FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Hartadinata Abadi: Capitalizing on solid volume growth and robust gold price; initiate with a Buy rating (HRTA.IJ Rp 418; BUY TP Rp 600) Geopolitical conflicts and additional rate cuts are expected to keep gold prices elevated, as it is perceived as a safe haven. HRTA outpaced industry growth from FY17-23. For FY23-26F, we project a 28% NP CAGR, driven by volume (13%) and private brand expansion. Attractive valuation with a strong earnings outlook: We initiate coverage with a Buy rating and a TP of Rp600 (5.8x FY25F PE). To see the full version of this report, please click here   To see the full version of this snapshoot, please click here   MARKET NEWS

RESEARCH COMMENTARY

BBYB Concall KTA

Loans:

• FY24 loan growth target: Management expects FY24F loan growth at 4-5% yoy (excluding AFI channeling loan), lower than 20% yoy previously.
• Since Jun24, neo loans, which was launched last year, have been aggressively marketed. The bank believes neo loans will be the primary growth driver going forward.
• Excess liquidity has been allocated to high-quality instruments, averaging a 6.5% yield, though this may decline due to rate cuts. The bank views entry into commercial banking as a strategic solution.
• Commercial banking, including multifinance, comprised c. 22% of the total loan currently. In the long run, retail lending is expected to remain at 70-80% of total lending.
• Management expects yields to fall below 20% due to reductions in SRBI's interest rate and lower yields on commercial loans, although risk-adjusted returns may improve.
• Write-offs have reached a record low, as asset quality remains a key focus.

 

Akulaku:

• Akulaku channeling remains under 'special attention' status with OJK, but the bank will resume the channelling once this status is lifted, which is expected to occur in Oct/Nov24.

 

Grading:

• The bank does not solely rely on P2P grading, utilizing its own scoring system to vet those provided by P2P partners.
• Internal ratings will also involve a third party, which is currently under discussion.

 

Deposits:

• The bank aims to reduce CoF through campaigns promoting transactional banking and improving client stickiness. In the near term, it plans to launch general insurance and additional features such as ticket payments.
• Recent marketing efforts have been focused on tangible objectives, such as promoting neo loans and enhancing consumer awareness of the bank’s broader capabilities.
• Segmentation strategies have been implemented: the affluent segment is directed towards wealth management, while the mass market is guided towards everyday services such as mobile top-ups and utility payments.
• The bank employs an interest tiering system, allowing for reduced rates for less price-sensitive clients. Previously, a one-size-fits-all approach was used. Regulatory guidelines require one month's notice to customers of any rate changes. Note: the bank plans to implement this tiering system for loans in the future. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

 

MACROECONOMY

Bank Indonesia Steps Into Foreign Exchange Market to Balance Supply and Demand

Indonesia's central bank entered into the foreign exchange market on Thursday to balance supply and demand, an official said, after the currency fell around 0.8% against the U.S. dollar, its lowest level since September 16, 2024, Edi Susianto, Bank Indonesia Monetary Management Department, stated that the Rupiah had weakened due to concern about rising geopolitical tension in the Middle East and a change in market expectation on the future magnitude of the U.S. Federal Reserve's interest rate cut. (Kontan)

 

SECTOR

Ministry of Energy and Mineral Resources Sets ICP for Sep24 at US$72.54/barrel

The Minister of Energy and Mineral Resources (MEMR) has set the Indonesian Crude Price (ICP) for Sep24 at US$72.54/barrel, a decrease of US$5.96 from the previous month’s price of US$78.51/barrel. According to the MEMR, this decline is influenced by falling global crude oil prices, particularly due to reduced demand from China. Oil refining capacity at 35 refineries in China dropped by 0.9% mom in Sep24, reaching 80.8% of the total capacity of 8.4 million barrels per day. (Kontan)

 

CORPORATE

ASII to Distribute Interim Dividend of Rp98/share

ASII will distribute an interim dividend of Rp3.967tr or Rp98/share (yield: 1.8%). This decision was made at the company’s Board of Directors meeting held on September 12, 2024, and subsequently approved by the Board of Commissioners on October 1, 2024. This interim dividend is scheduled to be distributed on October 31, 2024. (IDX)

 

BRIS Collaborates with Prudential Sharia Life

BRIS collaborates with Prudential Sharia Life to present bancassurance as a financial protection service option for customers. BRIS retail and wholesale banking customers will have access to Prudential Syariah's comprehensive insurance products through the company’s distribution channels. This new partnership is expected to increase the sharia customer base of each company. BRIS’s customer base as of June 2024 has reached 20.46mn. (Company)

 

First Media's Home Internet Services Officially Join EXCL Following Link Net Merger

First Media's home internet services officially became part of EXCL as of September 27, 2024, following Link Net's merger with EXCL based on a business transfer agreement signed on May 22, 2024. According to EXCL, the business transfer encompasses all segments related to internet service provision (ISP), IPTV, and Pay TV. Additionally, there are currently no changes to First Media's products and services. Therefore, existing customers do not need to take any action, including re-registering. (Emiten News)

 

HRUM Executed a Transaction Valued at Rp1.43tr

HRUM has executed a transaction valued at Rp1.43tr (approximately US$95mn) by signing a loan facility on September 30, 2024. This transaction involves four subsidiaries: Tanito Harum Nickel (THN), Position, Harum Nickel Industry (HNI), and Westrong Metal Industry (WMI). Specifically, THN is providing a loan of Rp756.9bn (US$50mn) to Position, and HNI is lending Rp681.21bn (US$45mn) to WMI. According to HRUM, the purpose of these transactions is to fund capex, working capital, general corporate financing, and investments for Position and WMI. (Emiten News)

 

MEDC to Distribute an Interim Dividend of Rp15.75/share

MEDC will distribute an interim dividend of US$25.89mn. The total interim dividend to be distributed is equivalent to 12.88% of MEDC's 1H24 profit. Each shareholder will receive a dividend of Rp15.75/share (yield: 1.15%). This interim dividend is scheduled to be distributed on October 1, 2024. (Kontan)

 

MIDI Reported Alfamidi’s SSSG of 11.07% in 3Q24

MIDI reported Alfamidi’s SSSG of 11.07% in 3Q24 and 10.11% yoy in 9M24, aligning with the company’s expectations and marking its highest SSSG in over a decade. Month-by-month data shows a robust low-teens SSSG for five consecutive months since May24, largely driven by stores outside Java. Alfamidi opened 54 new stores in 3Q24, bringing the total to 129 new stores by 9M24, up 3.3x from 39 in the same period last year. Alfamidi is on track to exceed its 2024 target of 200 additional stores, with momentum expected to carry through 4Q24. (Company)

 

PTPP Completes East Java Multipurpose Terminal Development Project

PTPP has completed the East Java Multipurpose Terminal project, a foreign private venture valued at Rp767bn. The project, carried out in collaboration with East Java Multipurpose Terminal (EJMT), a subsidiary of International Container Terminal Services, Inc. (ICTSI), involved dredging 1.8mn cubic meters and constructing jetties totaling 300 meters and container yards covering 1.5 hectares over two phases. The grand opening event was held on October 2, 2024. (Kontan)