BJBR
Contact our analyst achmadi
22% upside, Buy
19th October 2023
Price Rp1150
Target price Rp1400
Negative growth of Net Income
In the first semester of 2023, BJBR recorded a net income of IDR 0.91 trillion, marking a significant decrease of -24.13% compared to the previous year due to a massive increase in interest expenses, which surged by 42.97% YoY. This also led to a decrease in the Net Interest Margin (NIM) by 90 basis points (bps) YoY, reaching a level of 4.83%. Annually, the Return on Assets (ROA) and Return on Equity (ROE) ratios also decreased 6.41% and 0.55% respectively, reaching levels of 1.33% and 14.09%. We forecast that BJBR will improve its performance in FY23, with a projected growth in its Net Income of 10.27% YoY, reaching a level of IDR 2.54 trillion.
Strong Growth in Loans
As of June 2023, BJBR's consolidated loans grew significantly by 11.98% YoY, while the bank-only loans increased by 9.76% YoY. All segments experienced significant growth, with Commercial emerging as the best-performing segment, increasing by 25.76% YoY. Other segments such as Mortgage, Corporate, Micro, and Consumer grew by 15.91%, 14.50%, 10.41%, and 5.56% respectively. From an economic sector perspective, Trade and Construction were the major contributors, accounting for 26.6% and 20.8% respectively. We forecast that BJBR will continue to expand its loan portfolio, with an expected growth of 9.80% for consolidated loans and 9.85% for bank-only loans.
Deteriorating Asset Quality
Although still compliant with OJK regulations, BJBR's Non-Performing Loan (NPL) ratio increased by 12 basis points (bps) YoY, reaching a level of 1.22%, due to an increase in NPL across all segments. The Micro segment saw the highest NPL change, rising by 28 bps to 2.05%, while the Commercial & Corporate segment experienced the highest NPL with a figure of 2.76%. The special mention loans (bank-only) also increased by 0.3% to 2.4%. We forecast that BJBR will improve its asset quality with a 6-bps decrease in NPL, reaching 1.14% YoY.
Dedication to ESG Initiatives
BJBR's dedication to implementing ESG initiatives is evident. This can be seen in its sustainable portfolio, which grew robustly by 79.76% annually and 11.03% quarterly, reaching IDR 15.1 trillion. Most of the portfolio is channelled into other environmentally friendly business activities, such as financing for residential construction, accounting for 45.55%.
Valuation: 22% Upside potential, Buy.
Based on our DDM valuation, we have set a target price of IDR 1,400 within a year, representing a valuation of 0.90x PBV and a potential upside of 22%. Therefore, we have a "Buy" rating on this stock.
In the first semester of 2023, BJBR recorded a net income of IDR 0.91 trillion, marking a significant decrease of -24.13% compared to the previous year due to a massive increase in interest expenses, which surged by 42.97% YoY. This also led to a decrease in the Net Interest Margin (NIM) by 90 basis points (bps) YoY, reaching a level of 4.83%. Annually, the Return on Assets (ROA) and Return on Equity (ROE) ratios also decreased 6.41% and 0.55% respectively, reaching levels of 1.33% and 14.09%. We forecast that BJBR will improve its performance in FY23, with a projected growth in its Net Income of 10.27% YoY, reaching a level of IDR 2.54 trillion.
Strong Growth in Loans
As of June 2023, BJBR's consolidated loans grew significantly by 11.98% YoY, while the bank-only loans increased by 9.76% YoY. All segments experienced significant growth, with Commercial emerging as the best-performing segment, increasing by 25.76% YoY. Other segments such as Mortgage, Corporate, Micro, and Consumer grew by 15.91%, 14.50%, 10.41%, and 5.56% respectively. From an economic sector perspective, Trade and Construction were the major contributors, accounting for 26.6% and 20.8% respectively. We forecast that BJBR will continue to expand its loan portfolio, with an expected growth of 9.80% for consolidated loans and 9.85% for bank-only loans.
Deteriorating Asset Quality
Although still compliant with OJK regulations, BJBR's Non-Performing Loan (NPL) ratio increased by 12 basis points (bps) YoY, reaching a level of 1.22%, due to an increase in NPL across all segments. The Micro segment saw the highest NPL change, rising by 28 bps to 2.05%, while the Commercial & Corporate segment experienced the highest NPL with a figure of 2.76%. The special mention loans (bank-only) also increased by 0.3% to 2.4%. We forecast that BJBR will improve its asset quality with a 6-bps decrease in NPL, reaching 1.14% YoY.
Dedication to ESG Initiatives
BJBR's dedication to implementing ESG initiatives is evident. This can be seen in its sustainable portfolio, which grew robustly by 79.76% annually and 11.03% quarterly, reaching IDR 15.1 trillion. Most of the portfolio is channelled into other environmentally friendly business activities, such as financing for residential construction, accounting for 45.55%.
Valuation: 22% Upside potential, Buy.
Based on our DDM valuation, we have set a target price of IDR 1,400 within a year, representing a valuation of 0.90x PBV and a potential upside of 22%. Therefore, we have a "Buy" rating on this stock.
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