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IP Report: BBNI - Attractive Risk Reward Preposition; Stimulus on Tourism + Electricity Tariff Discount; Panic Redemption on Kresna Life
Friday, February 14, 2020       12:21 WIB
  • - Attractive risk reward preposition
  • Stimulus on Tourism by lowering airline fee + Electricity tariff discount to boost consumption
  • Flows: Panic Redemption on Kresna Life on Wanaartha

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: Attractive risk reward preposition
 Download complete report 
  • 20th February 2020 is the AGM - there is a probability of change in management in this meeting.
  • Risk of further kitchen sinking is very minimal in our view. They have done enough provision in FY19
  • BBNI is as prudent as its peers - We found that has been quite prudent with its provisioning approach. As a comparison,  Post IFRS 9 both and Duniatex (two biggest issues last year) coverage will be at 90% and 100%, respectively (higher than 's c.45%/60% and 60-70%/100% for /Duniatex).  Overall NPL/LAR coverage will be at 260%/59% vs. 's 256%/61% and 's 229%/60% which doesn't justify the valtion discount.
  • NIM to improve as improves and lower TD to obtain. Lower CoF amid surge in in Nov/Dec ( up 5% mom both in Nov and Dec). Jan20 also went up by c.11% yoy vs. TD -3% yoy which showed an encouraging trend.

Valuation is un-demanding + Deviation from EPS growth shall narrow. Hence, share px shall catch up
is our TOP Pick! Jovent Muliadi, our bank analyst, expects BNI to post robust earnings growth of 16-17% in FY20-21 after lackluster FY19 (+2% earnings growth). Rising coverage (for both NPL and LAR) and robust earnings growth in FY20-21 underpin our Buy rating
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Snippets
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 Government to enforce downstream coal 
Based on Investor Daily's report on the new law draft (RUU Cipta Kerja), the government is allegedly planning to require coal miners to go downstream - the draft states that mining activities are required to add value through processing and sterilizing of both metal and non-metal minerals, and also developing/utilizing coal (for downstream). To support this, the government plans to implement several incentives, such as the exemption from DMO regulation and 0% royalty taxes for producers that are able to do downstream coal. On the other hand, the draft on Inventory List of Issues (DIM) from RUU Minerba states that holders of IUP and IUPK are able to proceed with development/utilization according to the law - there is no mandatory clause here. (Investor Daily)
 Government plans to give electricity tariff discount 
The government is currently discussing a potential plan to give electricity tariff discount for industries that are operating for 24 hours. However, there are no details yet on how much discount will be given. Currently, the plan is still being discussed among the instances. (Bisnis Indonesia)
 Indonesia to Cut Airline Fees to Support Tourism Amid Outbreak Ministry projecting 30% drop in traffic due to coronavirus Government to cut carriers' landing charges, landing fees 
(Bloomberg) -- The Indonesian government stepped in to support the country's aviation and tourism industries to limit the damage the coronavirus outbreak has inflicted on airlines. The measures will include cutting landing charges and airport fees for carriers, as well as providing incentives to hotels and tourism businesses in areas popular among Chinese holiday makers, such as Bali, Manado and the Riau Islands, Transport Minister Budi Karya Sumadi said in a statement Thursday.
  aims for US$1bn of net profit by 2024 
The management cites its medium term target of US$8bn in revenue sand US$1bn in net profit by 2024, to be driven by higher gas volumes both domestic and exports. (Investor Daily)
 Pertamina will do tender offer on global bonds 
Pertamina is holding a cash offer on its US$1bn of senior notes that is due on 2021 with coupon rate of 5.25%. The tender offer will be held starting 13-20 Feb 2020. Holders of US$1,000 of Pertamina's senior notes will be getting US$1,044. The bonds will be paid using proceeds from its bonds recently issued in Jan 2020 (US$1.5bn proceeds with coupon rates of 4.175-5.95% and tenor of 10-30 years). (Investor Daily)
 Panic redemption on Kresna Life on Wanaartha 
Based on Kontan's sources, holders of Kresna Life insurance policy are concerned that the Jiwasraya corruption case could have impact to other firms as well. As a result, many of its policy holders are trying to liquidate the funds from Protecto Investa Kresna and Kresna Link Investa, both are products promising fixed returns of 7-9% p.a. To stop the panic, Kresna's management has stopped redemption for both products and offering roll over schemes with a minimum tenor of 6 months. Total asset for Asuransi Jiwa Kresna is Rp8tr. On the other hand, Wanaartha cited that the freezing of securities account related to Jiwasraya has also affected them. It indicates that payment for policy holders will be made 14 days after the freeze has been cleared. (Kontan)
 Government raises benchmark pricing on chicken prices 
Based on the regulation issued by Ministry of Trade (PMP No. 7/2020), the lower and upper bound prices for purebred chicken egg is raised to Rp19,000/kg and Rp21,000/kg respectively vs. previous prices of Rp18,000/kg and Rp20,000/kg. Price for the purebred chicken is also raised to Rp35,000/kg from Rp34,000/kg. (Kontan)
 Sales commentary is not a product of research 

Sumber : IPS

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