BRIS
Contact our analyst Lingga
9% UPSIDE, HOLD
3rd August 2020
Price Rp515
Target price Rp560
Sharia Bank Merger
The SOE Ministry plan to merge Islamic Banks is forecast to be completed in February 2021. There are two scenarios in merging BUMN Syariah banks. In the first scenario, BRIS will become the surviving entity and will continue to be listed on the IDX. However, in 1Q20, BRI Syariah total equity increased by 1.54% QoQ to IDR. 5.16 Trillion which is smaller than the total Equity of Islamic Bank Mandiri, IDR 5.18 Trillion. So in the second scenario, viewed from the company's capital, the larger Bank Mandiri Syariah will become the surviving entity, BBRI will makes a tender offer to the shareholders of BRIS and BRIS will be delisted. The goal of the Sharia Bank Merger is to broaden the Sharia bank capital structure in order to increase lending.
BRIS 1Q20 performance
In 1Q20, BRIS CAR was 21.99% up from 25.6% in FY2019, which is the largest capital adequacy among Sharia BUMN Banks. BRIS net profit was IDR. 75 million in 1Q20 which is growth of 150% YoY. Total loans increased to IDR. 30.45 Trillion. Loans to the retail segment grew an impressive 49.74%, while loans to small retail grew an even faster 71% YoY, to IDR. 6.07 Trillion. On the funding side, low cost CASA deposits grew to IDR. 16.86 Trillion up 78% YoY, as a result of more payroll savings accosts which grew 46%.
Valuation: 9% Upside, Hold.
Based on our DDM Valuation, we have a target price within one year of IDR 560 or trading at 1,0x PBV which gives 9% potential upside, Hold.
Previously
