BDMN
Contact our analyst Lingga
12% upside. HOLD.
11 May, 2020
Price Rp2490
Target price Rp2780
Investment Consideration
Flat NIM
Net Interest Margin (NIM) at 8.4% is flat QoQ, as no new loans were made. In April 2020, more than 130 thousand debtors with total loans outstanding of Rp12tn, requested easing of their financial obligations. Many of the debtors were of Adira (ADMF) and came from SME/informal sector. We still however estimate that the NIM will reach 8% in 2020.
Slower Loan Growth
In 1Q20, loan growth was 1.92% QoQ and 9.08% YoY. The enterprise segment increased significantly by 22% YoY, compared to 7% YoY in 1Q19. The increase was driven by collaborations with large global companies that the Bank established last year. The Small and Medium Enterprises (SME) and consumer mortgage loans also were Rp28.5 trillion and Rp8.9 trillion respectively, as of end of March 2020. We estimate the Bank’s loan growth will be 2.5% YoY in 2020.
Managing Asset Quality
Non-Performing Loans increased by 40 bps to 3.4% QoQ while Loan Loss Coverage increased to 129.3% QoQ from 112.6% in 4Q19. Meanwhile, the repaired credit ratio rose 20 bps compared to the previous 2.4%. BDMN is still able to manage the Non-Performing Loans quite well and new loan disbursement will come from the more secure MUFG client base. We expect BDM will be able to manage its asset quality, given that most of the restructured loans are given a period of up to 1 year.
Valuation: 12% Upside, HOLD.
Based on our DDM Valuation, we set a target price within one year of IDR 2,780, which means the shares will be traded at 0.6x PBV and gives 12% potential upside. HOLD.
