BBCA
Contact our analyst Lingga
25% upside. Buy.
5th June, 2020
Price Rp28,625
Target price Rp35,720
Focus on credit restructuring
In mid-May 2020, BCA had a loan restructuring pipeline of Rp 65 trillion to Rp82.6 trillion, 10% - 14% of total loans, from around 72,000 borrowers or 10% of the total. We expect this to increase in the next few months up to an estimated 20-30% of total loans. The estimated number of borrowers is 250,000 - 300,000, mostly for 2W and 4W vehicles.
Very strong CASA growth
1Q CASA Ratio of 76.7%, was up 15% driven by strong new account growth through the e-channel, This is despite slower business activity and increasingly fierce competition from the new issues of government bonds. It means BCA has a solid liquidity buffer, which it can invest in sovereign positions like BI repos as well as loans. With the strong CASA growth, it is expected that the Net Interest Margin will be maintained.
Good Loan Growth
In 1Q20, Loans rose by 12.3% YoY, 1.4% QoQ as corporate credit grew by 25.4%, Commercial & SME loans by 5%, Sharia Financing 19.8% and Consumer more moderately by 3% in line with slower growth in home and automotive purchases. BCA’s growth is coming mainly from existing customers who increased their working capital utilization by 75%. We estimate loan growth will be around 5% in 2020.
Valuation: 25% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 35,720,or trading at 3.5x PBV which gives 25% potential upside, Buy.
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