Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

Bank Tabungan Negara Persero / Equity Bottom-Up

*Domination Of Subsidized Indonesian Mortgages: Bank Tabungan Negara (BBTN.IJ) [BBTN] dominates the Indonesian mortgage market with over a one-third of market, and aggregates 45% of Indonesia’s subsidized mortgage market;*BP Tapera, Additive To Funding: BBTN’s monthly mortgage disbursements were IDR 2.5 tn during September 2020, and likely will continue, in our view, given the greater government support. Recently, the Indonesian government increased the FLPP budget to a record IDR 19.1 tn for 2021, or about 74% higher than its 2020 budget of IDR 11 tn. BP Tapera will only assume this function from PPDPP in 2022, after becoming fully operational by 2021. Despite the promising outlook, the government’s existing housing subsidy programs will remain in place and that BP Tapera is essentially an add-on;  and  *New Management Restructuring: The new management team have set out that asset quality improvement and retail funding are their main priorities.

*Domination Of Subsidized Indonesian Mortgages: Bank Tabungan Negara (BBTN.IJ) [BBTN] dominates the Indonesian mortgage market with over a one-third of market, and aggregates 45% of Indonesia’s subsidized mortgage market;*BP Tapera, Additive To Funding: BBTN’s monthly mortgage disbursements were IDR 2.5 tn during September 2020, and likely will continue, in our view, given the greater government support. Recently, the Indonesian government increased the FLPP budget to a record IDR 19.1 tn for 2021, or about 74% higher than its 2020 budget of IDR 11 tn. BP Tapera will only assume this function from PPDPP in 2022, after becoming fully operational by 2021. Despite the promising outlook, the government’s existing housing subsidy programs will remain in place and that BP Tapera is essentially an add-on;  and  *New Management Restructuring: The new management team have set out that asset quality improvement and retail funding are their main priorities.

Bank Tabungan Negara – Mortgage Powerhouse

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Cross Asset Strategy

<div class="content-highlight">
The week that was in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma</a> is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.
We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  
</div><h3>Macro Insights</h3>In <a href="https://www.smartkarma.com/insights/agong-asserts-himself-preventing-change-of-pm-but-disallowing-emergency-rule" target="_blank" data-smartkarma-citation="insights:44572" rel="noopener">Agong Asserts Himself, Preventing Change of PM but Disallowing Emergency Rule,</a> CrossASEAN Chief Economist <a href="https://www.smartkarma.com/profiles/prasenjit-k-basu" target="_blank" data-smartkarma-citation="accounts:612" rel="noopener">Prasenjit K. Basu</a> comments on the ongoing political upheaval in Malaysia. In <a href="https://www.smartkarma.com/insights/trouble-down-south-it-s-not-just-the-virus" target="_blank" data-smartkarma-citation="insights:44698" rel="noopener">Trouble Down South: It's Not Just the Virus,</a><a href="https://www.smartkarma.com/profiles/dr-jim-walker" target="_blank" data-smartkarma-citation="accounts:1628" rel="noopener">Dr. Jim Walker</a> gives his prescriptions on why South East Asia has been such a poor performer this year. In <a href="https://www.smartkarma.com/insights/thai-strategy-2021-part-1-key-themes" target="_blank" data-smartkarma-citation="insights:40842" rel="noopener">Thai Strategy 2021 (Part 1): Key Themes,</a> out Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> lays out his thoughts for the outlook for the Thai market next year. <h3>Equity Bottom-Up Insights</h3>In his Indonesian Insight, <a href="https://www.smartkarma.com/insights/matahari-department-store-lppf-ij-too-early-to-be-early" target="_blank" data-smartkarma-citation="insights:44460" rel="noopener">Matahari Department Store (LPPF IJ) - Too Early to Be Early,</a> Cross ASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> circles back to the country's largest department store operator post its recent results. In <a href="https://www.smartkarma.com/insights/akr-corporindo-akra-ij-great-omnibus-expectations" target="_blank" data-smartkarma-citation="insights:44611" rel="noopener">AKR Corporindo (AKRA IJ) - Great Omnibus Expectations,</a> CrossASEAN insight provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener">Angus Mackintosh</a> revisits <a href="https://www.smartkarma.com/entities/akr-corporindo-tbk-pt" target="_blank" rel="noopener">AKR Corporindo (AKRA IJ)</a> after its recent 3Q2020 results that continued to demonstrate its resilience, with an across the board improvement in margins, despite a decline in sales.In a Malaysian Insight, <a href="https://www.smartkarma.com/insights/ql-resources-ql-take-profit" target="_blank" data-smartkarma-citation="insights:44598" rel="noopener">QL Resources (QL): Take Profit?,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/henry-soediarko" target="_blank" data-smartkarma-citation="accounts:1006" rel="noopener">Henry Soediarko</a> revisits this commodity turned retail play, through its Family Mart business. In <a href="https://www.smartkarma.com/insights/far-east-hospitality-trust-feht-beneficiary-of-opening-up" target="_blank" data-smartkarma-citation="insights:44649" rel="noopener">Far East Hospitality Trust (FEHT): Beneficiary of Opening Up,</a> CrossASEAN Insight Provider<a href="https://www.smartkarma.com/profiles/henry-soediarko" target="_blank" rel="noopener"> Henry Soediarko</a> takes an initial look at<a href="https://www.smartkarma.com/entities/far-east-hospitality-trust" target="_blank" rel="noopener"> Far East Hospitality Trust (FEHT SP),</a> the only hospitality REIT in Singapore with a 100% domestic hospitality exposure and a higher fixed rental component, offering a defensive exposure during this difficult market environment. In <a href="https://www.smartkarma.com/insights/bca-profit-returns" target="_blank" data-smartkarma-citation="insights:44605" rel="noopener">BCA – Profit Returns,</a> banking specialist <a href="https://www.smartkarma.com/profiles/daniel-tabbush" target="_blank" data-smartkarma-citation="accounts:12" rel="noopener">Daniel Tabbush</a> revisits <a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a> and finds the bank clawing back some of the ROA it lost during 2Q2020 in the most recent quarter. In <a href="https://www.smartkarma.com/insights/bts-potential-positive-catalysts-ahead" target="_blank" data-smartkarma-citation="insights:44691" rel="noopener">BTS: Potential Positive Catalysts Ahead,</a><a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> revisit this Thai transportation play with a more positive slant.In <a href="https://www.smartkarma.com/insights/pttep-4q20-earnings-to-soften-from-lower-asp-and-volume-sales" target="_blank" data-smartkarma-citation="insights:44740" rel="noopener">PTTEP: 4Q20 Earnings to Soften from Lower ASP and Volume Sales,</a> our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> assess the prospects for <a href="https://www.smartkarma.com/entities/ptt-exploration-and-production-public-company-limited" target="_blank" data-smartkarma-citation="entities:261:1" rel="noopener">PTT E&amp;P (PTTEP TB)</a> going into the end of the year.<h3>Credit Insights</h3>In this Insight, <a href="https://www.smartkarma.com/insights/japfa-comfeed-earnings-flash-9m-fy-2020-results-lucror-analytics" target="_blank" data-smartkarma-citation="insights:44743" rel="noopener">Japfa Comfeed - Earnings Flash - 9M FY 2020 Results,</a> Senior Credit Analyst<a href="https://www.smartkarma.com/profiles/trung-nguyen" target="_blank" rel="noopener"> Trung Nguyen</a> discusses <a href="https://www.smartkarma.com/entities/japfa-comfeed-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:8258:1" rel="noopener">Japfa Comfeed Indonesia (JPFA IJ)'</a>s 9M2020 results, which came in worse than expected (following a dismal Q22020), as the impact of COVID-19 reduced consumers' purchasing power and hit demand. In <a href="https://www.smartkarma.com/insights/pan-brothers-earnings-flash-9m-fy-2020-results-lucror-analytics" target="_blank" data-smartkarma-citation="insights:44708" rel="noopener">Pan Brothers - Earnings Flash - 9M FY 2020 Results,</a><a href="https://www.smartkarma.com/companies/lucror-analytics" target="_blank" rel="noopener">Lucror Analytics</a> zeros in on the Pan Brothers’ Q3 and 9M2020 earnings. Pan Brothers’ cash flow generation remained poor, and it continued to report large working capital weakness. It appears unlikely that Pan Brothers will be able to increase the size of its syndication facility, given the low commitment from banks at the moment.


The week that was in ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.
We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  
Macro InsightsIn Agong Asserts Himself, Preventing Change of PM but Disallowing Emergency Rule, CrossASEAN Chief Economist Prasenjit K. Basu comments on the ongoing political upheaval in Malaysia. In Trouble Down South: It's Not Just the Virus,Dr. Jim Walker gives his prescriptions on why South East Asia has been such a poor performer this year. In Thai Strategy 2021 (Part 1): Key Themes, out Thai guru Athaporn Arayasantiparb, CFA lays out his thoughts for the outlook for the Thai market next year. Equity Bottom-Up InsightsIn his Indonesian Insight, Matahari Department Store (LPPF IJ) - Too Early to Be Early, Cross ASEAN Insight Provider Angus Mackintosh circles back to the country's largest department store operator post its recent results. In AKR Corporindo (AKRA IJ) - Great Omnibus Expectations, CrossASEAN insight provider Angus Mackintosh revisits AKR Corporindo (AKRA IJ) after its recent 3Q2020 results that continued to demonstrate its resilience, with an across the board improvement in margins, despite a decline in sales.In a Malaysian Insight, QL Resources (QL): Take Profit?, CrossASEAN Insight Provider Henry Soediarko revisits this commodity turned retail play, through its Family Mart business. In Far East Hospitality Trust (FEHT): Beneficiary of Opening Up, CrossASEAN Insight Provider Henry Soediarko takes an initial look at Far East Hospitality Trust (FEHT SP), the only hospitality REIT in Singapore with a 100% domestic hospitality exposure and a higher fixed rental component, offering a defensive exposure during this difficult market environment. In BCA – Profit Returns, banking specialist Daniel Tabbush revisits Bank Central Asia (BBCA IJ) and finds the bank clawing back some of the ROA it lost during 2Q2020 in the most recent quarter. In BTS: Potential Positive Catalysts Ahead,Country Group revisit this Thai transportation play with a more positive slant.In PTTEP: 4Q20 Earnings to Soften from Lower ASP and Volume Sales, our friends at Country Group assess the prospects for PTT E&amp;P (PTTEP TB) going into the end of the year.Credit InsightsIn this Insight, Japfa Comfeed - Earnings Flash - 9M FY 2020 Results, Senior Credit Analyst Trung Nguyen discusses Japfa Comfeed Indonesia (JPFA IJ)'s 9M2020 results, which came in worse than expected (following a dismal Q22020), as the impact of COVID-19 reduced consumers' purchasing power and hit demand. In Pan Brothers - Earnings Flash - 9M FY 2020 Results,Lucror Analytics zeros in on the Pan Brothers’ Q3 and 9M2020 earnings. Pan Brothers’ cash flow generation remained poor, and it continued to report large working capital weakness. It appears unlikely that Pan Brothers will be able to increase the size of its syndication facility, given the low commitment from banks at the moment. 

The Week that Was in ASEAN@Smartkarma - South East Asia Lags, the Bank's Return, and Nimble Staples

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Thematic (Sector/Industry)

Few countries compare. Banks in Indonesia saw staggering credit costs during 2Q20. For 40 banks the average rate of growth QoQ was 126%. The economy has reopened and there are improving signs, as with most every economies globally, at least outside of Latin America. Given banks' exceptional sequential growth in credit costs during the June quarter, Indonesia’s banks may have some of the most radical recoveries during 3Q20. Or at the least, their credit costs can come down just as dramatically.

Few countries compare. Banks in Indonesia saw staggering credit costs during 2Q20. For 40 banks the average rate of growth QoQ was 126%. The economy has reopened and there are improving signs, as with most every economies globally, at least outside of Latin America. Given banks' exceptional sequential growth in credit costs during the June quarter, Indonesia’s banks may have some of the most radical recoveries during 3Q20. Or at the least, their credit costs can come down just as dramatically.

*Lower Costs and Under-Provisioning Support Result: Bank Central Asia’ (BBCA.IJ) [BCA] reported 2Q20 earnings results of IDR of 5.7 bn, declining IDR 924 mn (14.0%) linked quarter – and missing consensus forecasts. However, if we exclude securities gains we find that core operating results actually improved linked quarter by IDR 1.3 bn (30.2%) to IDR 5.8 bn. While BCA was – like most banks around the word – was ravaged by credit weakness, the story for the quarter is management’s ability to quickly rein-in costs; and*Accelerating Credit Risk Supported By Lower Reserves: BCA’s NPLs increased IDR 2.5 bn (26.5%) linked quarter, and amount to 2.09% of total loans – up 18 bp over the period. 2020 guidance, however, remains unchanged at between 2.5-2.7%.NPL recognition of loans within the restructuring process/moratorium are throwing a wrench into BCA’s forecasts, however. As it stands, reserves were bled against both total loans and NPLs linked quarter (seemingly not taking potential losses of its forecast moratorium book into account) declined 25 bp and 45.3%, respectively, to 2.05% and 99.1%.

*Lower Costs and Under-Provisioning Support Result: Bank Central Asia’ (BBCA.IJ) [BCA] reported 2Q20 earnings results of IDR of 5.7 bn, declining IDR 924 mn (14.0%) linked quarter – and missing consensus forecasts. However, if we exclude securities gains we find that core operating results actually improved linked quarter by IDR 1.3 bn (30.2%) to IDR 5.8 bn. While BCA was – like most banks around the word – was ravaged by credit weakness, the story for the quarter is management’s ability to quickly rein-in costs; and*Accelerating Credit Risk Supported By Lower Reserves: BCA’s NPLs increased IDR 2.5 bn (26.5%) linked quarter, and amount to 2.09% of total loans – up 18 bp over the period. 2020 guidance, however, remains unchanged at between 2.5-2.7%.NPL recognition of loans within the restructuring process/moratorium are throwing a wrench into BCA’s forecasts, however. As it stands, reserves were bled against both total loans and NPLs linked quarter (seemingly not taking potential losses of its forecast moratorium book into account) declined 25 bp and 45.3%, respectively, to 2.05% and 99.1%.

Bank Central Asia – Hunkering Down Is Not Helping

We all know that banks in Indonesia have the best margins and best ROAs of all banks in the region. This is largely due to the limited level of competition, specialized nature of these banks, an under-penetrated system and excellent demographics. Where recovery metrics are strong across most all regions, banks should seem a meaningful delta in profit, perhaps in 2Q20 or later during 2H20.  One way of considering where the most marginal gains can be made is by looking at where the greatest loss was, where the greatest decline in ROA was.

We all know that banks in Indonesia have the best margins and best ROAs of all banks in the region. This is largely due to the limited level of competition, specialized nature of these banks, an under-penetrated system and excellent demographics. Where recovery metrics are strong across most all regions, banks should seem a meaningful delta in profit, perhaps in 2Q20 or later during 2H20.  One way of considering where the most marginal gains can be made is by looking at where the greatest loss was, where the greatest decline in ROA was.

Indonesia

PT Bank Panin Indonesia Tbk provides commercial banking and foreign exchange services in Indonesia and overseas.

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Bank Pan Indonesia (PNBN IJ)

Bank Tabungan Negara – Mortgage Powerhouse

BANK TABUNGAN NEGARA: Dominance Of Subsidized Mortgage Lending, Funding Additions Into Space, and Management Restructure Under Way.

Thomas J. Monaco

The Week that Was in ASEAN@Smartkarma - South East Asia Lags, the Bank's Return, and Nimble Staples

The Week that Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights from across South East...

Angus Mackintosh

Indonesia Banks – Most To Recover?

Few countries compare. Banks in Indonesia saw staggering credit costs during 2Q20. For 40 banks the average rate of growth QoQ was 126%. The...

Daniel Tabbush

Bank Central Asia – Hunkering Down Is Not Helping

*Lower Costs and Under-Provisioning Support Result: Bank Central Asia’ (BBCA.IJ) [BCA] reported 2Q20 earnings results of IDR of 5.7 bn, declining...

Thomas J. Monaco

BCA – Most ROA to Claw Back

We all know that banks in Indonesia have the best margins and best ROAs of all banks in the region. This is largely due to the limited level of...

Daniel Tabbush

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