FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Bank Neo Commerce: 1Q24 earnings beat: a profitable 1Q from lower provisions, ST challenges on NIM and disbursement (BBYB.IJ Rp 232; BUY; TP Rp 600)

• Driven by qoq lower provisions, BBYB recorded a positive 1Q24 net profit of Rp14bn, but at the expense of lower coverage.
• 1Q24 NIM fell due to lower loans and resilient deposits (hence a sharply lower LDR) due to the absence of Akulaku Finance loans disbursement. 
• Maintain Buy rating with an unchanged TP of Rp600 with a low LDR and sufficient coverage to drive loans and earnings growth. 

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RESEARCH COMMENTARY

Key takeaways – ERAA meeting (21 May 2024)

• ERAA 1Q24 SSSG:

• Consolidated: 5%
• Active Lifestyle segment: 5-7%
• F&B: double-digit

Increased mall traffic due to multiple long weekends in May 2024 is expected to further boost sales.

• Store Expansion Plans for FY24:

• FY24 target: 200 new stores this year
• This is a reduction from 600 new stores in FY23 and around 500 new stores in FY22

• Store Productivity and Product Launches

• Affordable Handsets: More affordable handsets (priced under Rp 3 million) will be launched in the upcoming quarters.
• 1Q24 saw the launch of 15 new series compared to 5 new series in 1Q23.

• Slow 3Q24, stronger 4Q24 with the launch of iPhone 15:

• 3Q24 is traditionally the slowest quarter due to clearance sales and high marketing costs, resulting in lower margins.
• Improvement anticipated in 4Q24 with the launch of iPhone 15.

• Erablue – Electronic stores

• Total stores (April 2024): 55 stores (vs FY24 Target: 80 stores)
• Focused on the mid-to-low market segment.
• Reported solid growth in April 2024 and is expected to maintain steady growth in the coming quarters.
• Erablue offers a 2-3% price difference compared to general trade (especially in home appliances).

(Natalia Sutanto, Sabela Nur Amalina – BRIDS)

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