BBRI Superior Many Fronts
Illustration: BBRI Superior Many Fronts
BBRI Superior Many Fronts. We believe BRI’s growth story is a compelling one – the bank has expanded its micro lending reach to over 5,000 units (including its Teras outfits) to penetrate the most under-banked SMEs and consumers across the nation. As well as, this positions it as the primary beneficiary of the rising suburban and rural economies. Furthermore, after the recent profit-taking, the counter is now attractively priced at FY11 11.4x EPS, the sector’s lowest. This sector-topping ROAE bank deserves a higher valuation than its current multiple.
Perusahaan Gas Negara, Healthy Long-Term Prospects
Maintaining Liquidity, BBRI Issue Bonds IDR6Trn
Indonesia 2012 Market Outlook
Prudence is a strong positive. As well as, slower credit growth this year should not be read negatively. To the contrary, consolidation of its NPL-plagued small commercial and medium segments is a major positive in addressing future asset quality worries and it adopts prudence, a contrast to mid-2007s when credit expanded rapidly despite a worsening credit book.
Perusahaan Gas Negara, Solid choice for rotational play
WSBP Issue Bonds IDR2Trn
Indonesia 2011 Investment Strategy
What to expect in 2011. Furthermore, restructuring and settlement of bad debt accounts are well underway, with the small commercial NPL ratio potentially falling to 5.6% and medium NPL ratio to 6.2%. Moreover, we expect gross NPL ratios to normalize in 2011 and for credit growth to resume to ~20% next year along with the completion of consolidation.
Indonesia Construction Early Warning Signs
SBR003 Early Redemption
Indonesia 2012 Investment Strategy
In addition to, there could be more emphasis on lower risk weighted credit types such as mortgages and SOE-related companies as capital ratios are thinning and we think that sub-debt is highly likely in 2H11. LDR is likely to continue charting new highs but we could be pleasantly surprised by BRI’s deposit gathering capacity on the back of infrastructure growth.
Perusahaan Gas Negara a Strong Position
Semen Indonesia IDR5Trn Bond Issue on May
Indonesia 2011 Market Outlook
Rising equity Beta seen. Finally, although lower risk-free rates should naturally lead to higher TPs, we observe BRI’s Beta rising from 1.33 to 1.37, prompting us to keep our TP at Rp13,400, which implies FY11 15.0x EPS or 4.0x BV. In fact, our growth rate assumption for BRI is the highest among our coverage at 11.1%, which is justified by its unparalleled exposure to MSMEs. Last, improvements in its asset quality could dispel market concerns and act as a catalyst. Buy.
