FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

AKR Corporindo: Expect a better 2H24 land sales; resume coverage with a Buy rating and TP of Rp1,850 (AKRA.IJ Rp 1,630; BUY; TP Rp 1,850)

• We expect JIIPE to remain a key earnings driver in FY24/ FY25, with 100 ha/90 ha of land sales for JIIPE in FY24F/FY25F (+10%/-10% yoy).
• 2H24 outlook: We expect better petroleum vol and higher margins; our conservative FY24F vol growth forecast of 1.5% implies upside.
• We upgrade our FY24F/FY25F EPS by 1%/3%; resume coverage with a Buy rating and 7% lower SOTP-derived TP of Rp 1,850.

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Macro Strategy Still No Utopia

• Bank Indonesia showcased its confidence on the IDR outlook and emphasized non-interest rate measures to stabilize the currency.
• Cross-currency risks continue to affect stability - a stronger DXY on the Fed's ongoing stance to maintain rates. Further volatility is anticipated.
• Rising oil prices on lingering geopolitical tensions and lower US inventory present additional risk to the already strained fiscal situation

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RESEARCH COMMENTARY

Banking Sector: Possible Extension of The Covid-19 Restru Program

• According to the Minister of Economic Coordination, the RI president is pushing to extend the COVID-19 restru program until FY25. The extension aims to support economic recovery, considering the pandemic's ongoing impacts on various sectors.
• Based on the OJK data, after the covid19 restru program ended on Mar24, the NPL ratio increased from 2.25% in Mar24 to 2.33% in Apr24.  
• Based on the latest available data on Mar24, BBRI and BMRI have covid19 restru outstanding loans of Rp41.5tr (3.5% of the total loan) and Rp22.3tr (1.6% of the total loan), respectively.
• We believe that the extension of the COVID-19 restru program, if any, will not significantly impact the banks under our coverage as they no longer recognize COVID-19 loans (same treatment as other loans).(Victor Stefano & Naura Reyhan Muchlis – BRIDS)

 

BBHI May24 Results

• In 5M24, BBHI booked NP of Rp172.5bn (-6% yoy) as CIR surged to 51.6% (+572bps yoy) and provisions increased by 29%.
• The significant increase in CIR reflects the high base from last year, as the bank recorded a Rp37.4bn gain from the sale of financial assets in May23.
• NIM was reported at 9.2% (+29bps yoy) due to a 27bps yoy increase in the EA yield offsetting the 39bps yoy rise in CoF to 6.4%, and despite the flat customer deposits growth and a 10% yoy decline in loans. 
• BBHI recorded a 49% yoy decline in NP to Rp31.2bn in May24 due to a flat NII and a 68% yoy decline in other operating income from the high base the year before, leading to a significant rise in CIR to 54.2%.
• On a monthly basis, NIM was flat at 9.3%, despite the 34bps mom rise in CoF to 6.3%, as the EA yield remained flat at 12.0%. Loans growth was flat and customer deposits grew by 5% mom, leading to an LDR of 136% (-512bps mom).
• Compared to FY23, NIM was slightly lower (-14bps) in 5M24 as CoF was 43bps higher and the EA yield was flat. CIR was 531bps higher in 5M24. However, CoC was 11bps lower. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

Bank Digital BCA (Blu) May24 Results

• In 5M24, Blu’s net profits amounted to Rp33.4bn (+369% yoy), driven by a 218bps yoy rise in NIM to 6.7% and a significant decline in CIR to 56.9%.
• A 319% increase in other operating income, driven by a 338% surge in fee-based income, and an 81% rise in NII resulted in 633% growth in PPOP, offsetting the 679% yoy higher provisions.
• Blu achieved relatively aggressive loans growth of 38% yoy, followed by a 234bps rise in the EA yield to 9.3%, at the expense of its CoC which rose to 6.6% (+538bps yoy).
• Despite the 27% yoy growth in customer deposits, Blu kept the CoF flat. The loans and customer deposits growth resulted in an LDR of 46% (+378bps yoy).
• In May24, Blu’s NP reached Rp5.5bn (+33% yoy) as CIR fell to 61.5% (-2,882bps yoy) and NIM increased to 6.7% (+218bps yoy) driven by a significant rise in the EA yield to 9.4% (+221bps yoy) and a 17bps decline in CoF to 3.4%.
• NP was flat mom in May24, despite the significantly lower CIR, as provisions surged 37% mom, resulting in a 146bps mom higher CoC of 5.8%. CoF was flat, and the EA yield rose 33bps mom, resulting in a 24bps mom higher NIM, despite flat loans and customer deposits mom growth.
• Compared to FY23, NIM was 122bps higher in 5M24 due to a 10bps lower CoF and 127bps higher EA yield. CIR was also notably lower in 5M24. However, CoC was 402bps higher. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

MARKET NEWS

MACROECONOMY

Government Update on the 5M24 and FY25 Fiscal Posture

The government, accompanied by the Prabowo-Gibran synchronization task force, provided an update on the 5M24 and FY25 fiscal posture. As of 5M24, the fiscal balance has turned to a deficit of Rp21.8tr or 0.1% of GDP. Gov't revenue declined by 7.1% yoy while spending jumped 14% yoy. On a positive note, the primary surplus remains large at Rp184.2tr. The government also stated that it drew down Rp200tr of SILPA to reduce government bond issuances in FY24. For 2025, The budget for the Free Nutritious Food Program (MBG) is set at Rp71tr, with implementation to be phased in, which is inline with our expectations. (Kemenkeu)

 

SECTOR

Auto: PT Indonesia Kendaraan Terminal (IPCC) Handles Imports of BYD Electric Cars

PT Indonesia Kendaraan Terminal Tbk (IPCC) is officially handling imports for the electric car manufacturer, BYD. Starting from June 3, 2024, 2,301 BYD units have landed at IPCC. The IPCC estimates that vehicle import and export activities in the middle of this year will experience an increase, especially for electric cars and brands from China that have no factories in Indonesia. (Kontan)

 

CORPORATE

PTBA Explores Collaboration on a Coal Gasification Project

PTBA is exploring collaboration with East China Engineering Science and Technology Co.Ltd. for a coal gasification project. The company is committed to supporting government policies that encourage coal downstreaming and which maintain national energy security. PTBA has allocated special coal reserves for downstream projects to ensure coal needs are met. (Kontan)

 

UNTR’s Heavy Equipment Sales Reached 1,757 Units as of May24

UNTR’s Heavy Equipment Sales reached 1,757 units as of May24, a decline from the previous year. The company aims to sell 4,000 units this year, with the mining sector accounting for 66%, construction at 13%, agro at 12%, and forestry at 9%. (Kontan)