RHB Indonesia - Bank Negara Indonesia - Beating All Expectations - (Bank Negara Indonesia) Unknown Jumat, 27 Januari 2017





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Bank Negara Indonesia - Beating All Expectations

We expect BNI to continue focusing to provide loans for government infrastructure projects despite the lower loan yield. To reduce further NIM decline, funding structure would become an important matter. As such, BNI would push its CASA deposits by tapping more institutions and their employees. Wholesale fundingalso forms part of its main strategy this year amid a volatile global environment. This is done through NCDs, IDR bond issuance and obtaining bilateral USD borrowings. Maintain BUY with an unchanged GGM-based TP of IDR6,800 (24% upside).

¨ A manageable funding structure, from both retail and wholesale instruments. For retail, Bank Negara Indonesia (BNI) would push its CASA deposits by tapping more institutions and their employees for CASA products. On wholesale funding, BNI would issue negotiable certificates of deposits (NCDs), IDR bonds, medium term notes (MTN)and secured bilateral USD borrowings. All in, we expect a relatively stable contribution from customer deposits, at 89.3% of the funding mix by end-2017 (end-2016: 89.6%).
¨ Better proper credit risk management. Post FY16's lower credit cost of 219bps (our forecast: 242bps) – which resulted in higher net profit – management continues to implement more stringent credit risk management. For instance, the credit risk review function now conducts a periodic review, starting from the loan center level up to the head office, in order to identify potential NPL borrowers. All in, we expect such ongoing progress to support our FY17F gross NPLratio of 2.5% byyear-end.
¨ Maintain BUY. We maintain our BUY recommendation on BNI, which remains as one of our Top Picks, supported by its strong loan growth from infrastructure projects, a more manageable funding mix and better asset quality. Our GGM-based TP of IDR6,800 implies1.35x 2017F P/BV (-0.15SD of its historical mean). (Eka Savitri)

Link to report: Bank Negara Indonesia : Beating All Expectations
Link to Daily report: Indonesia Morning Cuppa - 270117


Media Highlights:

Corporates

Bumi Serpong Damai FY16’s marketing sales
Bumi Serpong booked IDR6.25trn of total marketing sales through out 2016. FY2016 marketing sales decreased by 7% compared to FY2015 which was mainly due to 17% YoY lower residential sales, which contributed 58% of the sales.
 
The company has formed a joint venture company to accommodate the collaboration with Mitsubishi Corporate to develop 19 hectares of residential land, partial land sold amounting to IDR560bn has been booked and the remaining IDR840bn will be booked in 2017.

In this 1Q17, the company plans to launch new shophouse developments “West Park” on the third week of February 2017. This development offers 104 units of shophouses with price level of IDR1.4 – 5.8 billion per unit with sizes varying from 32 – 104 m2 (land) and 62 – 293 m2 (building).

Comment: The company’s FY16 marketing sales only achieved 91% from BSDE’s target and 90% from ours. We believe the decline in housing sales was due to lower average price per unit because house units sold during 2016 rose by 15%, this may be the result of BSD’s Price Amnesty Marketing marketing programme. We estimate that average house price per unit tumbled by 28% YoY. We remain positive on BSDE IJ, BUY, TP: IDR 2,650 due to positive drivers such as continued flow-through of tax amnesty programme, relaxation of LTV threshold and permission for “off-plan” properties for second mortgages along with several projects that are ready for launch such as Southgate Residence, Aerium, shophouses, Mozia residence, and etc. (Yualdo Yudoprawiro)

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