FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Bank Negara Indonesia: 1Q24: higher other operating income and lower provisions offset lower NIM from a higher CoF (BBNI.IJ Rp 5,226; BUY; TP Rp 6,800)

• BBNI booked 1Q24 NP of Rp5.4tr (+2% yoy, +3% qoq) supported by higher other op. income and lower provisions, offsetting the lower NIM.
• To boost NIM going forward, the bank aims to reprice its loans and reduce its exposure to high-rate USD time deposits.
• Maintain Buy rating with a TP of Rp6,800 (unchanged). Key catalysts are NIM recovery and a steady CoC.

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XL Axiata: 1Q24 earnings beat; better outlook with strong revenue momentum and improved cost structure.(EXCL.IJ Rp 2,440; BUY; TP Rp 3,300)

• 1Q24 earnings beat due to a better-than-expected revenue momentum with EBITDA margin gains, offering cushion for the next quarters.
• XL sees more revenue growth through more reloads via its digital app, while it seeks new footprint in ex-Java leveraging on AI tech.
• We raise our FY24-26F est. by +34%/16%/7% and TP to Rp,3300; reiterate Buy rating on its sustainable revenue growth momentum.

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Macro Strategy: The Entropy of Risk

• BI’s rate hike was balanced by adding to the industries qualified for incentives, supporting liquidity amid a weaker fiscal space outlook.
• The reemergence of two risks - stagflation and trade tensions may mean global monetary policy is more uncertain.  This warrants caution.
• The MSME Business Index remained in the expansionary zone in 1Q24, while the outlook for 2Q24 remains bright backed by Lebaran demand.

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RESEARCH COMMENTARY

ASII 1Q24 Results

• ASII reported NP of Rp7.4t (-14% YoY), 24% of our forecast/the consensus – inline with seasonality of 24%, driven by strong net income from financial services (+12% yoy) and solid equity income (+5% yoy), offsetting weaker automotive (-9% yoy) and heavy equipment (-15% yoy).
• At the top line, 1Q24 revenue reached Rp 81.2t (-2% yoy), 26% of our forecast/the consensus – inline with the seasonality average of 24%, as the auto segment surprisingly recorded flattish revenue growth despite ~20% yoy 4W decline, while financial services recorded +13% yoy growth and HE recorded a contraction of -7% yoy.
• On margins, the EBIT margin reached 12.5% (-50 bps yoy). Margins declined in the automotive segment (1Q24: 1.5% vs 1Q23: 2.8%), whereas financial services saw a margins improvement to 28.3% (+150 bps yoy) while heavy equipment recorded a 40 bps yoy decline to 20.3%.
• Despite inline revenue and earnings, we think it is still surprising for the automotive segment to record a milder contraction despite weak volume in 1Q24. We are currently recalibrating our numbers. In the meantime, we reiterate our HOLD call with a TP of Rp 5,600. ASII is currently trading at 6.2x forward PER (-1.5x std dev of the 8-years mean). Richard Jerry – BRIDS)

BDMN Bank Only Mar24 Results

• In Mar24, BDMN recorded net profits of Rp351bn (+91% mom, +35% yoy), driven by lower provisions of Rp131bn (-59% mom, -30% yoy).
• CoC improved significantly to 1.1% (-156bps mom, -77bps yoy).
• On a monthly basis, NIM improved to 5.2% (+24 bps mom) as the EA yield of 8.2% (+51bps mom) offset the CoF amounting to 3.8% (+30bps mom).
• On the other hand, CIR rose 105bps mom to 52.5% due to the 8.2% mom and 10.6% mom rise in employee and other expenses, respectively.
• In 3M24, NP grew 2% yoy to Rp831bn due to a 5% higher NII, which was offset by the 11% yoy increase in provisions.
• Despite a higher LDR of 104.8% (+463bps yoy), NIM declined to 5.1% (-58bps yoy).
• Compared to FY23, the EA yield and CoC were relatively flat. On the other hand, NIM declined 39bps, while CoF and CIR rose by 61bps and 27bps, respectively.
• On an annual basis, loans and customer deposits grew 19% and 14%, respectively. (Victor & Naura – BRIDS)

BUKA IJ – Posting positive adj. EBITDA mainly through OPEX improvements, BUKA adopts more 1P Retail.

• BUKA achieved a milestone in 1Q24 posting Rp15bn of EBITDA, its first ever positive quarterly adj. EBITDA. The qoq increment in adj. EBITDA of Rp61bn resulted mainly from significant reductions in employee costs.
• BUKA’s 1Q24 total TPV stood flat, while its blended take rate showed a substantial improvement by 16bps to 2.80%.
• The 1Q24 contribution margin came in at Rp124bn (+2.1%qoq, 19.9%yoy), as the COGS was higher as BUKA adopted more 1P retail practices. (Niko – BRIDS)

MAPI 1Q24 earnings: Below expectation, F&B still reported negative sales and EBIT margins

• MAPI reported 1Q24 net profit of Rp414bn, +6% yoy and 2% qoq, supported by +18% yoy top line growth. The 1Q24 gross margin was 42.6%, lower than our FY24F (45.2%) and the consensus (44.2%).
• The 1Q24 net profit accounted for 17/18% of our FY24F/the consensus, i.e., below expectations to achieve our FY24F/consensus growth of 26%/23% yoy.
• At the top line, specialty stores reported 1Q24 revenue growth of +26% yoy, followed by Dept stores (+15% yoy). Meanwhile, F&B still reported minus 17.7% yoy revenue growth.
• 1Q24 overseas revenue was +95% yoy (16% contribution to the 1Q24 top line), while domestic revenue grew +9% yoy.
• On the EBIT margin, Specialty and Dept stores reported lower margins vs 1Q23. (Natalia & Sabela – BRIDS)

MAPA 1Q24 earnings: Below expectation on lower gross margins and higher opex

• MAPA reported 1Q24 net profit of Rp281bn, +8.2% yoy, supported by a strong top line (+35.6% yoy). The lower 1Q24 gross margin, higher opex and higher financing costs led to soft growth at the 1Q24 bottom line.
• The 1Q24 net profit accounted for 16% of our FY24F and consensus estimates, below our FY24F and consensus bottom line growth estimates of +26% yoy (1Q24:+8.2% yoy).
• Overseas revenue booked strong growth of +110% yoy in 1Q24, while domestic revenue was +20% yoy.(Natalia & Sabela – BRIDS)

PGAS IJ; 1Q24 Result Highlights; Way above ours and consensus

• PGAS recorded strong performance in 1Q24 with earnings jumped 42% yoy yo US$122 mn, which was way above ours (45.2%) and consensus (51.1%). This stellar result was mainly due to improving spread in 1Q24.
• Revenue was recorded slightly improved by 1.7% yoy to US$949 mn due to higher ASP in its distribution segment.
• On quarterly basis, PGAS also recorded improvements to its earnings (+53.1% qoq) resulted by lower average cost of gas in 1Q24 and lead to a higher spread. (Hasan Barakwan,BRIDS)

UNTR 1Q24 earnings slight beat from resilient Pama, higher gold price

• UNTR posted 1Q24 net profit of Rp4.55tr (-15% yoy, forming 27% of our forecast/ the consensus). The 1Q24 earnings' slight beat was mainly supported by resilient mining contracting (Pama) business, with +14% yoy revenue growth (27% of our FY24F est.), supported by 17% production volume growth.
• Revenue from the heavy equipment business fell 22% yoy, but also came in above our FY24F estimate (at 41% of FY24F), supported by relatively resilient parts and services revenue (-12% yoy) vs. Komatsu sales’ -20% yoy.
• UNTR’s mining businesses (coal + gold + nickel) delivered -17% yoy revenue, also ahead of our expectation (at 41% of FY24F), reflecting the contribution from nickel units and the effect of higher gold prices, partly offsetting the drop in thermal coal prices (~-35% yoy).
• We currently have a Hold rating on UNTR with a TP of Rp24,900. Overall, we see the 1Q24 earnings as a slight beat amid the potential for further upside in coal production (for Pama) and gold prices. (Erindra – BRIDS)

MARKET NEWS

MACROECONOMY

Indonesia Direct Investment Realization Reached Rp401.5tr in 1Q24

Direct investment realization reached Rp401.5tr in 1Q24, marking a notable increase of 22.1% yoy and 9.8% qoq. This achievement accounts for 32.4% of the FY24 target of Rp1,239.3tr. Direct investment in the downstream sector amounted to Rp75.8tr. Foreign Direct Investment (FDI) maintained its strength despite elections and global uncertainty, registering robust growth of 15.5% yoy to Rp204.4tr. Investment distribution in 1Q24 was evenly balanced between Java and Ex-Java regions. In terms of sectors, the base metal industry remained dominant with Rp48.1tr investment. (Ministry of Investment)

 

The US Treasury Announced Increased Borrowings in 2Q24

The US Treasury announced increased borrowings in 2Q24. It expects to borrow US$243bn (vs. US$202bn in January’s estimates) in privately-held net marketable debt to end the quarter with a US$750bn cash balance. In 1Q24, the US Treasury borrowed US$748bn in privately-held net marketable debt, US$12bn lower than the estimate due to higher cash receipts and lower fiscal expenses. (US Treasury)

 

SECTOR

The Indonesian Government is Targeting the Conversion of 150,000 units of Electric Motorcycles by 2024

The government is targeting to convert 150,000 units of ordinary motorcycles to electric motorcycles by 2024. In addition, the government also provides a subsidy of Rp10mn/converted motorcycle unit given directly to the conversion workshop appointed by the government. On the other hand, there are still some challenges in implementing electric vehicles, such as limited charging infrastructure and high prices. The government continues to address these challenges by building charging infrastructure and providing various incentives to encourage the use of electric vehicles. (Emiten News)

 

CORPORATE

AKRA Distributes Dividends of Rp125/Share

AKRA's AGM decided to distribute dividends of Rp2.46tr or equivalent to Rp125/share (Div. yield: 7.6%). The DPR is 88.7% of the company's 2023 net profit of Rp2.78tr. The Rp125/share dividend includes two interim dividends of Rp50/share paid in Aug23 and Rp25/share in Nov23. The remaining dividend to be paid is Rp50/share. The dividend will be paid on May 27, 2024 with regular and negotiated market cum dividends on May 8, 2024, regular and negotiated market ex dividends on May 13, 2024, cash market cum dividends on May 14, 2024 and with an recording date on May 14, 2024. (Bisnis)

 

MAPA Injects SDI Capital of US$10mn For Expansion

MAPA has injected US$10mn in capital to Sports Direct Indonesia (SDI), equivalent to Rp162.4bn, with a 7.75% annual interest rate. The loan, signed on April 24, 2024, will mature on March 28, 2029, or upon contract breach. (Emiten News)