BJTM
Contact our analyst Lingga
45% upside. BUY.
6th February 2020
Price Rp 640
Target price Rp 930
Loans above estimate
In 2019, loans grew by 13.16% from 6.74% in 2018, more than our estimate of 6.62%. Loan growth was supported by the Commercial segment which grew 24.06%, SME loans grew 18, 85%, and Consumer loans 7.12%. Going forward commercial lending is focused on strengthening the system, and targeting 10 key sectors which have been tested in each region. For the Consumer segment, the focus is still on payroll loans. Loan growth in 2020, is still the main focus of BJTM’s strategy, with a large estimated market potential from the development of projects carried out by BJTM worth IDR 262 trillion. We estimate loan growth in 2020 will be a higher 14.31%
Lower Coverage Ratio
BJTM Coverage Ratio decreased to 92.40% in FY2019 from 94.22% in FY2018, due to the formation of CKPN from November 2018. In 2019, the NPL ratio was at 2.77% from 3.75% in 2018, and our estimate for 2020 is there will be less additional provisioning required. This means lower Credit Costs and we estimate the Coverage Ratio will be down to 86%
Lower Cost Funds
In FY19 third party funds growth was intentionally slower at 18.91% from 27.78% in FY2019. The focus of BJTM is both to increase the loan to deposit ratio and to utilize low-cost funding, to increase profits in 2020. Key to this is getting corporate customers to pay payroll to employees using BJTM accounts. We estimate Third Party Fund growth in 2020 will be lower again at 9.85%
Valuation: 45% Upside, BUY.
Based on our DDM Valuation, we have a target price within one year of IDR. 930 or trading at 0.9x PBV which gives 45% potential upside, BUY
In 2019, loans grew by 13.16% from 6.74% in 2018, more than our estimate of 6.62%. Loan growth was supported by the Commercial segment which grew 24.06%, SME loans grew 18, 85%, and Consumer loans 7.12%. Going forward commercial lending is focused on strengthening the system, and targeting 10 key sectors which have been tested in each region. For the Consumer segment, the focus is still on payroll loans. Loan growth in 2020, is still the main focus of BJTM’s strategy, with a large estimated market potential from the development of projects carried out by BJTM worth IDR 262 trillion. We estimate loan growth in 2020 will be a higher 14.31%
Lower Coverage Ratio
BJTM Coverage Ratio decreased to 92.40% in FY2019 from 94.22% in FY2018, due to the formation of CKPN from November 2018. In 2019, the NPL ratio was at 2.77% from 3.75% in 2018, and our estimate for 2020 is there will be less additional provisioning required. This means lower Credit Costs and we estimate the Coverage Ratio will be down to 86%
Lower Cost Funds
In FY19 third party funds growth was intentionally slower at 18.91% from 27.78% in FY2019. The focus of BJTM is both to increase the loan to deposit ratio and to utilize low-cost funding, to increase profits in 2020. Key to this is getting corporate customers to pay payroll to employees using BJTM accounts. We estimate Third Party Fund growth in 2020 will be lower again at 9.85%
Valuation: 45% Upside, BUY.
Based on our DDM Valuation, we have a target price within one year of IDR. 930 or trading at 0.9x PBV which gives 45% potential upside, BUY
Previously
bjtm_25_september_2019.pdf
bjtm_25_september_2019.pdf
