FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Bank Rakyat Indonesia:  Positive 1Q24 net profit growth despite higher provisions, expected improvement ahead (NOT RATED)

• Despite the 91% increase in provisions, BBRI booked 1Q24 net profit of Rp15.9tr in 1Q24 (+2% yoy) with strong PPOP growth of +22% yoy.
• The mgmt raised CoC/NPL guidance to max 3.0% (from 2.2-2.3%) and to max 3.0% (from 2.7-2.9%), but with an expected improvement in 2H24.
• Since Mar24, BBRI’s valuation has de-rated to 2.4x PBV (+0.5SD vs 5-year mean) as the shares fell 15%, underperforming the sector by 11%.

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Bank Jago: 1Q24 earnings below; expect steadier NIM and faster growth amid robust asset quality (ARTO IJ Rp 2,040; BUY; TP Rp 4,500)

• ARTO’s 1Q24 earnings missed estimates due to a lower NIM caused by the lower portion of high-yield Sharia financing, amid lower provisions.
• A lower portion of Sharia financing may limit the yield decline and drive brisker loans growth going forward amid robust asset quality.
• We maintain our FY24-25F estimates and TP of Rp4,500; maintain Buy with faster expected loans growth and NIM expansion as key catalysts.

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Sido Muncul: 1Q24 earnings beat on solid volume and margins, but headwind from weak purchasing power (SIDO IJ Rp 705; HOLD; TP Rp 710)

• On the back of solid 1Q24 revenue (driven mostly by volume) and higher margins, SIDO booked brisk 1Q24 net profit growth of 30% yoy.
• We expect soft input prices to sustain the high margins going forward. As such, we raise our FY24-25F net profit estimates by 2.7%.
• We see risk of rising inflation and weak purchasing power to potentially hinder sales in 2Q24 onwards. Maintain Hold with a higher TP of Rp710

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RESEARCH COMMENTARY

BTPS 1Q24 Results – below

• BTPS recorded a sequential improvement in 1Q24 with net profits of Rp264bn (+244% qoq) but still 38% lower than in 1Q23. An improvement was seen in the CoC, which declined to 13.6% from 23.7% in 4Q23, thanks to the higher repayment rate of 93.4% (similar to 1Q23’s level). 
• However, the 1Q24 NP is only 18% of the street`s FY24F, i.e. below, as the bank expected lower provisions.  
• The bank reported lower 1Q24 NII of Rp1.2tr (-2% yoy, -5% qoq) as NIM declined to 24.6% (-85bps yoy, -99bps qoq), reflecting the increase in the CoF to 4.2% (+66bps yoy, +22bps qoq). 
• The lending balance declined to Rp11tr (-8% yoy, -4% qoq) as the bank continued to focus on improving asset quality. The deposit balance also declined, in-line with the lending.
• Asset quality was relatively unchanged with NPF of 3.0% (-5bps yoy, +3bps qoq).
• To improve the repayment rate, the bank is reimplementing the solidarity fund, which has been absent since covid-19. The initiative has had a minimal impact thus far as it has only been applied to c. 3% of the total lending balance. (Victor Stefano & Naura Reyhan Muchlis - BRIDS)

HEAL 3M24 Achievement: Above Our forecast and the consensus

• HEAL reported 3M24 Net Profit after Taxes and Minority Interest (PATMI) at Rp191bn (+75% yoy, +116% qoq), forming 32% of our forecast and the consensus.
• The EBITDA margin managed to record a new level of 29%, a 420bps expansion compared to 3M23. HEAL successfully managed to lower its medicines cost as a % of revenue from 24% in 3M23 to 22% in 3M24. Meanwhile, minority interest as a % of net profit has been stable at 22%, similar to 4Q23’s level. Inpatient and outpatient revenue continued to post positive growth at 33%yoy and 17% yoy, respectively.
• HEAL is our Top Pick in the sector, and we currently have a Buy rating on the stock with a TP of Rp1,800, implying FY24F EV/EBITDA of 17.6x. Currently, the stock trades at Rp1,090 implying FY24F EV/EBITDA of 11.0x. More details on volume developments and other key drivers will be made available in an earnings call on May 2, 2024 at 3PM JKT Time. (Ismail Fakhri Suweleh - BRIDS)

SILO 3M24 Results and Call Takeaways

Core Profit In-Line with our forecast and the consensus

• Siloam booked 3M24 net profit of Rp14bn, a substantial drop of 95%yoy, due to one-off non-cash impairment for its hospital assets at Rp308bn, recorded in other expenses. Stripping out the impairment, Siloam still booked net profit of Rp365bn (+24.3%yoy, +0.4%qoq), reaching 26.7% and 26.1% of our forecast and consensus estimates (i.e. inline).
• At the top-line, SILO still booked solid growth of 14%yoy, with the private payer mix remaining stable at 82%. Revenue intensity contracted a bit in 1Q24 due to the seasonal case-mix (dengue, emergency cases, and other low-ticket spending), yet countered by strong growth in inpatient days (+16%yoy), and outpatient visits (+14%yoy).

1Q24 Operationally Solid amid Low-Seasonality

• We think that the 1Q24 result depicts Siloam’s ability to overcome seasonality (strong operational growth despite the fasting season falling in Mar24) which should be sustained in 2Q24. The Mar24 average revenue per productive days was 7% higher compared to January, and was 10% higher compared to the 4Q23 average, according to the management.
• Meanwhile, on the fixed assets impairment, we will continue to monitor developments. Nonetheless, we believe Siloam’s current strategy to maximize a higher intensity case mix is intact producing revenue growth. New developments on high-intensity cases: 1st successful bone-narrow transplant @MRCCC Semanggi. The company has also explained its related-party transactions on plans to purchase a parking area in Siloam Kebon Jeruk, for the needs of the flagship-hospital capacity expansion. (Ismail Fakhri Suweleh - BRIDS)

MARKET NEWS

MACROECONOMY

Indonesia Government Budget as of 3M24

Government budget as of 3M24:

• Revenue: Rp620.0tr (-4.1% yoy, 20% of target)
• Tax Revenue: Rp393.9tr (-8.8% yoy)
• Spending: Rp611.9tr (-18% yoy, 18.4% of target) ~ mainly for election and social aid
• Surplus: Rp8.1tr (0.04% of GDP)
• Primary Surplus: Rp122.1tr (MoF)

 

US PCE Accelerated to 2.7% yoy in Mar24

The US PCE accelerated to 2.7% yoy in March 2024. It was a 0.3% increase on a monthly basis. Core PCE reached 2.8% in Mar24, higher than the consensus at 2.6% but unchanged from Feb’s 2.8%. Services rose 0.4% mom while goods prices rose 0.1% mom. Foods decline by ~0.1% mom and energy prices rose 1.2% mom. (Bloomberg)

 

CORPORATE

BBCA's Paylater Performance improved in 1Q24

BBCA recorded that the outstanding credit value from its paylater increased 61% ytd to Rp185bn since the end of December 2023. This amount contributed around 1% to BBCA's total credit to the individual segment or personal loans. From the customer side, the number of paylater users at BCA grew 70% ytd to 88,500 customers. Although the overall credit distribution with paylater at BCA has increased, the NPL ratio remained at 0.47% as of March 2024. (Kontan)

 

BBNI Collaborates with Telkomsel on Reciprocal Cooperation for Employees.

BBNI signed a Memorandum of Understanding (MoU) with Telkomsel regarding reciprocal cooperation for employees. This MoU includes cooperation in integrated cash management services, employee benefits, BNI subsidiary facilities, and telecommunications access services for Indihome, E+, KV, and Landing Page products specifically for employees. (CNBC)

 

BBRI Signed a Strategic Partnership with Microsoft for AI Development

BBRI signed a strategic partnership with Microsoft to encourage the development and use of artificial intelligence (AI) at the company. This partnership intends to enrich innovation and AI-based digital solutions to improve operations, services, and customer experience when using products. Together with Microsoft, BBRI will modernize its banking platform and IT workload management, explore collaborative technology, and increase digital as well as IT and the technical capabilities of its workers. (Investor Daily)

 

EMTK Has Completed Its Acquisition of 51% of CASS Shares for Rp872.7bn

EMTK has completed its acquisition of 51% of PT Cardig Aero Services Tbk (CASS) for Rp872.7bn. The transaction, completed on April 25, 2024, involved acquiring 1,064,344,500 CASS shares from PT Cardig Asset Management, PT Dinamika Raya Swarna, and Cemerlang Pte Ltd. (Emiten News)

 

MAPI has Announced The Opening of the First GANT Store in Indonesia

MAPI has opened the first American sportswear brand GANT store in Indonesia, located at Ground Floor Pondok Indah Mall 2. The 92 sqm interior, features a modern interpretation of the brand's history, dating back to university campuses in the US. The store showcases GANT's Spring/Summer 2024 collection, featuring clothing for both men and women, as well as accessories like caps and tote bags. (Company)