Stable as usual
Stability over growth
Our recent communication with Bank Central Asia (BBCA) confirms that the bank is focusing on stability. In particular, we expect liquidity to be on the managements’ priority list. Having said that, we expect the BBCA’s lending growth to have decelerated in 2Q14 from a quarter earlier. However, given ample loan demand in the corporate sector, we believe the bank will be able to quickly maneuver and embrace the growth agenda when macro and political uncertainties fade away. Given its strong balance sheet, we believe BBCA is well positioned to gear up to leverage. In particular, we estimate its loan-to-deposit ratio to have come down from a quarter earlier (1Q14: 77.1%).
Margins to have widened further
We expect to see further margin improvement in 2Q14. We believe the bank is maintaining disciplined pricing policies to prudently manage its net interest margins. Furthermore, its strong CASA base (77.7% of total deposits as of 1Q14) will build a solid foundation in keeping its margins strong.
All quiet on the credit quality front
We believe credit concerns are not an imminent issue for the bank. As a strong transaction bank, we believe BBCA has outstanding track record of sound underwriting skills. Furthermore, given its selective stance in terms of lending, we see limited chances of credit deterioration. Moreover, the bank has deep pockets to weather any mild economic headwinds (NPL coverage ratio: 388.1% as of 1Q14). However, given the lagging effect of the monetary tightening on banks’ asset quality metrics, we are closely watching industry trends.
2Q14 earnings to be in line; Reaffirm our Buy recommendation on BBCA
BBCA looks likely to post an in line 2Q14 (Consensus: IDR3,883bn vs. ours IDR3,862bn). We maintain our Buy recommendation on BBCA. We are also revising up our target price by 11.2% to IDR13,975. Our revised target price is based on ROE of 22.2%, COE of 13.2%, LT growth of 10.0% and embeds a P/B multiple of 3.8x to our 12MF BPS. BBCA’s shares are currently trading at a P/B of 3.2x against our 12MF BPS. Given current price represents 10.7% discount from the post GFC average (3.6x), we believe valuations are quite attractive. The company is expected to release its 2Q14 earnings on July 23
Bernard n friends
Infrastructure play
Rising domestic demand
For more than a decade, cement consumption in Indonesia exhibited rapid growth. This was largely triggered by the increase in purchasing power and infrastructure developments. In the past, cement producers had to export excess cement that was produced on the grounds. However, today cement producers find it increasingly difficult to cater growing domestic demand. This is evident by the significant decrease in cement exports. Responding to the rising local demand, cement companies lifted their utilization rate to above 90%. We are now witnessing cement companies trying to expand their capacity through new plant expansions. The first capacity expansion was conducted by Semen Indonesia in 2012, which came after 13 years of no capacity increase.
Boasting highest gross profit margin among manufacturing players
Indonesian cement industry is one of the industries with the highest gross profit margin compared to other manufacturers. Based on our analysis with three largest companies from each sector as a sample, the cement industry boasted the highest gross profit margin with 41.9%, followed by the pharmaceutical industry with a gross profit margin of 39.1% (based on the financial statements as of 2013). However, in terms of return of equity, the cement industry came in third position with 19.5% after the cigarette industry’s 36% and animal feed industry’s 22%.
Limited impact on profit margin from electricity tariff hike
According to the regulation No. 9 2014 by the Minister of Energy and Mineral Resources (ESDM), electricity tariffs are expected to every 2 months from July to December for public companies (power > 300 kVA) and large industries (power > 30,000 kva). The total increase in electricity cost is expected to jump up to 38.9% (public companies) and 64.7% (large industries). For cement companies, the cost of electricity is estimated to be c. 10% ~ 12% of the total cost of production. This is expected to will result in an increase overall
expenses by 2% to 3%. However, we believe that this increase will be passed on to the customers. Furthermore, given it’s a seller’s market, we believe the increase in the cost of production will place limited impact on its profitability, in our view.
Starting to get crowded
There are nine cement companies that have their own production capacity in Indonesia. The nine companies are Semen Padang, Semen Gresik, Semen Tonasa (which are subsidiaries of Semen Indonesia), Semen Baturaja, and Semen Kupang, Heidelberg (Indocement), Holcim (Holcim Indonesia), La Farge (Semen Andalas), and Bosowa (Semen Bosowa) Among the aforementioned names, Semen Indonesia (Semen Padang, Semen Gresik, Semen Tonasa), Semen Baturaja, and Semen Kupang are state-owned, whereas Heidelberg (Indocement), Holcim (Holcim Indonesia), La Farge (Semen Andalas), and Bosowa (Semen Bosowa) are privately held.
Overweight on the cement sectors
The cement sector’s growth outlook is promising. We view that the growing number of Indonesia’s infrastructure developments to be the key growth driver. In order to achieve
government’s goal to become a developed country by 2025, the government set out the Master plan for Acceleration and Expansion of Indonesia’s Economic Development
(MP3EI) in 2011. This development blueprint will be supervised and coordinated by the president as the chairman of Committee for Acceleration and Expansion of Indonesia’s
Economic Development (KP3EI).
HEADLINE NEWS
∙ BTPN: Laba bersih Bank BTPN (BTPN) alami penurunan sebesar 10% hingga semester I 2014 menjadi Rp991,15 miliar dibandingkan dengan laba bersih periode sama tahun sebelumnya yang Rp1,10 triliun. Pendapatan bunga naik menjadi Rp6,04 triliun dibandingkan pendapatan bunga tahun sebelumnya yang Rp5,25 triliun dan pendapatan bunga bersih naik tipis menjadi Rp3,48 triliun dari pendapatan bunga bersih tahun sebelumnya yang Rp3,44 triliun.
∙ PTBA: Bukit Asam (PTBA) meraih kenaikan laba bersih semester I 2014 sebesar 32,85% menjadi Rp1,16 triliun dibandingkan dengan laba bersih periode sama tahun sebelumnya Rp870,12 miliar. Penjualan naik menjadi Rp6,43 triliun dibandingkan penjualan tahun sebelumnya yang Rp5,43 triliun
∙ MERK: Merck Indonesia (MERK) membukukan kenaikan laba periode berjalan di Semester pertama tahun ini sebesar 7,57% menjadi Rp39,93 miliar dibandingkan dengan laba periode berjalan tahun sebelumnya Rp37,12 miliar. Penjualan naik menjadi Rp327,42 miliar hingga Juni 2014 dibandingkan penjualan Rp294,84 miliar
∙ ANTM: Aneka Tambang (ANTM) tengah menjajaki fasilitas kredit dari beberapa perbankan lokal senilai total US$150 juta atau sekitar Rp1,74 triliun. Dana tersebut rencananya akan digunakan untuk memenuhi kebutuhan ekspansi perseroan tahun depan, terutama untuk pengembangan Proyek Perluasan Pabrik Feronikel Pomalaa (P3FP) di Pomalaa, Sulawesi Tenggara.
∙ TLKM: Telekomunikasi
10:25, SPECIAL MENTION, 21 Jul1 2014 l Sumber: Teddy Dwitama
Saham CPO menarik untuk diperhatikan setelah terkoreksi dalam akibat dari turun nya harga sawit yang terjadi sejak akhir Juni hingga pertengahan Juli 2014. Perlahan harga CPO yang sempat menyentuh level terendah nya sejak Oktober 2013 di RM2248/bsl, sudah mulai membaik dan saat ini diperdagangkan di RM2298/bsl. Kenaikan ini memberi potensi untuk kembali mengakumulasi saham-saham berbasis CPO seperti AALI, SSMS dan LSIP.
Astra Agro Lestari (AALI, Rp26,150) masih menjadi stock pick kami dari sektor plantation dan TP untuk AALI pun kami naikan. Hingga 1Q14, pendapatan AALI naik diatas perkiraan dengan pencapaian yang mencapai 24% dari target FY14. Pencapaian ini cukup baik mengingat pencapaian pada kuartal pertama AALI setiap tahun nya hanya berkisar di level 18-20% dari target full-year nya. Harga CPO yang mulai rebound setelah sempat terkoreksi -2.6% selama seminggu terakhir, memberikan potensi kenaikan untuk saham berbasis CPO seperti AALI. Kami memberikan rekomendasi BUY untuk AALI menjadi Rp34,375 dimana di level tersebut setara dengan 13x PE 2015.
11:50, FR CLSA TODAY JSMR IJ – JORRW2N (the missing link of JORR1) to be inaugurated today (21July) by Public Works Minister Djoko Kirmanto – and will begin commercial operation on 22July. This 7.67km toll road will have the same tariff as rest of JORR1, which is at Rp8,500 (for passenger cars category). 5km of the toll road started operation in Dec2013, so it is the remaining 2km that will begin operation on 22July. JSMR has previously mentioned this toll road will be ready by end of July. JSMR believes the commencement of JORRW2N will help reduce traffic in
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