in 1 new province and 7 new cities/districts.
• Lawson: In 3Q24, MIDI opened 3 new stores (stand-alone), bringing the total number of Lawson stores to 696 for 1H24. The company will continue to review more stores with negative EBITDA and may close some to maintain profitability. (Natalia Sutanto, Sabela Nur Amalina – BRIDS)

 

MYOR 2Q24 result: Slightly above to achieve our and consensus’ estimates

• MYOR reported 2Q24 net profit of Rp606bn, +23% yoy but down 46% qoq, leading to 1H24 bottom line of Rp1.7tn, +13% yoy, supported by solid top line (+9% yoy) lower opex/revenue despite lower gross margin by 80bps (25.8% vs 1H24: 25.8%). On the core profit, MYOR reported 1H24 core profit of approximately Rp1.6tn, +13% yoy.
• The 1H24 net profit was 51% of our FY24F and 52% of consensus, i.e slightly above.
• In 1H24, Beverage’s revenue +15% yoy with improved operating margin to 12% (1H23: 10.5%), while Food’ revenue also grew +13% yoy with lower OP margin of 10.3% (1H23: 11.3%). (Natalia &Sabela – BRIDS)

Poultry – Which opor 🐤 does not come twice? Opportunity

• As of today's closing, JPFA and MAIN share prices have contracted by 7.2% and 4.7%, respectively, while CPIN`s share price remains positive at 0.5%. We believe this was partly due to the MTD share price performance of CPIN, JPFA, and MAIN, which increased by 2.0%, 16.5%, and 27.8%, respectively, as of June 29, 2024.
• As the integrators are maintaining a positive tone on the results, one of the main reasons for the share price contraction was the declining LB price, in our view. From its peak at Rp20.5k/kg in the 1st week of Suro month, LB price has dropped to Rp16.5k currently (3rd week of Suro). 
• We see the drop in LB prices in the 3rd week of Suro as normal (in line with historical data) at c. 10%. Although LB prices are lower compared to the third week of Suro during 2022-2023 (due to timing differences, as 2022-2023 prices bottomed in the second week and rebounded in the third week), average LB prices during the first three weeks of Suro in 2024 are still higher than our initial expectations, at Rp18.9k.
• We believe this presents an opportunity to buy into the poultry sector (we opine for lower LB prices during Suro despite the resilient prices in the first two weeks) given the potential strong earnings momentum and rebound in LB prices post Suro month. (Victor Stefano & Wilastita Sofi – BRIDS)

UNTR headline earnings: steady revenue, improved 2Q24 margin drove 1H24 earnings beat

2Q24 earnings

• Net profit: +10% qoq/ -15% yoy
• Operating profit: +8% qoq/ -16% yoy
• Revenue: -1% qoq/ -5% yoy

 

1H24 earnings:

• Net profit: -15% yoy (forming 55% of BRIDS/ cons FY24F)
• Operating profit: -13% yoy (58%/ 57% of BRIDS/ cons FY24F)
• Revenue: -6% yoy (58%/ 57% of BRIDS/ cons FY24F)

 

Divisional performance key drivers:

• Revenue beat from mining contracting on stronger-than-expected volume (+15% yoy vs. forecast of +10% yoy); possible margin support from weaker IDR and better volumes.
• Stronger-than-expected 1H24 sales volumes of coal mining (70% of FY24F)
• Strong gold price in 1H24

MARKET NEWS

MACROECONOMY

China's Politburo Prioritizes Boosting Domestic Demand, Pledges New Economic Measures

China latest politburo meeting ended with a new commitment to address the domestic demand slump and making it a priority in the short-term. The focus on “high-quality” development, penciled in the Third Plennum communique, is expected to be set aside for a longer-term objective. Officials vowed to roll out a batch of new measures to support the economy. (Bloomberg)

 

SECTOR

The New Regulation Regarding National Health Includes Points For Retail Cigarettes and Ready-to-eat Products.

The President has signed a new regulation regarding national health, Government Regulation Number 28 of 2024, is an extension of Law Number 17 of 2023 concerning Health. Several points in this regulation regarding cigarettes are prohibited from being sold retail or to anyone under the age of 21 (Article 434 (1) and the impose of excise on processed food, including ready-to-eat items. This regulation, referred to as. The central government can determine the maximum limit of sugar, salt, and fat content in processed food, including ready-to-eat items. (Kontan)

 

CORPORATE

ISAT Absorbed Capex of Rp4.52tr in 1H24.

ISAT has utilized a capital expenditure budget of Rp4.52tr in 1H24, or about 37.5% of its 2024 Capex budget of Rp12tr. Approximately 89.8% of ISAT's capex was allocated to the mobile business to support data service demand, with the remainder allocated to multimedia, data communication, internet, and information technology segments. (Kontan)

 

KLBF Signs Shareholders Agreement for the Establishment of Joint Venture

KLBF, through its subsidiary PT Global Chemindo Megatrading (GCM), signed a Shareholders Agreement (SHA) on July 29, 2024, to establish a joint venture with Lian SGP Holding Pte. Ltd. (Lian SGP), a subsidiary of Livzon Pharmaceutical Group Inc. GCM and Lian SGP have agreed to establish a new company named PT Livzon Pharma Indonesia (LPI), based in Central Jakarta, focused on the active pharmaceutical ingredients industry with an initial investment of Rp650bn. The shareholding structure will be 80% Lian SGP and 20% GCM. (Emiten News)

 

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