BCAS Vista 30 Jan-20

OJK: 11M19 Bank industry data

•   The banking system displayed a rebound in loan growth at 7.1% YoY in Nov-19 vs 6.5% YoY in Oct-19.  However, it still does not compare to Nov-18 loan growth of 12.1% YoY. Main segments that contribute to a stronger month came from investment with the growth of 13.7% YoY, followed by the consumption and working capital segment with the growth of 6.1% and 4.2%, respectively.

•   On the deposit growth side, OJK recorded a monthly increase of 40 bps to 6.7% YoY in Nov-19, but still lower than Nov-18 deposit growth of 7.2% YoY.

•   Therefore, LDR booked at 92.9% in Nov-19 vs 93.3% and 92.6% in Oct-19 and Nov-18, respectively.

•   Note that in Nov-19 loan rate decreased to 10.53% vs 10.55% and 10.87% in Oct-19 and Nov-18 respectively, while TD rate decreased to 6.33% in Nov-19 from 6.45% in Oct-19 and 6.64% in Nov-18.

BUJT to implement tariff adjustment in 5 toll road section

The Indonesian Toll Road Authority (BUJT) will implement a tariff adjustment in 5 toll road sections, including Cawang – Tomang – Pluit, Ujung Pandang section 1 and 2, Bali Mandara, Pondok  Aren – Serpong and Gempol – Pandaan section I.  Note that the 3 out of 5 toll roads sections are owned by JSMR.

Comment: We believe that this tarrif adjustment will have a significant impact to JSMR, as a larger adjustment are done on even years. For this year, we expect JSMR to implement an average 6% tariff hikes.

Soekarno-Hatta International Airport’s new facilities inaugurated

Last week, President Joko Widodo has inaugurated Soekarno-Hatta International Airport’s third runway, East Connection Taxiway, and a VIP building. The new facilities are expected to facilitate a surge in air traffic as well as to improve the airport’s safety procedures for takeoff and landing. The Transportation Minister, Budi Karya Sumadi, stated that the third runaway is estimated to increase the number of aircraft landings and takeoffs to 100/hour from previously at 81/hour. At the same occasion, President Joko Widodo also instructed the acceleration of the fourth terminal and expected operations by 2022 or early 2023 at the latest. (Jakarta Post)

Government to reimpose export duty on CPO

Ministry of trade plans to reimplement CPO export duty as high as USD18/ton in Feb-2020 following the rise in CPO price. the reference price is set at USD839.69 per ton, an increase of 15.07% from USD729.72 per ton in Jan-20. The export duty is in line with Ministry of Finance regulation no 13/PMK.010/2017, which stated that a USD18/ton export duty are imposedif the CPO’s reference price reach USD800-850/ton. (Investor Daily)

Pertamina suggests for Domestic Market Obligation on CPO

Pertamina proposes government to employ a Domestic Market Obligation (DMO) for CPO, both for volume and price, in order to implement B100 program. Currently, Pertamina is revamping its refinery in Cilacap which will be used to produce B100 in 2022. (Investor Daily) 

Comment: We think this is reasonable request for Pertamina as technically, mixing FAME can be done only up to 30%, due to water and glycerin content. Thus, Pertamina needs B100  as additional material in order to impose B40 and B50 programs. We need to see further detail on DMO, but we view the sentiment might be negative for CPO companies, especially for AALI, because it might require Company to reduce export market.

COMPANY

Bank Rakyat Indonesia (BBRI) to increase MSME loan portion

BBRI’s CEO, Sunarso, stated that the company will focus on MSME segment and increase the MSME portion to 80% by 2022 compared to 78% in 2019. Note that, the company booked 12.19% YoY of MSME loan growth in 2019. (Bisnis Indonesia, Investor Daily)

BPD Jawa Barat and Banten (BJBR) offers 10.25% coupon on its subordinated bonds

BJBR offers 8.50% - 10.25% coupon for its IDR500bn shelf-registered bond II phase I. Note that the bonds are issued in two series: series A with 5 years tenor and coupon of 8.50% - 9.50% and B with 7 years tenor with the coupon of 9.25% - 10.25%. (Bisnis Indonesia)

Ciputra Development (CTRA) booked IDR6.1tn FY19 marketing sales

CTRA book IDR6.1tn (-3.6% YoY) for FY19 marketing sales, representing 102% of FY19 marketing sales target (IDR6.0tn). Despite a sluggish 1H19, Ciputra significantly increased launches in the second semester and saw a robust 55 percent semester-on-semester growth in marketing sales.  It is worth noting that 73 percent of total 2019 marketing sales came from landed housing with ticket price less than IDR2.0bn. (Company, BCA Sekuritas)

Comment: CTRA further strengthens our thesis on units priced below IDR2.0 bn being the main driver of marketing sales for residential property. Management will continue their 2019 strategy going into 2020 in terms of product type, location, and unit price.

Indo Tambangraya Megah (ITMG) to lower production target

ITMG’s management has stated that the company will lower their production target from last year given the weak global demand and abundant supply. While capex target will also decline in line with the lower production. Note that last year ITMG set their production and sales volume target at 23.6mn tons and 26.5mn tons, respectively, with capex allocation of USD121.9mn. On a separate note, the management will continue their transfer quota to fulfill DMO. (Kontan)

Malindo Feedmill (MAIN) confidents to increase sales

MAIN’s Corporate Secretary, Andre Andreas Hendjana, stated that the company is optimistic to be able to boost 2020 sales as they believe the government could maintain the price of broiler and DOC, resulting to a promising prospect in the animal feed market. The company also targets 15% YoY net profit growth in 2020. In addition, Indonesian Feed Miller Association (GPMT) projected that animal feed production would grow at 5% - 6% through 2020. (Kontan)

Kimia Farma (KAEF) exports cosmetic raw materials to South Korea

KAEF has officially exports raw material for cosmetics to South Korea from its factory in Cikarang. Note that last year, the Company has completed the transfer of technology and optimization of the cosmetics’ raw material production at its drugs raw material factory (BBO) in Cikarang. CEO of KAEF, Verdi Budidarmo, stated that the export of 7 raw materials for cosmetics will translate to a USD1.5mn sales. Currently, exports is contributing to around 2% of KAEF’s revenue. (Kontan)