FOCUS BFI Finance Company Update 20 September 2018

Transcription

1 FOCUS XXX Company Update XX XXXXX 213 Mandiri Sekuritas Analyst Tjandra Lienandjaja Priscilla Thany Sector : Multifinance BUY Current Price Rp63 Target Price Rp1, (+58.7%) 52wk range Rp92 Rp51 Stock Data Bloomberg Code BFIN IJ Mkt.Cap (Rp bn/us$ mn) 1,59 / 678 Issued Shares (mn) 15,967 Avg. Daily T/O (Rp bn/us$ mn).3/. Major shareholder Trinugraha Capital & CO SCA 42.8% NT Asian Discovery Fund 8.2% Others 49.% EPS consensus Mansek Cons Diff 218F F (3.8) 22F (4.1) Share price performance 3m 6m 12m Absolute (%) (16.) (24.1) 14.5 Relative to JCI (%) (16.8) (19.1) 14.1 Awaiting the New Owners Compass and Starfinance of Italy will buy 19.9% and 11% stakes in BFIN from Trinugraha. We believe the new owners will bring in more expertise to further improve the company s future business. Maintain Buy with TP of Rp1,. New owners to come on board. Compass, a wholly owned by Mediobanca S.p.A of Italy (MB IM; Not covered) has entered into a Sale and Purchase Agreement (SPA) with Trinugraha Capital consortium to acquire 19.9% stake in BFIN in early August 218. In addition, Starfinance, an SPV of some Italian private investors, will also acquire 11% stake from the same vendor. Completion of the deal is expected before the yearend. Who is Compass and what can it offer? Compass is % owned by Mediobanca Group of Milan, Italy (eight largest bank). While the parent company concentrates on investment banking, Compass is the business arm for consumer lending. It ranks 3 rd in Italy with ca.12% market share in consumer credit, exvehicle credit. With its expertise, Compass can contribute to improve on credit assessment system, Customer Relationship Management, credit recovery process, product innovation, and cross selling. In the developed market, Compass has tripled its loan book and revenues, reduced its cost of credit risk, and increased its net profit by fivefold in the past 11 years. BFIN is the Group s first expansion in Asia. The historical performance of Compass can be seen in Figures 115. Compass may add more stakes in BFIN. As Mediobanca is part of EU, the transaction requires authorization from the ECB and we believe this is the main reason for the <2% stake acquisition. The company will evaluate to increase its stake in the medium term so that BFIN can be consolidated into Compass. It will keep the current management team for BFIN with expected new members from Compass. Legal case with APT still continues. APT has filed a lawsuit against the Ministry of Justice in Jakarta State Administrative Court (PTUN), demanding the revocation of 1 amendments of BFIN s article of association issued by the Ministry. This case has not deterred Compass move to acquire BFIN despite the expected long legal process to come. Maintain Buy call on the counter. We remain positive on BFIN s operating performance (1H18 results note) and keep our positive stance for the counter with TP of Rp1,, based on 2.5x P/BV 219. FINANCIAL SUMMARY PreProvision Profit 1,298 1,791 2,41 2,217 2,536 Net Profit 798 1,188 1,347 1,445 1,655 EPS EPS Growth (%) P/E Ratio (x) BVPS P/BV Ratio (x) Dividend Yield (%) ROAE (%) CAR (%)..... Source: Company (216217), Mandiri Sekuritas (21822) Please see important disclosure at the back of this report Page 1 of 7

2 BFIN At a Glance FIGURE 1. NEW BOOKING BY TYPE AND ORIGIN 16, 14, 12, 1, 8, 6, 4, 2, (%yy) FIGURE 2. MANAGED PORTFOLIO BY TYPE AND ORIGIN 18, 15, 12, 9, 6, 3, (%yy) H H18 Non Dealer Used 4W Dealer Used 4W Leasing HETO New financing growth (RHS) Non Dealer Used 2W Dealer New 4W Others/property Non Dealer Used 4W Non Dealer Used 2W Dealer Used 4W Dealer New 4W Leasing HETO Others/property Managed receivables growth (RHS) estimates FIGURE 3. MANAGED RECEIVABLES BREAKDOWN 217 Non Dealer Used 2W, 9% Others/property, 2% Leasing HETO, 14% Non Dealer Used 4W, 47% Dealer New 4W, 5% Dealer Used 4W, 23% FIGURE 4. NPF LEVEL Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 (%) 2.% 1.8% 1.6% 1.4% 1.2% %.8%.6%.4%.2%.% NPF amount (LHS) NPF Level (RHS) FIGURE 5. YIELD, COF, AND NIM 25.% FIGURE 6. TOTAL DEBTS AND GEARING RATIO 14, (x) 3. 2.% 15.% 1.% 5.% 12, 1, 8, 6, 4, 2, % 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 Mar11 Sep11 Mar12 Sep12 Mar13 Sep13 Mar14 Sep14 Mar15 Sep15 Mar16 Sep16 Mar17 Sep17 Mar18. Net Interest Margin Interest Yield Cost of Funds Total Debt (LHS) Debt/Equity (RHS) Please see important disclosure at the back of this report Page 2 of 7

3 FIGURE 7. MEDIOBANCA GROUP Holding Functions Group ALM & Treasury Corporate & Investment Banking (CIB) Consumer Banking (CB) Wealth Management (WM) Principal Investing (PI) Corporate & Investment Banking Consumer Banking Affluent & Premier Principal Investing Mediobanca Spa Compass CheBanca! Ass. Generali M&A, CapMkt, Corporate Lending, Trading AFS stake ptf Specialty Finance MB Facta MBCredit Solution Private & HNWI Banca Esperia CMB Spafid Mediobanca AM Cairn, Duemme, CMG Corporate client business Consumer client business AUA/AUM driven client business Proprietary equity stakes FIGURE 8. COMPASS CONSUMER CREDIT S NEW LOANS RANKS #3 IN ITALY IBL Fiditalia Finitalia Credem Deutsche ISP Agos Compass Findom UCI FIGURE 9. WITH 12% MARKET SHARE OF NEW LOANS 16% 14% 11.4% 1.5% 11.7% 12.% 1% 8% 7% 7% 5% 5% Jun18 Market growth (YoY) Compass growth (YoY) Market Share (%) Please see important disclosure at the back of this report Page 3 of 7

4 FIGURE 1. COMPASS NEW LOANS FY16 FY17 FY18 FIGURE 11. COMPASS NEW LOANS BY PRODUCT FY17 FY18 Cars Point of Sale Salary guarenteed Personal Loans Credit Cards 7. FIGURE 12. COMPASS LOAN BOOK (YE JUNE) FIGURE 13. COMPASS REVENUES (YE JUNE) (EUR m) J7 J8 J9 J1 J11 J12 J13 J14 J15 J16 J17 J18 J7 J8 J9 J1 J11 J12 J13 J14 J15 J16 J17 J18 FIGURE 14. DECLINING COST OF RISK (YE JUNE) (EUR m) J7 J8 J9 J1 J11 J12 J13 J14 J15 J16 J17 J FIGURE 15. COMPASS NET PROFIT (YE JUNE) (EUR m) J7 J8 J9 J1 J11 J12 J13 J14 J15 J16 J17 J18 LLPs CoR Please see important disclosure at the back of this report Page 4 of 7

5 FIGURE 16. COMPASS AND BFIN STRENGTHS COMPASS Credit risk assessment Advanced scoring models and risk pricing capability BFIN Established platform Large multifinance company Collection Datadriven, highly industrialized processes Outstanding management Senior management with longtenured experience, reputation, and track record Ability to craft distribution agreements Toplevel service to both customers and dealers Fast growing Loan book has grown by more than 2x in the last 5Y Advanced CRM platform Predictive models to run eventdriven cross selling Profitable Significant profitability, higher than peers' average Customized product design Flexible product customization for marketing campaigns Risk control Excellent "Compasslike" risk management Please see important disclosure at the back of this report Page 5 of 7

6 BFI Finance Profit & Loss Interest Income 2,422 2,992 3,697 4,417 5,88 Interest Expense (792) (897) (1,62) (1,58) (1,761) Net Interest Inc. 1,63 2,95 2,635 2,99 3,327 Other Oper. Inc. 85 1,5 1,119 1,256 1,369 Operating Exp. (1,137) (1,354) (1,713) (1,949) (2,16) Personnel Exp.. (716) (869) (1,91) (1,225) (1,348) G & A (392) (482) (616) (716) (83) Others (28) (4) (6) (8) (9) PreProv. Profit 1,298 1,791 2,41 2,217 2,536 Provision Exp. (273) (33) (347) (41) (458) Operating Inc. 1,25 1,488 1,694 1,815 2,78 Pretax Income 1,25 1,488 1,694 1,815 2,78 Tax Expenses (227) (3) (347) (37) (424) Minority Int. Net Profit 798 1,188 1,347 1,445 1,655 Cash Flow Assets Cash Due to BI Interbank Placement SecuritiesNet Gross Loan 11,766 15,589 19, 22,557 25,763 Loan Loss Prov. (183) (237) (268) (312) (356) Fixed Assets Other Assets Total Assets 12,476 16,483 2,266 23,784 27,13 Liabilities & Equity Liabilities Demand Deposits Saving Deposits Time Deposits Total Third Party Funds Deposits From Oth. Banks Securities Issued Borrowings 4,691 6,819 7,51 9,67 1,188 Subordinated Loan Other Liabilities 3,531 4,76 7,676 7,934 9,839 Total Liabilities 8,222 11,579 14,728 17,541 2,27 Minority Interest Shareholder's Equity 4,255 4,94 5,539 6,243 7,13 Total Liab. and Equity 12,476 16,483 2,266 23,784 27,13 Valuation Growth (% YoY) Assets Loans Earnings Assets NonPerforming Loans (27.3) Deposits..... Shareholders' Equity Net interest income Noninterest income Operating expenses Preprovision profit Net profit Common Ratios (%) NIM LDR..... NPL Coverage ratio ROAE ROAA Total CAR..... Tier 1 CAR..... Other Ratios (%) Yield on earning assets Avg. cost of funds Net Interest Spread CASA deposits..... Cost to income Equity to assets Dividend payout Effective tax rate Balance Sheet YE Dec 216A 217A 218F 219F 22F EPS BVPS DPS Valuations P/BV (x) P/E (x) P/PPOP (x) Dividend yield (%) estimates Please see important disclosure at the back of this report Page 6 of 7

7 Mandiri Sekuritas A subsidiary of PT Bank Mandiri (Persero) Tbk Plaza Mandiri 28 th Floor, Jl. Jend. Gatot Subroto Kav , Jakarta 1219, Indonesia General: , Fax : (Equity Sales) RESEARCH Adrian Joezer Head of Equity Research, Strategy, Consumer adrian.joezer@mandirisek.co.id Tjandra Lienandjaja Deputy Head of Equity Research, Banking tjandra.lienandjaja@mandirisek.co.id Ariyanto Kurniawan Automotive, Coal, Chemical ariyanto.kurniawan@mandirisek.co.id Kresna Hutabarat Telecom, Media kresna.hutabarat@mandirisek.co.id Bob Setiadi Construction, Toll Road bob.setiadi@mandirisek.co.id Laura Taslim Retail laura.taslim@mandirisek.co.id Priscilla Thany Banking, Building Material priscilla.thany@mandirisek.co.id Lakshmi Rowter Healthcare, Consumer lakshmi.rowter@mandirisek.co.id Robin Sutanto Property robin.sutanto@mandirisek.co.id Audrey Hanzdima Property, Research Assistant audrey.hanzdima@mandirisek.co.id Edbert Surya Research Assistant edbert.surya@mandirisek.co.id Silvony Gathrie Research Assistant silvony.gathrie@mandirisek.co.id Riyanto Hartanto Research Assistant riyanto@mandirisek.co.id Leo Putera Rinaldy Chief Economist leo.rinaldy@mandirisek.co.id Aziza Nabila Amani Research Assistant aziza.amani@mandirisek.co.id INSTITUTIONAL SALES Silva Halim Head Institutional Equities silva.halim@mandirisek.co.id Andrew Handaya Institutional Sales andrew.handaya@mandirisek.co.id Feliciana Ramonda Institutional Sales feliciana.ramonda@mandirisek.co.id Kevin Halim Institutional Sales kevin.halim@mandirisek.co.id Mirna Santikara Salim Institutional Sales santikara.salim@mandirisek.co.id Sharon Anastasia Tjahjadi Institutional Sales sharon.tjahjadi@mandirisek.co.id Talitha Medha Anindya Institutional Sales talitha.anindya@mandirisek.co.id Kevin Giarto Institutional Sales kevin.giarto@mandirisek.co.id Kusnadi Widjaja Equity Dealing kusnadi.widjaja@mandirisek.co.id Edwin Pradana Setiadi Equity Dealing edwin.setiadi@mandirisek.co.id Jane Theodoven Sukardi Equity Dealing jane.sukardi@mandirisek.co.id Michael Taarea Equity Dealing michael.taarea@mandirisek.co.id RETAIL SALES Andreas M. Gunawidjaja Head Retail Equities andreas@mandirisek.co.id Boy Triyono Plaza Mandiri boy.triyono@mandirisek.co.id Hendra Riady Menara Sudirman hendra.riady@mandirisek.co.id Hendra Riady (Pjs) Pondok Indah hendra.riady@mandirisek.co.id Linawati Surabaya Linawati@mandirisek.co.id Ruwie Medan ruwie@mandirisek.co.id Indra Mas'ari Bandung indra.mas ari@mandirisek.co.id Bambang Suwanto Malang bambang.suwanto@mandirisek.co.id Widodo Solo widodo@mandirisek.co.id Yogiswara Perdana Yogyakarta yogiswara.perdana@mandirisek.co.id Aidil Idham Palembang aidil.idham@mandirisek.co.id Yuri Ariadi Pontianak yuri.ariadi@mandirisek.co.id Achmad Rasyid Bandar Lampung achmad.rasyid@mandirisek.co.id Ravianda Firmanda Bali ravianda.firmanda@mandirisek.co.id INVESTMENT RATINGS: Indicators of expected total return (price appreciation plus dividend yield) within the 12month period from the date of the last published report, are: Buy (15% or higher), Neutral (15% to1%) and Sell (15% or lower). DISCLAIMER: This report is issued by PT. Mandiri Sekuritas, a member of the Indonesia Stock Exchanges (IDX) and Mandiri Sekuritas is registered and supervised by the Financial Services Authority (OJK). Although the contents of this document may represent the opinion of PT. Mandiri Sekuritas, deriving its judgement from materials and sources believed to be reliable, PT. Mandiri Sekuritas or any other company in the Mandiri Group cannot guarantee its accuracy and completeness. PT. Mandiri Sekuritas or any other company in the Mandiri Group may be involved in transactions contrary to any opinion herein to make markets, or have positions in the securities recommended herein. PT. Mandiri Sekuritas or any other company in the Mandiri Group may seek or will seek investment banking or other business relationships with the companies in this report. For further information please contact our number ANALYSTS CERTIFICATION: Each contributor to this report hereby certifies that all the views expressed accurately reflect his or her views about the companies, securities and all pertinent variables. It is also certified that the views and recommendations contained in this report are not and will not be influenced by any part or all of his or her compensation.