BRIDS Market Pulse

In the spotlight

• JCI rose 3.2% w-w, outperforming EM peers. Similar to the previous week, however, the index’ performance continued to be driven by illiquid large-cap stock DCII (+41.5% w-w) and conglo-related stocks SMMA (+43.9% w-w), CDIA (+70.8%), BRPT (+9.7%). Meanwhile, LQ45 rose +1.1%, driven by BRPT and ASII, offsetting underperformance in BMRI. Within our coverage, automotive sector (ASII) outperformed amid strong flows from foreign investors (US$35mn), followed by heavy equipment (UNTR) on the back of positive sentiment on the coal sector on possible production disruption in China. Overall foreign investors’ outflow moderated (to -US$8mn), but consistent outflows continued to be seen in large-cap banks (BBCA, BMRI).
• 2Q25 earnings season kicks off. 2Q25 earnings from several banks (ARTO, BTPS, BBNI) showed persisting margin pressure due to rising CoF, but with generally still steady asset quality.

• BBNI 2Q25 earnings miss: 2Q25 net profit fell -12% qoq/ yoy, bringing 1H25 net profit to Rp10.1tr (-6% yoy), below our/cons est. at 46% of FY25F, due to compressed NIM.  Mgmt cut FY25 NIM guidance to 3.8% (prev. 4.0-4.2%) on CoF pressure, necessitating downward revision in our forecasts. We maintain Buy rating on BBNI with a lower TP of Rp4,800 based on our revised forecasts, implying an FV PBV of 1.1x.

• BTPS: solid 2Q25 profit growth on robust asset quality. BTPS booked a net profit of Rp644bn in 1H25 (+17% yoy), outperforming our/cons ests. at 54/53% of FY25F, driven by a lower CoC at 8.1%. Mgmt remains cautious on loan growth, monitoring macro conditions, and expects NIM to stay stable in the coming quarters. We downgrade our rating to Hold with a TP of Rp1,500 as we think current valuation has fairly reflected the fundamentals.

• ARTO: 2Q25 earnings miss, despite record profit on lower provisions; margin pressure persists. ARTO posted 2Q25 net profit growth of +11% qoq/ +136% yoy, resulting in 1H25 net profit of Rp127bn (+154% yoy), but below our/cons ests. Mgmt. maintains its +30% loan growth guidance and expects a delayed impact from rate cuts to bring CoF lower in 2H25. We maintain our Buy rating but lowered our FY25-27F est. to account for higher CoF, resulting in a lower TP of Rp3,300.

• Healthcare: 2Q25 Preview: defensive profile intact despite growth normalization hence, we expect In-Line 1H25 earnings. We expect in-line 1H25 earnings for hospitals despite an est. -7% yoy core profit due to macro headwinds and tighter BPJS. We also expect Pharma’s 1H25 earnings to be in-line with 54% run-rate, with KLBF’s intact cost-efficiency, potential quarterly rebound in SIDO. Maintain OW rating on defensive growth outlook amid weak macro headwinds. Top Picks: MIKA (Buy, TP Rp3,200) and KLBF (Buy, TP Rp1,780).

• TLKM: Streamlining and value unlocking at the core of new transformation pillars. TLKM new mgmt. sets four transformation pillars focused on efficiency, portfolio streamlining, value unlocking, and strategic holding shift. Restructuring becomes a key move as TLKM plans to streamline from 55 to 22 subsidiaries and unlock up to Rp100-150tr in asset value. We maintain a BUY rating with a TP of Rp3,500, supported by ongoing industry price repair and visible progress on product simplification.

• Commodities: ICI3 and ICI4 coal indices prices have continued to show signs of stabilization, trading at US$55.9/t and US$40.9/t respectively, indicating cost support from Indonesian producers (at US$40-45/t for ICI4) with potential rebound from seasonal winter restocking by end of 3Q. Potential production cut due to safety inspections in China may support the market’s balance, as China's production has been stronger than expectation (+7% yoy as of 5M25). However, China’s total coal inventory, which remains at historically high levels, may cap price recovery prospect. On the regulatory front, re-emergence of plan by the Indonesian government to impose export tax on coal also poses a potential overhang for the sector.

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