new pt trimegah sekuritas indonesia tbk | - august 14, 2015 bfi … · 2019. 11. 4. · pt trimegah...
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COMPANY FOCUS PT Trimegah Securities Tbk - www.trimegah.com 1
Initiating coverage with a Buy
We initiate our first financing sector stock coverage with a Buy amidst
the industry tough times. We view that BFIN is highly undervalued de-
spite it is expected to deliver ~16% ROE in 2015-17F. Moreover, the
stock also offers attractive dividend yield, and some defensive qualities.
Using Gordon Growth Methodology (GGM), we estimate BFIN’s target
price of Rp3,550 under the conservative assumptions of 15.8% sustain-
able ROE, 4.8% long-term growth rate, and 12.8% cost of equity
(7.75% risk-free rate). The TP implies 1.4x 2015/16F PBV and it cur-
rently trades cheaply at 1.0x 2015F PBV.
Attractive dividend yield
In the past 2 years, BFIN has given back to shareholders. The company
even distributed more dividends with 49.9% payout ratio for FY14 earn-
ings this year. From our latest discussion with the management, the
company is expected to continue giving back to shareholders and deliver
~8-9% dividend yield in the following years. At the current share price,
our calculation suggest 8.9% 2016F dividend yield (assuming 35/25%
payout ratio for 2015F final earnings/2016F interim earnings), which is
higher than current 10-year Indonesian government bond yield.
Has some defensive qualities:
• Much lower cost of credit than its closest listed competitor, ADMF.
• Historically lower write-offs rate compared to most of its listed
peers.
• Relatively more stable business growth compared to most of its
listed peers.
All these defensive attributes lead BFIN’s historical earnings to be less
volatile than most of its listed peers.
Increasing exposure toward used passenger 4W a positive
The company’s plan to increase used passenger 4W is a good strategy
given the rising price of new LCGC. Given the current economic down
cycle, customers are expected to rather buy used 4W. This is also sup-
ported by our on-the-ground channel checks, which reveals the demand
for used passenger 4W is still higher than new ones.
PT BFI Finance Indonesia provides finan-cial services such as leasing, consumer financing, and factoring. The company is based in Tangerang, West Java.
Share Price Rp2,550
Sector Financing
Price Target Rp3,550 (39%)
Year end Dec 2013 2014 2015F 2016F 2017F
Net Profit (Rpbn) 509 594 635 674 721
EPS (Rp) 333 385 411 437 467
EPS Growth (%) 3.4 15.6 6.9 6.2 6.9
DPS (Rp) 0 264 226 217 231
BVPS (Rp) 2,224 2,341 2,548 2,767 3,003
P/E (x) 7.7 6.6 6.2 5.8 5.5
P/BV (x) 1.1 1.1 1.0 0.9 0.8
ROE (%) 15.0 16.4 16.1 15.8 15.6
Div Yield (%) 0.0 10.3 8.9 8.5 9.1
BFI Finance Company Focus
BUY Rp3,550
Reuters Code BFIN.JK
Bloomberg Code BFIN.IJ
Issued Shares 1,566
Mkt Cap. (Rpbn) 3,993
Avg. Value Daily 6 Month (Rpbn)
0.5
52-Wk range 2,800 / 2,000
Trinugraha Capital & CO SCA 43.7%
Public 56.3%
EPS 15F 16F
Consensus (Rp) 398 475
TRIM vs Cons. (%) 3.3 (8.0)
Undervalued and Proven to Be Resilient
Company Update
Stock Data
Major Shareholders
Consensus
Stock Price
Company Data
August 14, 2015
Angga Aditya Assaf
0.0
0.0
0.0
0.0
0.0
0.0
0.0
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500
1,000
1,500
2,000
2,500
3,000
Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15
(Rpbn)Avg. 5 Day MA Trading Value (RHS) Price (LHS)
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 2
Source: OJK, Trimegah Research
INDONESIAN FINANCING INDUSTRY ANALYSIS
Expect slowdown to continue this year
Data from Financial Services Authority (OJK) shows that Indonesian financing industry is facing a slowdown this
year. In addition, automotive sales growth is also contracting. Our finding also suggest that automotive sales
growth closely correlates with GDP growth. We still expect the slowdown to continue this year given the delay of
the government infrastructure projects, weak purchasing power due to higher inflation, and less appetite of the
financiers in providing additional financing due to threat of rising bad loans.
Figure 1. Financing Industry Assets Breakdown (in Rp bn)
Source: OJK, Trimegah Research
Figure 2. Financing industry growth (YoY)
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2009
2010
2011
2012
2013
Jan-1
4
Feb-1
4
Mar-
14
Apr-
14
May-1
4
Jun-1
4
Jul-14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-
14
Jan-1
5
Feb-1
5
Mar-
15
Apr-
15
Consumer Financing Credit Card Factoring Financial Lease
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
200
9
201
0
201
1
201
2
201
3
Jan
-14
Feb-14
Mar-1
4
Ap
r-1
4
May-1
4
Ju
n-1
4
Ju
l-1
4
Au
g-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan
-15
Feb-15
Mar-1
5
Total Financing Consumer Financing Financial Lease
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 3
Figure 3. Financing Industry Funding Sources (in Rp bn)
Source: OJK, Trimegah Research
Figure 4. 4W sales figure (in units)
Source: Gaikindo, Trimegah Research
Indonesian automotive sales: will remain sluggish this year
Data from Gaikindo shows that 4W and 2W sales are showing a declining trend since 2014 and we expect it to
remain sluggish this year due to rising inflation and slower economic growth. As aforementioned, our finding also
suggest that there is a high correlation between automotive sales and GDP growth in Indonesia. Hence, adding
with the expectedly less than 5% GDP growth this year we expect auto sales growth to remain slow this year.
-80
-60
-40
-20
0
20
40
60
80
100
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Jan-0
2
Jul-02
Jan-0
3
Jul-03
Jan-0
4
Jul-04
Jan-0
5
Jul-05
Jan-0
6
Jul-06
Jan-0
7
Jul-07
Jan-0
8
Jul-08
Jan-0
9
Jul-09
Jan-1
0
Jul-10
Jan-1
1
Jul-11
Jan-1
2
Jul-12
Jan-1
3
Jul-13
Jan-1
4
Jul-14
Jan-1
54W Sales (units) % YoY growth (RHS)
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
20
09
20
10
20
11
20
12
20
13
Jan
-14
Fe
b-1
4
Ma
r-1
4
Ap
r-1
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Ma
y-1
4
Jun
-14
Jul-
14
Au
g-1
4
Se
p-1
4
Oct
-14
No
v-1
4
De
c-1
4
Jan
-15
Fe
b-1
5
Ma
r-1
5
Ap
r-1
5
Fund Borrowings Securities Issued Sub-debt
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 4
Figure 5. 2W sales figure (in units)
Source: Gaikindo, Trimegah Research
Figure 6. GDP vs Indonesia car sales
Source: Bloomberg, CEIC, Trimegah Research
-60
-40
-20
0
20
40
60
80
100
120
140
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
Jan-0
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Jul-02
Jan-0
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Jul-03
Jan-0
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Jul-05
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Jul-06
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Jul-07
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Jul-08
Jan-0
9
Jul-09
Jan-1
0
Jul-10
Jan-1
1
Jul-11
Jan-1
2
Jul-12
Jan-1
3
Jul-13
Jan-1
4
Jul-14
Jan-1
5
2W Sales (units) % YoY growth (RHS)
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 5
Heavy equipment sales: potential shifts from mining to construction sector
Data from Komatsu also shows a slowing trend in heavy equipment sales YoY, despite increasing YTD. We note a
slowdown in sales to mining sector due to sluggish growth in commodities-related sectors. Moreover, sales to
plantations and forestry sectors are also declining.
We view a potential shift to the construction sector from mining following the execution of government infra-
structure projects. Thus, we expect heavy equipment financial lease to grow flat this year and start to pick up
starting next year.
Source: United Tractors, Company, Trimegah Research
Figure 7. Komatsu’s monthly heavy equipment sales
Figure 8. Komatsu’s monthly heavy equipment sales breakdown
Source: United Tractors, Company, Trimegah Research
503
374334
366324
306 301
242 232251
170
110
244275
244203 207
Jan-14
Feb-1
4
Mar-
14
Apr-
14
May-14
Jun-1
4
Jul-
14
Aug-14
Sep-1
4
Oct-
14
Nov-14
Dec-1
4
Jan-15
Feb-1
5
Mar-
15
Apr-
15
May-15
42%29%
36% 37% 32% 36% 35% 39%
24%34% 30% 32% 33% 35% 32% 35% 29%
28%
32%29% 28%
26% 24% 31% 22%
31%
30%27%
35%23%
33%33% 28% 44%
15%19%
26% 22%23%
31% 23% 29%29%
25%
22%
19%
16%
10% 11% 17%
19%
15% 20%9% 13% 19%
9% 11% 10%16% 11%
21%14%
28%22% 24% 20%
8%
Jan
-14
Feb-14
Mar-1
4
Ap
r-1
4
May-1
4
Ju
n-1
4
Ju
l-1
4
Au
g-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan
-15
Feb-15
Mar-1
5
Ap
r-1
5
May-1
5
Mining Construction Agro Forestry
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 6
COMPANY ANALYSIS
Brief Corporate Profile
BFI Finance (BFIN) is based in South Tangerang, West Java, Indonesia, and established under the name of PT
Manufacturers Hanover Leasing Indonesia in 1982. In 1990, the company changed its name into PT Bunas Fi-
nance Indonesia and became one of the first financing companies to be listed in Indonesia Stock Exchange in
1990. During Asia economic crisis in 1997, BFIN successfully managed to restructure its debt without the govern-
ment help and changed its name into PT BFI Finance Indonesia. The company has been doing well and became
more solid in the financing industry, especially from financial and operational perspectives.
The company’s main businesses are consumer financing and financial lease. Other business that the company
does are loan factoring and credit cards but both contribute small portion to its revenue. BFI focus on the 4W and
2W vehicles financing, both new and used, to the low-mid customers. In addition, BFIN also provide financial
lease of heavy equipment to corporations and individuals. BFIN currently owns 220 outlets all across Indonesia
with more than 6,000 employees.
Competitive industry environment
BFIN position in the industry is quite competitive considering high risk of new substitute products (e.g., banks
automotive loans) and high bargaining power of customers. Thus, the competition environment will largely occur
on pricing and services. It all depends on how BFIN can remain efficient in terms of operational costs and how
well it can manage its asset quality risk during the current slowing cycle.
Figure 9. BFIN’s Porter 5 forces analysis
Source: Trimegah Research
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 7
Figure 10. BFIN’s main business composition (in Rp bn)
Source: Company, Trimegah Research
2,521 3,538
4,595 4,978
6,777 6,990
240
607
1,339
2,381
2,309
3,887
-
2,000
4,000
6,000
8,000
10,000
12,000
2009 2010 2011 2012 2013 2014
Gross Consumer Financing Receivables Gross Investments in Financial Leases
Assets profile: dominated by used 4W consumer financing
Consumer financing dominates the assets composition with ~22.6% CAGR during 2009-2014. Used 4W business
dominates the consumer financing portfolio—accounts for 62% of managed bookings and 22% of new bookings
in FY14. The majority of consumer financing business is for commercial purposes (minibus, trucks, and jeep).
Meanwhile, financial lease is the second main business line which has reported enormous growth (~74.5% CAGR
during 2009-2014) due to commodity boom. In 2014, heavy equipment leasing registered slower growth due to
slowdown in the commodities-related sectors.
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 8
2 ,8853,454
5,710
6 ,9571 ,045
1,505
2,163
2 ,419
1 ,095
1,967
1,150
1 ,214
461
447
531
596
0
2,000
4,000
6,000
8,000
10,000
12,000
2011 2012 2013 2014
Used four-wheeler financing New four-wheeler financing
Heavy equipment financing Used two-wheeler financing
Figure 11. Managed receivables breakdown
Source: Company, Trimegah Research
3,038 3 ,422
5 ,517 6,150
941
1 ,110
1 ,529
1,469
1,087
1 ,803
809
838
676
658
781
814
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2011 2012 2013 2014
Used four-wheeler financing New four-wheeler financing
Heavy equipment financing Used two-wheeler financing
Figure 12. New bookings breakdown
Source: Company, Trimegah Research
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 9
43% 43% 44%
19% 20% 19%
19% 20% 19%
14% 12% 13%
4% 4% 5%
2012 2013 2014
Minibus Truck Pick-up Jeep Bus Passenger car
Figure 13. Breakdown of 4W financing by type
Source: Company, Trimegah Research
M ining, 3 9%
M ining, 2 9%
C ons truction, 25 %
C ons truction, 2 5%
Indus trial and
M anufac turing, 1 0% Indus trial and
M anufac turing, 1 9%
P lantation, 1 3%P lantation, 9%
Fores try, 9 %
Fores try, 7%
Servic es, 2 %
Servic es, 5%
T rade and D is tribution,
1 %T rad e and D is tribution,
2%
O thers, 1 % O thers, 4%
2013 2014
Figure 14. Heavy equipment leasing based on sectors
Source: Company, Trimegah Research
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 10
Figure 15. Portfolio Distribution Channels
Source: Company, Trimegah Research
Figure 16. Financing portfolio based on geographical location
Source: Company, Trimegah Research
Greater Jakarta
12%
Java and Bali29%
Sumatera19%
Kalimantan18%
Sulawesi and East
Indonesia22%
2014
Greater Jakarta
11%
Java and Bali26%
Sumatera22%
Kalimantan20%
Sulawesi and East
Indonesia21%
2013
Dealer
financing
60%
Direct via
branch
40%
2013
Dealer
financing
58%
Direct via
branch
42%
2014
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 11
Balanced capital structure
BFIN largely utilizes fund borrowings and equity to finance its operational. While at the same time, the usage of
debt securities as alternative source of funding is also increasing. The diverse sources of funding should benefit
BFIN since it will reduce cost of funds going forward. We also found out that BFIN’s funding composition is rela-
tively more efficient compare to its competitors since it utilizes cheaper funding sources (fund borrowings and
equity).
1 ,593 2 ,316 2 ,406
3 ,172 3 ,933 4 ,370 4 ,829
5 ,484 1 ,941
2 ,366 2 ,862
3 ,397
3 ,614 3 ,857
4 ,140
4 ,450
1 60
485
905
1 ,233
1 ,295
1 ,411
1 ,524
1 ,665
-
-
225
225
330
394
426
465
-
2,000
4,000
6,000
8,000
10,000
12,000
2010 2011 2012 2013 2014 2015F 2016F 2017F
Fund Borrowings Equity Bond Securities MTN
Figure 17. BFIN’s funding composition
Source: Company, Trimegah Research
46% 43%37%
46%
63%
15%
39% 51%
12%
30%39%
18%12%
43%
7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
ADMF BFIN CFIN WOMF MFIN
Borrowings Equity Bonds & MTN
Figure 18. Funding composition comparison (as at FY14)
Source: Company, Trimegah Research
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 12
PEERS COMPARISON
Relatively lower credit costs compare to its peers
BFIN’s historical credit cost is considerably among the lowest compared to its peers which provide both consumer
financing and financial lease; competing with Clipan Finance (CFIN) but far below ADMF. On a overall basis,
BFIN’s credit cost is also relatively low, indicating robust asset quality. Its write-offs rate is relatively lower than
most of its competitors. BFIN’s credit cost has been increasing in the past 4 years as a result of increasing cover-
age ratio. We expect stabilizing NPF ratio on the back of consistent write-offs despite challenging macro condi-
tion, but credit costs is also expected to stabilize on the back of high loan loss coverage—already comfortable to
cover NPF risks.
Figure 19. Gross NPF, Credit costs, and coverage ratio outlook
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
2010 2011 2012 2013 2014
ADMF BFIN CFIN WOMF MFIN
Figure 20. Credit costs comparison among Indonesian financing stocks
Source: Companies Financial Statements, Trimegah Research
Source: Company, Trimegah Research
0
20
40
60
80
100
120
140
0.0
0.5
1.0
1.5
2.0
2.5
2010 2011 2012 2013 2014 2015F 2016F 2017F
Gross NPF (%) Credit Cost (%) Loan Loss Coverage (RHS, in %)
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 13
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
2010 2011 2012 2013 2014
ADMF BFIN CFIN WOMF MFIN
Figure 21. write-offs rate to total financing comparison
Source: Companies Financial Statements, Trimegah Research
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 14
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
2010 2011 2012 2013 2014
ADMF BFIN CFIN WOMF MFIN
Figure 22. Consumer financing YoY growth comparison
Source: Companies Financial Statements, Trimegah Research
-100.0%
0.0%
100.0%
200.0%
300.0%
400.0%
500.0%
600.0%
2010 2011 2012 2013 2014
ADMF BFIN CFIN
Figure 23. Financial lease YoY growth comparison
Source: Companies Financial Statements, Trimegah Research
Less volatile business growth
Our findings also suggest that BFIN’s business growth is relatively less volatile compared to its competitors as
reflected by relatively more stable growth of consumer financing and financial lease YoY growth. Even at the
current period, both BFIN’s consumer financing and financial lease growth outpaced its bigger competitor, ADMF.
We deemed that BFIN’s less aggressive strategy could be beneficial at these bearish cycle, where defensive qual-
ity shows its superiority.
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 15
-60.0%
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
2010 2011 2012 2013 2014
ADMF BFIN CFIN WOMF MFIN
-100.0%
-80.0%
-60.0%
-40.0%
-20.0%
0.0%
20.0%
40.0%
2010 2011 2012 2013 2014
ADMF BFIN CFIN WOMF MFIN
Source: Companies Financial Statements, Trimegah Research
Source: Companies Financial Statements, Trimegah Research
Figure 24. PPOP growth comparison
Figure 25. Net Profit growth comparison
Relatively stable earnings growth
Our examination reveals BFIN’s earnings growth is relatively stable as reflected by less volatile PPOP and net
profit growth than most of its competitors, adding another defensive quality. Moreover, its margins and cost of
funds are also found to be relatively stable.
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 16
1H15 RESULTS SNAPSHOT
The company booked 15% YoY net profit growth in 1H15 to Rp 298bn, translates to Rp150bn on a QoQ basis.
The growth was mainly driven by 13% YoY net interest income growth, which was due to 80bps YoY yield im-
provement. However, we also see a 47% YoY higher provisioning expense as in line with the slowing economy.
In terms of booking, BFIN reported 24% YoY increase in new bookings amidst economic slowdown. The relatively
strong new bookings growth is mainly due to non-dealer used 4W bookings. This is also in line with our on-the-
ground channel checks that indicates resilient used 4W demand. This led to 20% YoY managed receivables
growth.
Some guidance for FY15
• Expect rising NPF ratio in 2H15
• Net profit growth in FY15 will be <15% YoY
• 5 new branches will open this year—this reflects the management optimism that there will be some pick up
in growth in 2H15
• The management indicates to increase exposure to used passenger cars financing from currently commercial
cars financing. This is due to lower credit cost on the passenger cars segment
• There is an indication that the management will continue to pay dividends going forward. The latest payout is
50% of the earnings
1H14
NII (Rp bn) 629
Total Revenue (Rp bn) 1,100
Provisioning (Rp bn) 100
Net Profit (Rp bn) 259
New Bookings (Rp bn) 4,546
Total Managed Receivables*
(Rp bn) 10,463
NIM (%), as calculated by the
company 7.9
Total Assets (Rp bn) 8,990
Total Borrowings (Rp bn) 5,006
Total Equity (Rp bn) 3,523
CoC/Avg. Receivables (%) 2.1
1H15 YoY
(%)
2Q14 1Q15 2Q15 QoQ
(%)
YoY
(%)
710 12.9 316 349 360 3.2 14.0
1,352 22.9 568 655 698 6.6 22.8
147 46.5 58 72 75 4.8 30.1
298 14.9 129 147 150 1.7 16.5
5,647 24.2
12,582 20.3
10,740 19.5
6,562 31.1
3,823 8.5
8.2 0.3
2.7 0.6
NPL (%) 1.6 1.7 0.1
Write-offs rate (%) 1.0 1.4 0.4
Debt/equity (x) 1.3x 1.6x 0.3x
Figure 26. 1H15 result snapshot
*include off-balance sheet financing
Source: Company, Trimegah Research
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 17
ON-THE-GROUND CHANNEL CHECKS TO THE LARGEST USED 4W MARKET IN JAKARTA
Used passenger 4W demand remains intact...
As aforementioned, the company guided to increase exposure toward used passenger 4W financing going for-
ward. We then had a chance to visit used 4W market in WTC Mangga Dua, the largest used passenger 4W mar-
ket in Jakarta. According to the dealers, demand for used cars remains intact despite slowdown in the new car
sales. They claimed that there was a slight slowdown in the recent months, but they said that it was rather sea-
sonal. On average, a dealer are able to sell 10 used-cars per month. In mid-May 2015, around 5 used-cars per
dealer were already sold. In conclusion, we view that the second-hand cars market is still resilient and BFIN
should benefit from this considering at the current economic down cycle, customers are expected to buy used 4W
rather than new ones given the rising new LCGC price.
...but dealership competition remains tight
Our observation suggests that the financing companies cooperating with the dealers are mostly unlisted competi-
tors, e.g., BCA Finance, Astra Credit Companies, and OTO Multi Artha. The main reason is they are favorited by
customers for lower interest rates offered and better service qualities. We did not see any of BFIN’s presence
there (ads or marketing agents) - even ADMF was also not there. Hence, we note this as a competition risk for
BFIN considering the size of the market.
Figure 27. Pictures taken from the largest used cars market in WTC Mangga Dua, Jakarta
Source: Trimegah Research
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 18
OUTLOOK AND VALUATION
Initiate with a “Buy”, TP Rp3,550 (39% ups.)
Outlook: we still expect the industry to post sluggish growth until the end of this year due to the slowing econo-
my condition. Despite some optimism of the economic growth pick up in 2H15, we conservatively assume a
single digit consumer financing and financial lease growth in 2015/16F. We also expect rising cost of credit this
year as there is a likelihood of decline in customers’ repayment ability. As a result, we project 7/6/7% EPS
growth for 2015/16/17F. Despite that, ROE is expected to maintain at ~16%. Further upside will come from the
uptick in consumption growth in 2H15.
We use Gordon Growth Methodology (GGM) in valuing BFIN’s stock since its business model is similar with banks.
Assuming 15.8% sustainable ROE, 4.8% long-term growth rate, and 12.8% cost of equity, we arrive at Rp3,500
TP (37% ups.) implying 1.4x 2015F PBV. At the current share price, BFIN trades cheaply at 1.0x 2015F PBV.
Considering its undemanding valuation, ~16% ROE, attractive dividend yield and some defensive qualities, we
therefore initiate our coverage for BFIN with a “Buy”.
Key investment risks
1) Unexpected rise in inflation, which could lead to further rise in credit costs
2) Slower consumption growth
3) Tightening competition
4) Adverse regulatory interventions
2015F
Sustainable ROE (%) 15.8
Long-term Growth Rate (%) 4.8
Cost of Equity (%) 12.8
Justified PBV (x) 1.4
BV of Equity (Rp) 2,548
Implied 2015F P/E (x) 8.6
Target Price (Rp) 3,535
Risk-Free Rate (%) 7.75
Stock Beta 1.0
Market Risk Premium (%) 5.0
Target Price (Rounded, in Rp) 3,550
Figure 28. BFIN’s valuation using Gordon Growth Methodology (GGM)
Source: Trimegah Research
PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 19
Figure 29. BFIN’s 5-years forward PBV band
Figure 30. BFIN’s 5-years forward PE band
+2 stdev
-2 stdev
-1 stdev
mean
+1 stdev
+2 stdev
-2 stdev
-1 stdev
mean
+1 stdev
Source: Bloomberg, Trimegah Research
Source: Bloomberg, Trimegah Research
0.0
0.5
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1.5
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2.5
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-11
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-12
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2
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15
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PT Trimegah Securities Tbk - www.trimegah.com COMPANY FOCUS 20
Income Statement (Rp bn)
Year end Dec 2013 2014 2015F 2016F 2017F
Interest Income 1,514 1,792 1,960 2,072 2,294
Interest Ex-
pense 421 502 535 542 606
NII 1,092 1,291 1,425 1,530 1,688
Non Interest
Income 713 831 474 583 707
Operating Ex-
pense 1,085 1,306 1,500 1,699 1,994
PPOP 805 990 1,014 1,036 1,086
Provisioning
Expenses 138 245 218 191 182
Operating Profit 667 745 796 845 904
Tax Expense 159 151 161 171 183
Net Profit 509 594 635 674 721
EPS (Rp/Share) 333 385 411 437 467
EPS Growth (%) 3.4 15.6 6.9 6.2 6.9
Dividend Per
Share 0 264 226 217 231
Dividend Growth
(%) 0.0 0.0 -14.4 -3.8 6.6
Balance Sheet (Rp bn)
Year end Dec 2013 2014 2015F 2016F 2017F
Cash and Equivalents 225 290 149 159 172
Time Deposits 0 0 0 0 0
Financial Lease-Net 1,929 3,115 3,144 3,300 3,652
Consumer Financing-
Net 5,310 5,443 5,719 6,215 7,197
Other Receivables 83 126 113 121 137
Other Assets 415 376 340 359 407
Total Assets 8,293 9,671 9,842 10,574 12,022
Total Earning Assets 7,239 8,559 8,863 9,515 10,849
Borrowings 3,172 3,933 3,820 4,075 4,917
Debt Securities 1,454 1,622 1,768 1,866 2,060
Other Liabilities 109 106 111 117 123
Total Liabilities 4,897 6,056 5,909 6,302 7,386
Total Shareholder's
Equity 3,397 3,614 3,933 4,272 4,636
BVPS (Rp/Share) 2,224 2,341 2,548 2,767 3,003
Key Ratio Analysis
Year end Dec 2013 2014 2015F 2016F 2017F
Earning Assets Yield (%) 23.0 22.7 22.5 22.5 22.5
Cost of Funds (%) 10.3 9.9 9.6 9.4 9.4
NIM, as calculated (%) 16.6 16.3 16.4 16.6 16.6
ROE (%) 15.0 16.4 16.1 15.8 15.6
ROA (%) 6.1 6.1 6.5 6.4 6.0
Cost to Income Ratio (%) 57.4 56.9 59.7 62.1 64.7
Net Consumer Financing
Growth (%) 36.1 3.1 4.1 8.5 15.1
Net Financial Lease
Growth (%) -0.7 62.2 1.5 5.2 10.6
Funding Growth (%) 30.9 20.0 0.6 6.3 17.4
Receivables/Funding (%) 196.2 195.7 201.7 203.5 196.4
Asset/Equity (x) 2.4 2.7 2.5 2.5 2.6
Gross NPL (%) 1.5 1.5 1.5 1.4 1.2
Loan Loss Coverage (%) 80.5 123.3 126.4 114.9 110.8
Cost of credit 1.2 1.8 1.9 1.6 1.3
Interim Result (Rpbn)
2Q14 3Q14 4Q14 1Q15 2Q15
Total Financing &
Leasing—net 7,767 7,892 8,559 8,704 9,307
Total Deposit 5,006 5,051 5,555 6,186 6,562
Total Asset 8,991 9,023 9,671 10,265 10,740
Revenue 568 578 622 655 698
PPOP 230 245 255 255 262
Operating profit 172 198 205 184 187
Net Profit 129 149 189 147 150
Capital History
Date
16-Jun-90 IPO @ Rp5,750
07-Aug-12 Stock split 1:2
PT Trimegah Securities Tbk
Gedung Artha Graha 18th Floor
Jl. Jend. Sudirman Kav. 52-53
Jakarta 12190, Indonesia
t. +62-21 2924 9088
f. +62-21 2924 9150
www.trimegah.com
DISCLAIMER
This report has been prepared by PT Trimegah Securities Tbk on behalf of itself and its affiliated companies and is provided for information
purposes only. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of any offer to buy. This report has
been produced independently and the forecasts, opinions and expectations contained herein are entirely those of Trimegah Securities.
While all reasonable care has been taken to ensure that information contained herein is not untrue or misleading at the time of publication,
Trimegah Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. This report is
provided solely for the information of clients of Trimegah Securities who are expected to make their own investment decisions without reliance
on this report. Neither Trimegah Securities nor any officer or employee of Trimegah Securities accept any liability whatsoever for any direct or
consequential loss arising from any use of this report or its contents. Trimegah Securities and/or persons connected with it may have acted
upon or used the information herein contained, or the research or analysis on which it is based, before publication. Trimegah Securities may in
future participate in an offering of the company’s equity securities.
One of major PT Trimegah Securities Tbk’s major shareholders is also a major shareholder of PT BFI Finance Tbk.