FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Vale Indonesia: Cost Efficiencies in Growth Projects (INCO.IJ Rp 2,950; BUY TP Rp 3,300)

• INCO announced a reduction of US$800mn in projected capex for Pomalaa HPAL due to efficient technology and cost-cutting measures.
• It also announced an initial resource of 825mn wmt saprolite and 533mn wmt limonite, making it the largest in Indonesia.
• We lowered our TP to Rp3,300 as we decreased our LT nickel price assumption to US$16,500 for its HPAL projects; Upgrade rating to Buy.

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RESEARCH COMMENTARY

BBCA (Buy, TP Rp11,900) - Apr25 Bank-Only Results

Apr25 Insights:

• Net profit down mom and yoy: BBCA posted a lower net profit of Rp4.5tr in Apr25 (-33% mom, -8% yoy), due to the absence of dividend income.
• NIM declined as CoF rose: The bank recorded a lower NIM of 5.8% (-33bps mom, -14bps yoy), driven by lower EA yield and higher CoF.
• CoC remained manageable: CoC stood at 0.6%, still in line with monthly seasonality.
• Higher CIR due to lower income: Opex remained high at Rp2.5tr, while the absence of dividend income eroded earnings, resulting in a higher CIR of 29%.
• Loans remained robust but deposits declined: BBCA continued to report solid loan growth of 1% mom (+13% yoy), while deposits declined by 2% mom (+4% yoy), resulting in a higher LDR of 80%.

 

4M25 Insights:

• Net profit growth remained solid: BBCA posted a net profit of Rp20.2tr in 4M25 (+17% yoy), achieving 35% of both our and consensus FY25 estimates—inline.
• Supported by higher dividend income: Net profit growth was supported by higher dividend income of Rp2.2tr in 4M25, up from Rp770bn in 4M24.
• Steady NIM at 6.0%: NIM remained steady at 6.0%, as EA yield declined slightly while CoF held unchanged at 1.1%.
• Improving CIR as opex rose more modestly: Growth in NII (+7%) and other operating income (+26%) more than offset the higher opex (+4%).
• Lower provisions and CoC: Provision expenses declined by 8%, keeping CoC low at 0.4% (-10bps yoy).

 

Summary:

• Overall Performance: We view BBCA’s Apr25 results as weak, marked by a slight increase in CoF, lower deposits, and NP growth that was mainly driven by the timing of dividend payments. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

KLBF (Buy, TP Rp1,800) - KTA 1Q25 Earnings Call: On-Track to Meet 8-10%yoy Net Profit Growth Guidance

• 1Q25 top-line growth of 6%yoy was primarily volume-driven, with the company still seeing limited room for ASP increases throughout FY25F given the weak macro backdrop.
• Despite that, KLBF maintained its revenue/net profit growth guidance of 8-10%yoy, expecting the Pharma business to continue as the main growth driver - offsetting weakness in Nutritionals due to tight competition. Apr25 and May25 overall volumes are on-track to meet the guidance despite the post-Eid slowdown.
• Even in the unbranded generic (BPJS) pharma business, KLBF continues to see sustainable double-digit volume growth in 1Q25, with no major issues in receivables collection - despite acknowledging some delays in gov't hospital payments.
• The key strategy will remain focused on managing raw material costs and maintaining opex level at 26-27% of revenue, with efforts to manage employee expenses. Marketing spending is maintained at 20-21% to revenue with higher allocation for Above-the-line.
• Overall usage of RMB has been increasing but remains below 10% of aggregate raw materials costs, with sensitivity to USD as now: Rp1 depreciation impacting 0.1% profit margin.
• KLBF recent buyback schedule: May.5,2025 - Aug.4,2025 with Rp250bn max. value. (Ismail Fakhri Suweleh & Sabela Nur Amalina – BRIDS)

 

MARKET NEWS

MACROECONOMY

Moody’s Downgraded the US Credit Rating to Aa1 from Aaa Moody’s downgraded the US credit rating to Aa1 from Aaa, removing its last top-tier rating due to rising concerns over the country’s growing debt and persistent deficits. Citing weakened fiscal metrics, the agency criticized both Congress and successive administrations for unsustainable budget policies, with deficits nearing $2tn annually and projected to widen to 9% of GDP by 2035. The downgrade reflects worries about rising interest payments, entitlement spending, low revenue, and elevated Treasury yields between 4–5%, all of which threaten long-term fiscal sustainability—especially amid slower growth from the ongoing global tariff war. Moody’s now assigns a stable outlook to the rating. (Bloomberg)

 

SECTOR

Commodity Price Daily Update May 16, 2025

Tech: Ride-Hailing Drivers to Stage Mass App Shutdown and Protest on May 20

Thousands of ride-hailing drivers from Grab, Gojek, and Maxim will stage a mass protest and app shutdown on Tuesday, May 20, 2025, at the Ministry of Transportation in Jakarta. Organized by SPAI, the demonstration demands better welfare for drivers, including reducing platform commission fees to 10% and eliminating discriminatory order allocation systems that prioritize certain drivers. (Tempo)

 

CORPORATE

ACES Expands to Eastern Indonesia with 250th Store in Sorong

ACES will open AZKO 250th store in Sorong, Papua, on May 25, 2025, as part of its eastern Indonesia expansion. The store, located in Paragon Mall, follows a recent opening in Abepura, Jayapura. Sorong was chosen for its role as an economic hub and gateway to eastern Indonesia. (Bisnis)

 

BRIS to Distribute Dividends of Rp22.78/share

BRIS has decided to distribute dividends totaling Rp1.05tr, equivalent to Rp22.78/share (yield: 0.8%). The dividend payout ratio represents 15% of the company's net profit for 2024. Additionally, 20% of the 2024 net profit will be allocated as the company’s mandatory reserves, while the remaining 65% will be retained as earnings. (Bisnis)

 

BRIS Appoints Anggoro Eko Cahyo as New President Director

BRIS has approved the appointment of Anggoro Eko Cahyo as the new President Director, replacing Herry Gunargi. The decision was made during the Annual General Meeting of Shareholders (AGMS) held on Friday, May 16, 2025. (Bisnis)

 

GGRM Injects Rp1.5tr into Subsidiary for Toll Road Project

GGRM has injected Rp1.5trn into its subsidiary, SSAT, to support the Kediri-Tulungagung Toll Road project in East Java. This capital increase raises SSAT's total capital to Rp3.5tr, with GGRM holding nearly all shares. (Emiten News)