Buy Dec 2018 TP (IDR) 10,300 Consensus Price (IDR) 8,407 TP to Consensus Price +22.5% vs. Last Price +17.0%

Transcription

1 Bank Mandiri Tbk (BMRI) Firm Stepping for Further Growth 4Q17 Performance Review BMRI posted the interest income of IDR20.2 trillion (+1.9% y-y) and the net interest income of IDR13.5 trillion (+2.4% y-y). The operating revenue grew higher by 7% y-y into IDR20.1 trillion underpinned by the substantial increment of 17% into IDR6.6 trillion in non-interest income. The net profit was IDR5.6 trillion or soaring by 214% y-y due to the anomaly posting of net profit attributable to the high provision cost in 4Q16. Room for Growth in Credit Although the banking industry is loomed by lagging growth, BMRI is capable of posting the stable credit growth at the average of 10% within the last two years. It is bolstered by the robust performance of the corporate segment with the average growth of 15%. We project that it will achieve the growth of 12.4% in The robust corporate segment coupled with the consumer and micro segment of which contribution is concertedly boosted will bolster the room for growth in credit. The consumer and micro segment is capable of posting the current growth of 20%. Capability of Maintaining Interest Cost In 2017, the moderate growth of 7% in deposit caused the loan-to-deposit ratio to hike into 88.5% (vs 85.7% in 2016). Meanwhile, CASA ratio surged into 66.2% and was targeted to hit 70% in The increment in CASA allows BMRI to efficiently manage the interest cost. Target Price Rp10,300 We use an assumption of forward P/B of 2.3x (2SD higher than the last 4- year average) as the basis of valuation method. This target price implies a 2018E P/B of 2.6x (vs 2.2x in the current time). Bank Mandiri Tbk Summary (IDR bn) 2016/12A 2017/12A 2018/12E 2019/12E Interest Income 76,710 79,502 86,785 97,067 growth 7.2% 3.6% 9.2% 11.8% Operating Revenue 72,490 75,981 82,156 93,885 Net profit 13,789 20,640 24,162 28,925 EPS (IDR) EPS growth -32.2% 49.7% 17.1% 19.7% BVPS (IDR) 3,286 3,643 4,009 4,443 Net Interest Margin 5.9% 5.3% 5.4% 5.5% Loan/Deposits 85.7% 88.5% 89.1% 90.9% NPL 4.0% 3.5% 3.2% 3.2% ROE 10.1% 12.8% 13.5% 14.7% ROA 1.4% 1.9% 2.0% 2.2% ROIC 19.1% 16.1% 16.1% 16.7% P/E 19.6x 18.1x 17.0x 14.2x P/BV 1.8x 2.2x 2.2x 2.0x DPS (IDR) Dividend yield 2.3% 2.5% 2.7% 3.2% Source: Company Data, Bloomberg, NHKS Research Please consider the rating criteria & important disclaimer NH Korindo Sekuritas Indonesia Company Report Buy Dec 2018 TP (IDR) 10,300 Consensus Price (IDR) 8,407 TP to Consensus Price +22.5% vs. Last Price +17.0% Shares data Last Price (IDR) 8,800 Price date as of Feb 21, wk range (Hi/Lo) 9,050 / 5,550 Free float (%) 40.0 Outstanding sh.(mn) 46,667 Market Cap (IDR bn) 410,667 Market Cap (USD mn) 30,183 Avg. Trd Vol - 3M (mn) Avg. Trd Val - 3M (bn) Foreign Ownership 22.1% Finance Bank Bloomberg Reuters Raphon Prima , ext:214 raphon@nhsec.co.id Share Price Performance BMRI IJ BMRI.JK YTD 1M 3M 12M Abs. Ret. 10.0% 9.0% 18.9% 62.3% Rel. Ret. 5.5% 6.6% 8.8% 37.6%

2 BMRI at A Glance BMRI is the second biggest bank in Indonesia after BBRI. In 2017, it distributed the credit of IDR730 trillion or around 15% from the total credit distributed in Indonesia. Besides, it is the most credible bank among other banks in Indonesia in term of the corporate segment. In 2017, it distributed the credit of IDR265 trillion to the corporate segment of equal to 36% from the total credit. It persistently endeavors to not only strengthen its relationship with the corporate clients but also bolster the contribution of the consumer and micro segment. The contribution of the consumer segment is targeted to hit 19% in 2020 with the focus on mortgage loan, automotive credit, and payroll-based credit, particularly for employees of companies which are the corporate clients of BMRI Indonesian s Bank Competitiveness in ASEAN Banking industry in Indonesia is the investment priority in ASEAN as it offers higher credit rate than do its peers in ASEAN. It is the takeaway factor to the excellent characteristic the banking industry in Indonesia has. The Indonesia s banks are still capable of maintaining NIM higher than 5% albeit the headwind of decline in reference rate. The higher NIM is capable of being translated into a higher ROE. A number of banks in Malaysia and Singapore such as OCBC, CIMB, and Malayan Banking can outpace the growth of 10%-20% in net profit posted by the Indonesia s banks. However, those three banks have bigger assets than does the Indonesia s bank have. ASEAN Banks Company Market Cap (USD mn) Total Asset (USD mn) Net Profit Growth Net Interest Margin ROE P/E P/BV Dividend Yield BMRI 30,183 82, % 5.3% 12.8% 18.1x 2.2x 2.5% BBRI 34,449 82, % 7.6% 18.5% 15.5x 2.7x 2.6% BBCA 43,535 49, % 6.7% 18.9% 26.5x 4.7x 0.9% BBNI 13,946 52, % 5.4% 14.3% 13.6x 1.8x 2.6% Singapore DBS 57, , % 1.8% 9.5% 17.2x 1.6x 2.1% UOB 34, , % 1.8% 10.4% 13.6x 1.4x 2.5% OCBC 41, , % 1.6% 11.1% 13.3x 1.4x 2.8% Malaysia CIMB 16, , % 2.6% 9.3% 14.9x 1.4x 3.5% Malayan Banking 28, , % 1.9% 11.2% 13.4x 1.5x 5.4% Hong Leong 5,552 50, % 1.6% 9.6% 13.8x 1.3x 2.0% Thailand Bangkok Bank 12,488 94, % 2.4% 8.5% 11.9x 1.0x 3.2% Siam Commercial 16,067 92, % 3.0% 12.4% 11.7x 1.4x 3.7% Bank of Ayudhya 10,162 64, % 3.8% 10.7% 13.8x 1.4x 2.0% Philippine BDO Unibank 12,559 46, % 3.9% 10.8% 23.1x 2.3x 0.8% Metropolitan Bank 6,003 37, % 3.9% 9.1% 16.7x 1.5x 1.0% Philippine Island Bank 9,110 38, % 3.4% 13.0% 21.3x 2.6x 1.5% Source: Bloomberg, NHKS research PT NH Korindo Sekuritas Indonesia Company Research Page 22

3 Performance Highlights Interest Income (IDR bn) 1Q15-4Q17 Net Profit (IDR bn) 1Q15-4Q17 Gross Loan (IDR bn) 1Q15-4Q17 Deposit (IDR bn) 1Q15-2Q17 Loan Composition Loan Yield, Cost of Deposit, NIM 1Q15-4Q17 PT NH Korindo Sekuritas Indonesia Company Research Page 33

4 Multiple Valuation Forward P/B band Last 4 years Dynamic Forward P/B band Last 4 years Rating and target price update Target Price Revision Date Rating Target Price Last Price Consensus vs Last Price vs Consensus 02/22/2018 Buy 10,300 (Dec 2018) 8,800 8, % +22.5%, Bloomberg Analyst Coverage Rating Closing and Target Price Source: Bloomberg NH Korindo Sekuritas Indonesia (NHKS) stock ratings 1. Period: End of year target price 2. Rating system based on a stock s absolute return from the date of publication Buy : Greater than +15% Hold : -15% to +15% Sell : Less than -15% PT NH Korindo Sekuritas Indonesia Company Research Page 44

5 Summary of Financials BMRI Summary Last Price (IDR) February 21, ,800 Target Price (IDR) Dec , /12A 2017/12A 2018/12E 2019/12E Analyst: Raphon Prima Rating: Buy ROE 10.1% 12.8% 13.5% 14.7% ROA 1.4% 1.9% 2.0% 2.2% INCOME STATEMENT ROIC 19.1% 16.1% 16.1% 16.7% Operating ROA 7.4% 7.0% 6.9% 7.1% in IDR bn 2016/12A 2017/12A 2018/12E 2019/12E Pre-Provision ROA 4.5% 4.0% 4.0% 4.1% Interest Income 76,710 79,502 86,785 97,067 Non-Interest Income/Op. Rev 28.5% 31.1% 28.6% 28.6% Growth (% y/y) 7.2% 3.6% 9.2% 11.8% Cost/Income 40.2% 43.4% 41.8% 41.7% Interest Expenses (24,885) (27,174) (28,134) (30,043) Cash Dividend (IDR bn) 6,213 9,300 10,886 13,032 Net Interest Income 51,825 52,327 58,651 67,024 Dividend Yield (%) 2.3% 2.5% 2.7% 3.2% Net Interest Margin 5.9% 5.3% 5.4% 5.5% Payout Ratio (%) 45.1% 45.1% 45.1% 45.1% Net Fee Income 10,774 11,856 13,288 15,185 Equity/Assets 14.8% 15.1% 14.9% 14.8% Trading Income 3,027 3,950 4,427 5,059 Loan/Deposits 85.7% 88.5% 89.1% 90.9% Other Operating Income 6,863 7,849 5,790 6,617 Loan/Assets 63.7% 64.9% 65.5% 66.9% Operating Revenue 72,490 75,981 82,156 93,885 NPL 4.0% 3.5% 3.2% 3.2% Operating Expenses (29,114) (32,992) (34,353) (39,124) Loan Loss Reserves/Loans 5.0% 4.7% 4.3% 4.2% Pre-provisioning OP (PPOP) 43,375 42,990 47,803 54,761 Deposits/Liabilities 87.2% 86.4% 86.4% 86.4% Provision for Impairment (24,762) (15,820) (15,998) (16,687) CASA/Deposits 64.2% 66.2% 67.0% 69.0% EBT 18,573 27,157 31,791 38,058 Time Deposits/Deposits 35.8% 33.8% 33.0% 31.0% Income Tax (3,923) (5,714) (6,689) (8,007) Par Value (IDR) Non-controlling Interest (861) (803) (940) (1,126) Total Shares (mn) 46,667 46,667 46,667 46,667 Net Profit 13,789 20,640 24,162 28,925 Share Price (IDR) 5,788 8,000 8,800 8,800 Growth (% y/y) -32.2% 49.7% 17.1% 19.7% Market Cap (IDR tn) BALANCE SHEET in IDR bn 2016/12A 2017/12A 2018/12E 2019/12E 2016/12A 2017/12A 2018/12E 2019/12E Cash 22,907 24,269 22,674 24,248 Price /Earnings 19.6x 18.1x 17.0x 14.2x Placement in Banks 136, , , ,609 Price /Book Value 1.8x 2.2x 2.2x 2.0x Net Loans 629, , , ,205 Price/Op. Revenue 3.7x 4.9x 5.0x 4.4x Investment 160, , , ,461 PE/EPS Growth -0.6x 0.4x 1.0x 0.7x Fixed Asset 35,663 36,619 37,787 39,243 EV/Operating Revenue 4.1x 5.3x 5.5x 4.9x Other Assets 53,821 65,279 73,380 78,371 EV/PPOP 6.8x 9.4x 9.4x 8.3x Total Assets 1,038,706 1,124,701 1,252,243 1,400,138 EV (IDR bn) 295, , , ,342 Deposits 772, , ,018 1,030,271 Op. Revenue CAGR (3-Yr) 13.0% 11.4% 8.1% 9.0% Debt 45,124 52,739 58,841 65,893 EPS CAGR (3-Yr) -8.8% 1.3% 5.9% 28.0% Other liabilities 68,036 77,355 86,305 96,648 Basic EPS (IDR) Total Liabilities 885, ,695 1,065,165 1,192,812 Diluted EPS (IDR) Capital Stock 11,667 11,667 11,667 11,667 BVPS (IDR) 3,286 3,643 4,009 4,443 Retained Earnings 96, , , ,258 Op. Revenue PS (IDR) 1,553 1,628 1,760 2,012 Shareholders' Equity 153, , , ,326 DPS (IDR) CASH FLOW STATEMENT DCF, RIM & EVA in IDR bn 2016/12A 2017/12A 2018/12E 2019/12E 2016/12A 2017/12A 2018/12E 2019/12E Net Income 13,807 20,640 24,162 28,925 DCF (IDR bn) Deprec & Provision 26,535 18,110 2,902 5,903 NOPAT 34,214 33,945 37,745 43,239 Chg. In Working Capital (5,785) (4,362) 687 5,188 +Depr./Amor. 26,535 18,110 2,902 5,903 CFO 34,557 34,388 27,750 40,016 -Chg. in Loan (75,870) (82,134) (100,740) (117,633) Net Changes in Loan (75,870) (82,134) (100,740) (117,633) -Incr. (Decr.) in Working Cap. (5,785) (4,362) 687 5,188 CFI (82,033) (87,382) (123,775) (147,069) (Unlevered) FCFF (20,906) (34,441) (59,406) (63,302) Dividends Paid (6,100) (6,213) (9,300) (10,886) WACC Net Changes in Deposit 85,627 52,699 95, ,252 Cost of Debt (Tax Adj.) 9.0% 7.2% 7.7% 7.9% CFF 79,369 53,401 94, ,627 Cost of Equity (COE) 10.5% 12.1% 13.1% 13.3% Net Changes in Cash 31, (1,594) 1,574 WACC (%) 10.3% 11.5% 12.4% 12.6% RIM OWNERSHIP PROFITABILITY & STABILITY VALUATION INDEX Spread (FROE-COE) (%) 1.1% 1.3% 1.1% 2.1% Residual Income (IDR bn) 1,283 2,040 1,858 3,951 By Geography % Shareholders % Equity Charge 12,506 18,599 22,304 24,974 Indonesia 77.9 Republic of Indonesia 60.0 EVA United States 13.8 Harris Associates 2.8 Invested Capital (IDR bn) 159, , , ,919 Norway 2.2 Norges Bank 1.7 ROIC-WACC (%) 11.2% 5.6% 4.5% 5.0% Luxembourg 1.5 Vanguard 1.4 EVA (IDR bn) 17,856 11,089 10,047 12,252 DISCLAIMER This report and any electronic access hereto are restricted and intended only for the clients and related entity of PT NH Korindo Sekuritas Indonesia. This report is only for information and recipient use. It is not reproduced, copied, or made available for others. Under no circumstances is it considered as a selling offer or solicitation of securities buying. Any recommendation contained herein may not suitable for all investors. Although the information here is obtained from reliable sources, it accuracy and completeness cannot be guaranteed. PT NH Korindo Sekuritas Indonesia, its affiliated companies, respective employees, and agents disclaim any responsibility and liability for claims, proceedings, action, losses, expenses, damages, or costs filed against or suffered by any person as a result of acting pursuant to the contents hereof. Neither is PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, nor agents liable for errors, omissions, misstatements, negligence, inaccuracy arising herefrom. All rights reserved by PT NH Korindo Securities Indonesia PT NH Korindo Sekuritas Indonesia Company Research Page 55