FROM EQUITY RESEARCH DESK

IDEA OF THE DAY

Cement: Divergence between SMGR and INTP sales volumes in Aug24; prices are improving in Sep24 (NEUTRAL) INTP's sales vol continued to outperform with a 3.5% yoy growth (ex-Grobogan) in Aug24, vs. industry’s -1% yoy and SMGR’s -5% yoy. Bag ASP showed improvement across SMGR's and INTP’s products; yet, as Merdeka is still priced relatively low, risk of price war lingers. Maintain Neutral rating on the sector, with INTP as our top pick; the availability and pricing of Semen Merdeka is the key factor to watch.      To see the full version of this report, please click here   Indosat Ooredoo Hutchison: Aggressive Distribution Fuels Future Growth While Ensuring Short-Term Resilience with Price Hikes (ISAT.IJ Rp 10,975; BUY TP Rp 13,300) IOH establishes another distribution layer with Indosat retailers to transition away from low ARPU to high ARPU potential users in ex-Java. IOH implements 5-9% price hikes to maintain revenue resilience in 2H24 while it anticipates the sector to recover by 1Q25. We maintain our BUY rating on IOH (TP: Rp13,300), implying premium valuation driven by growth from IOH's expanding distribution. 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

BBRI Aug24 Bank Only Results

8M24 Insight:

• Net Profit: BBRI reported net profits of Rp36.2tr in 8M24, up 4% yoy (from +2% in 7M24), partly due to a low base in Aug23. The bank continued to book robust PPOP growth of 16% yoy, partially offset by a 44% yoy increase in provisions. CoC declined to 3.2% from 3.3% in 7M24 but remained up 75bps yoy.
• Performance vs. Consensus: The 8M24 net profit represents 60% of the FY24 consensus forecast, lower than the 66% achieved in 8M23.
• Loan and Deposit Growth: Loan growth slowed to 7% yoy in 8M24, down from 9% yoy in 7M24, while deposit growth fell from 13% yoy in 7M24 to 7% yoy in 8M24. LDR increased to 89%.
• NIM: NIM remained under pressure at 6.8% in 8M24, down 50bps yoy, as CoF stayed high at 3.7%.
• CIR: CIR improved to 35.1% (-205bps) driven by a 37% increase in other operating income, offsetting a 6% increase in opex.

 

Aug24 Insight:

• Net Profit: BBRI’s net profit increased to Rp4.8tr in Aug24 (+51% mom, +21% yoy) from a low base in both months. This growth was driven by robust PPOP of Rp8.9tr (+16% mom, +5% yoy) and improved provision expenses of Rp2.6tr (-32% mom, -21% yoy).
• NIM: NIM rose slightly mom to 6.8%, supported by a higher EA yield and LDR, partly offset by a slight increase in CoF.
• CoC: CoC decreased to 2.6% from high bases of Jul24 (3.7%) and Aug23 (3.5%).
• Loan and Deposit Growth: Loans remained flat mom, while deposits declined by 2%.
• Other operating income: Other operating income was high at Rp5.4tr (+18% mom, +65% yoy) with notable increases in fee income and other income.

 

Summary:

• Overall Performance: Despite the higher CoF amid lower deposits and flat loan growth mom, BBRI's Aug24 results were strong, as it compensated with higher other operating income and lower CoC. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

SAQU Aug24 Results

8M24 Insight:

• Net Loss: SAQU reported a net loss of Rp150bn in 8M24, despite achieving an NII of Rp386bn, as opex reached Rp498bn. 
• CIR and Opex: The CIR stood at 126.4% in 8M24, largely driven by elevated opex, primarily due to other expenses (Rp213bn) and salary expenses (Rp163bn). 
• NIM: NIM was recorded at 5.1% in 8M24, with EA yield and CoF at 7.4% and 4.6%, respectively. 
• Given that SAQU was launched as a digital bank towards the end of FY24, we believe that a yoy comparison may not fully capture the bank’s performance trajectory.

 

Aug24 Insight:

• Net Loss: SAQU recorded a 3% mom decline in net loss to Rp32.2bn in Aug24, supported by a 2% increase in NII and flattish opex growth, which offset an 8% decline in other operating income.
• NIM: NIM was flat mom at 5.0% in Aug24, as both EA yield and CoF were flat mom at 7.5% and 5.0%, respectively.
• CIR: CIR improved by 274bps mom to 149.5% in Aug24. The relatively flat opex resulted from a 9% mom decline in other expenses, which offset a 13% mom rise in promotional expenses. The drop in other operating income was mainly due to an 11% mom decrease in fee income. 
• CoC: CoC rose to 3.3% (+89bps mom) as provisions increased by 36% mom. 
• Loans and Customer Deposits: Loans and customer deposits amounted to Rp5.0tr (flat mom) and Rp6.3tr (+3% mom), respectively, resulting in an LDR of 79.4% (-263bps mom).

 

Summary:

• Overall Performance: In our view, the bank’s performance continues to reflect the costs associated with its developmental phase, requiring substantial investments in promotional activities, which have driven high opex. We anticipate this trend to persist until the bank builds sufficient brand awareness, at which point promotion-related costs should diminish. (Victor Stefano & Naura Reyhan Muchlis – BRIDS)

MACROECONOMY

China's Central Bank Announces Major Monetary Stimulus Measures to Address Economic Slowdown

• China's Central Bank has announced several monetary stimulus measures to tackle the ongoing economic challenges. The stimulus package includes several key rate reductions:
• A 50bps cut to the Reserve Requirement Ratio (RRR), which is expected to inject approximately CNY 1tr into the financial system.
• A reduction in the 7-day reverse repo rate to 1.5%.
• The Medium-term Lending Facility (MLF), which serves as the basis for the Loan Prime Rate (LPR), will be reduced by 30bps.
• A 50bps reduction in outstanding mortgage rates for individual borrowers, easing annual interest expenses by about CNY 150bn and benefiting roughly 150 million people.
• The Lowering of the minimum down payment for second home purchases, from 25% to 15%. (Bloomberg)

 

SECTOR

Property: 11% VAT on IPL Expected to Further Impact Indonesia’s Apartment Ownership and Occupancy

The recent implementation of an 11% Value Added Tax (VAT) on Environmental Management Fees (IPL) for apartment complexes is expected to further reduce public interest in vertical housing. The Association of Indonesian Apartment Owners and Residents highlighted that apartment occupancy has been declining since the COVID-19 pandemic, with many buildings still struggling to reach pre-pandemic occupancy levels. Additionally, data from Colliers show no new apartment projects have been launched between the first and second quarters of this year, with demand for apartments in Q2 2024 reaching only 330 units. (Kontan)

 

CORPORATE

BUKA to Implement MESOP II

BUKA will implement MESOP II with a maximum number of option rights to be converted amounting to 4,019,592,620 shares at an exercise price of Rp189/share (Current Price: Rp115/share). The implementation of MESOP II will take place over 30 trading days, starting from October 1, 2024 – November 12, 2024. (IDX)

 

ELSA and PGEO Strengthen Synergy in Geothermal Development 

ELSA and PGEO are enhancing their synergy in geothermal development through strategic collaboration at the Indonesia International Geothermal Convention & Exhibition (IIGCE) 2024. Following the signing of a Joint Study Agreement (JSA) last June, ELSA has signed a Joint Development Agreement (JDA) with PGEO and Multifab for the development and manufacturing of heat exchangers. These heat exchangers play a crucial role in the geothermal energy production process, which can improve the efficiency of geothermal power plants (PLTP). (Emiten News)

 

GOTO Officially Introduced the Associate Product Manager Bootcamp Program

GOTO has officially introduced the Associate Product Manager (APM) Bootcamp Program, highlighting the company’s commitment to developing Indonesia's tech talent. As the first initiative of its kind in the country, it provides extensive on-the-job training with a top-tier curriculum designed to cultivate the future leaders of Indonesia's technology sector (TheJakartaPost)

 

GoPay Free Transaction Fees for MSME Merchants 

GoTo Financial is promoting the wider adoption of QRIS by introducing a program that eliminates transaction fees for micro, small, and medium enterprises (MSMEs). According to GoTo Financial, this program can be utilized immediately by MSMEs that download and register their business on the GoPay Merchant app, starting in September 2024. (Kontan)

 

Comment: This should be a cash burn in the beginning, but we like Gopay initiating free QRIS fees for merchants to transact with their customers. Normally, a QRIS fee of 0.3% is charged to merchants for transactions over Rp100,000. (Niko Margaronis – BRIDS)

 

ISAT EGMS Approves 1:4 Stock Split

ISAT will carry out a stock split with a ratio of 1:4 for all Series B shares, which will change the nominal value from Rp100 per share to Rp25, while the nominal value of Series A shares remains the same. Thus, the number of Series B shares recorded will increase significantly from 8.06bn (8,062,702,740) shares to 32.25bn (32,250,810,957) shares, thereby increasing market accessibility and liquidity. (Bisnis)