Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>On the 26th June 2023, <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">MUFG (8306 JP)</a> and 92.7%-held <a href="https://www.smartkarma.com/entities/adira-dinamika-multi-finance-tbk-pt" target="_blank" data-smartkarma-citation="entities:3245:1" rel="noopener">Adira Dinamika (ADMF IJ)</a> entered into SPAs with key shareholders to acquire an 80.6% stake in <a href="https://www.smartkarma.com/entities/mandala-multifinance-tbk-pt" target="_blank" data-smartkarma-citation="entities:12756:1" rel="noopener">Mandala Multifinance (MFIN IJ)</a>.</li>
<li>Although not explicit in various company announcements, MUFG/Adira are paying an estimated IDR 3,297/share. The SPAs are subject to regulatory approvals, primarily Indonesia's OJK.</li>
<li>An EGM for MFIN's shareholders has now been tabled for 13th Feb to vote on this change of control. Presumably, you wouldn't progress to the EGM without OJK's conditional approval. </li>
</ul>


On the 26th June 2023, MUFG (8306 JP) and 92.7%-held Adira Dinamika (ADMF IJ) entered into SPAs with key shareholders to acquire an 80.6% stake in Mandala Multifinance (MFIN IJ).
Although not explicit in various company announcements, MUFG/Adira are paying an estimated IDR 3,297/share. The SPAs are subject to regulatory approvals, primarily Indonesia's OJK.
An EGM for MFIN's shareholders has now been tabled for 13th Feb to vote on this change of control. Presumably, you wouldn't progress to the EGM without OJK's conditional approval. 


Mandala Multifinance (MFIN IJ): 13th Feb Change Of Control Vote

<ul>
<li>
<a href="https://www.smartkarma.com/entities/mitsubishi-ufj-finl-spon-adr" target="_blank" data-smartkarma-citation="entities:8619:1" rel="noopener">Mitsubishi UFJ Financial (MUFG US)</a> and 92.7%-held <a href="https://www.smartkarma.com/entities/adira-dinamika-multi-finance-tbk-pt" target="_blank" data-smartkarma-citation="entities:3245:1" rel="noopener">Adira Dinamika Multi Finance (ADMF IJ)</a> have entered into SPAs with key shareholders to acquire an 80.6% stake in <a href="https://www.smartkarma.com/entities/mandala-multifinance-tbk-pt" target="_blank" data-smartkarma-citation="entities:12756:1" rel="noopener">Mandala Multifinance (MFIN IJ)</a>.</li>
<li>MUFG and Adira appear to be paying IDR 3,297/share or IDR 7tn all-in. The SPAs are subject to regulatory approvals with completion expected in early 2024. </li>
<li>Upon completion, MUFG will hold 70.6% in Mandala and Adira 10% in the Indo car/motorcycle loan lender. This will trigger a Mandatory Tender Offer for the remaining 19.4%.</li>
</ul>



Mitsubishi UFJ Financial (MUFG US) and 92.7%-held Adira Dinamika Multi Finance (ADMF IJ) have entered into SPAs with key shareholders to acquire an 80.6% stake in Mandala Multifinance (MFIN IJ).
MUFG and Adira appear to be paying IDR 3,297/share or IDR 7tn all-in. The SPAs are subject to regulatory approvals with completion expected in early 2024. 
Upon completion, MUFG will hold 70.6% in Mandala and Adira 10% in the Indo car/motorcycle loan lender. This will trigger a Mandatory Tender Offer for the remaining 19.4%.


Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

Bank Negara Indonesia Persero / Equity Bottom-Up

<ul>
<li>Negara’s attractive valuations, its low PEG ratio and efficiency ratio should drive the share re-rating; pre- and post-provision were flat QoQ, but profitability ratios edged higher over the medium term</li>
<li>We like Mandiri for its attractive PE multiples and its robust credit quality, despite the 4Q24 returns blip; Mandiri has the second-best efficiency ratio and with further scope for gains</li>
<li>Rakyat’s high structural cost of risk remains a drag on its post-provision returns, with eroded further in 4Q24; although declining, returns are high but Rakyat valuations are not yet compelling</li>
</ul>


Negara’s attractive valuations, its low PEG ratio and efficiency ratio should drive the share re-rating; pre- and post-provision were flat QoQ, but profitability ratios edged higher over the medium term
We like Mandiri for its attractive PE multiples and its robust credit quality, despite the 4Q24 returns blip; Mandiri has the second-best efficiency ratio and with further scope for gains
Rakyat’s high structural cost of risk remains a drag on its post-provision returns, with eroded further in 4Q24; although declining, returns are high but Rakyat valuations are not yet compelling


Indonesian Banks Screener; Bank Negara (BBNI IJ) Stands Out

<ul>
<li>Negara’s attractive valuations, its low PEG ratio, its improving returns and efficiency ratio stand out; pre- and post-provision returns edged higher, combined with high NPL coverage and healthy CET1 ratio</li>
<li>We remain positive on Mandiri for its attractive PE multiples, its premium returns, and its robust credit quality metrics; Mandiri has the second-best efficiency ratio after mega-cap Bank Central Asia</li>
<li>Rakyat’s high structural cost of risk continues to weigh on its pre- and post-provision returns, with the latter being eroded further to 3Q24</li>
</ul>


Negara’s attractive valuations, its low PEG ratio, its improving returns and efficiency ratio stand out; pre- and post-provision returns edged higher, combined with high NPL coverage and healthy CET1 ratio
We remain positive on Mandiri for its attractive PE multiples, its premium returns, and its robust credit quality metrics; Mandiri has the second-best efficiency ratio after mega-cap Bank Central Asia
Rakyat’s high structural cost of risk continues to weigh on its pre- and post-provision returns, with the latter being eroded further to 3Q24


Indonesian Banks Screener; Stick with Bank Negara (BBNI IJ) And Bank Mandiri (BMRI IJ)

<ul>
<li>Negara value attributes, its growth potential captured by its low PEG ratio and its improving efficiency ratio all stand out; pre- and post-provision returns edged higher, with high NPL coverage</li>
<li>We are also positive on Mandiri for its quality attributes, its premium returns, and its strong credit quality metrics; Mandiri has the second-best efficiency ratio after mega-cap Bank Central Asia</li>
<li>Bank Mega has seen credit quality stabilise in 2Q24, but its returns are under pressure, with the efficiency ratio worsening steadily; cost of risk is likely to increase going forward</li>
</ul>


Negara value attributes, its growth potential captured by its low PEG ratio and its improving efficiency ratio all stand out; pre- and post-provision returns edged higher, with high NPL coverage
We are also positive on Mandiri for its quality attributes, its premium returns, and its strong credit quality metrics; Mandiri has the second-best efficiency ratio after mega-cap Bank Central Asia
Bank Mega has seen credit quality stabilise in 2Q24, but its returns are under pressure, with the efficiency ratio worsening steadily; cost of risk is likely to increase going forward


Indonesian Banks Screener; Bank Negara (BBNI IJ), the Value and Growth Pick

Indonesia

PT Bank Permata Tbk provides commercial and foreign exchange banking services through a network of offices in Indonesia.  The Bank also performs custodianship and trusteeship services as well as manages pension funds.

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Bank Permata (BNLI IJ)

Mandala Multifinance (MFIN IJ): 13th Feb Change Of Control Vote

It appears the transaction timeline is moving towards the pointy end. Assuming settlement mid-April, this is trading at a gross/annualised spread...

David Blennerhassett

MUFG Seeks A Majority Stake In Mandala

The only pushback is if the regulator has an issue with MUFG becoming the dominant player. Barring that, at a gross/annualised spread of 23%/31%,...

David Blennerhassett

Indonesian Banks Screener; Bank Negara (BBNI IJ) Stands Out

Negara's modest valuations, improving returns and efficiency ratio over the medium term to drive share re-rating; Mandiri is attractive on...

Victor Galliano

Indonesian Banks Screener; Stick with Bank Negara (BBNI IJ) And Bank Mandiri (BMRI IJ)

We like Negara and Mandiri; Negara stands out on valuation and is starting to deliver stronger returns, whilst Mandiri is attractive on PE...

Victor Galliano

Indonesian Banks Screener; Bank Negara (BBNI IJ), the Value and Growth Pick

Negara is our top pick, Mandiri remains a buy; both banks have big valuation differentials with quality play BCA and they have lower structural...

Victor Galliano

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Mandala Multifinance (MFIN IJ): 13th Feb Change Of Control Vote

It appears the transaction timeline is moving towards the pointy end. Assuming settlement mid-April, this is trading at a gross/annualised spread...

David Blennerhassett

MUFG Seeks A Majority Stake In Mandala

The only pushback is if the regulator has an issue with MUFG becoming the dominant player. Barring that, at a gross/annualised spread of 23%/31%,...

David Blennerhassett

Indonesian Banks Screener; Bank Negara (BBNI IJ) Stands Out

​Negara's modest valuations, improving returns and efficiency ratio over the medium term to drive share re-rating; Mandiri is attractive on...

Victor Galliano

Indonesian Banks Screener; Stick with Bank Negara (BBNI IJ) And Bank Mandiri (BMRI IJ)

​We like Negara and Mandiri; Negara stands out on valuation and is starting to deliver stronger returns, whilst Mandiri is attractive on PE...

Victor Galliano

Indonesian Banks Screener; Bank Negara (BBNI IJ), the Value and Growth Pick

Negara is our top pick, Mandiri remains a buy; both banks have big valuation differentials with quality play BCA and they have lower structural...

Victor Galliano

Negara's modest valuations, improving returns and efficiency ratio over the medium term to drive share re-rating; Mandiri is attractive on...

We like Negara and Mandiri; Negara stands out on valuation and is starting to deliver stronger returns, whilst Mandiri is attractive on PE...