BBTN
Contact our analyst Lingga
21% downside. SELL.
16 March 2020
Price Rp1300
Target price Rp1030
Significant drop in net income
FY19 net profit was dramatically slashed by IDR209 million or 92.6% YoY, as growing deposits (+56.6% YoY) imposed higher interest expense (+31.4% YoY). On QoQ basis, PPoP also fell due to a 20.2% QoQ increase in Provision expenses in 4Q19, although on YoY basis it was up by 103%.
Single-digit loan growth
In FY19, deferred loans grew slower at 7.4% YoY compared to 19.5% YoY in FY18 as a result of lower construction segment loans (-0.7% YoY) and subsidized mortgages (-13.2% YoY). We estimate in 2020 loans will grow at 7.5% YoY.
Asset Quality Downgraded
Asset quality took a turn for the worst as gross NPL increased to 4.8% in FY19 from 2.8%. As much as 18.7% of the NPL came from Construction loans since there has been a slowdown in the sales of high-rise buildings especially apartments in Jakarta and Kalimantan, whereas Other Housing loans contributed 4.7% to the NPL. The decline in asset quality prompted BBTN to increase the provisions by IDR7.8 trillion in order to fulfill the IFRS9 requirement.
Valuation: 21% Downside potential, Sell
Based on our DDM Valuation, we conclude the one-year target price of IDR 1,030 or 21% downside potential. BBTN shares are now traded at 0.7x PBV. Sell.
