Contact our analyst Lingga
21% upside. Buy.
4th November, 2020
Target price Rp35,560
Net Profit Increased
Net profit in 3Q20 increased significantly by 37.8% QoQ to IDR 7.8Tn from IDR 5.67tn in 2Q20, due to a significant decrease in provision expenses of 40.2%. But, besides that, pre-provision Operating Profit also increased significantly by 9.2% to IDR 12tn. Net Interest Income decreased slightly by 0.1% due to a decrease in Time Deposits.
Restructuring Process update
As of 30 September 2020, the restructured loans reached IDR 80Tn or 14% of the total loans. Most of the restructuring was dominated by the corporate sector at 34%, the commercial segment by 26%, the consumer segment by 26%. Restructurings have been in the form of a tenor extension scheme, as well as deferred principal, and interest payments. By mid-October, BBCA has restructured loans amounting to IDR 107tn or 19% of the total loans. The end of the year target loan restructuring is IDR 108tn or 20% of the total loans.
Credit quality strong
In 3Q20, NPLs decreased by 20 bps to 1.9%, from 2.1% in 2Q20, NPLs are dominated by the Trading, Restaurant & Hotel sectors, 4.4%, Manufacturing 1.5%, Mining 1%. Overall NPLs remain below the industry average. SML NPLs declined to 2.3% from 2.8% in 2Q20. SML NPLs are mostly from the Corporate Segment 37.5%, 34% Consumer Segments, and Commercial & SME 26.6%. We estimate a year-end gross NPL of 1.3% in FY2020.
Valuation: 21% Upside, Buy.
Based on our DDM Valuation, we have a target price within one year of IDR 35,560, or trading at 3.7x PBV which gives 21% potential upside, Buy.