Indonesia

• BFI Finance Indonesia saw a marked turnaround in new bookings and a declining NPF ratio in 4Q2023, as its business recovered from the malware attack in May last year.
• The company has started to be more aggressive in non-dealer 4W space but remains cautious on 2W. Write-offs peaked in 4Q2023 and will decline in 2024, leading to lower CoC. 
• BFIN will launch a tripartite collaboration with GoTo and Bank Jago which will help to drive future bookings growth. Valuations remain attractive with BFIN trading in 2.0x PBV 

• Matahari Department Store (LPPF IJ) reported another slow set of results in 4Q2023, as it saw slower demand and continues to clear aged inventory. 
• The company is well-prepared for the upcoming Lebaran season with more conservative inventory levels. It will also see the benefits of new brands coming on stream this year. 
• Matahari Department Store will open 4-6 new stores in 2024 but close 10 underperforming stores, with a continued focus on new DP brands like SUKO. Valuations remain attractive. 

• EV supply chain is at a nascent stage in ASEAN and EV adoption in the region lags behind developed markets despite boasting a large population with a burgeoning middle class.
• However, Governments in the region continue to introduce new initiatives and offer incentives to promote the sector, while companies continue to attract large investment to develop the EV market.
• The four companies we looked at have reported earnings and we have discussed their latest results and our investment thesis.

• Bank Mandiri is our top pick for its quality attributes, its premium and growing pre- and post-provision returns; Mandiri provides a better valuations to returns mix than Bank Central Asia
• Bank Negara is the value pick with its low PE multiples, its attractive PEG ratio, whilst also improving pre- and post-provision returns with cost of risk well controlled
• Bank Rakyat registered worsening pre- and post-provision returns in 4Q23, with cost of risk worsening; this reflects its heavily MSME focused loan mix which keeps structural cost of risk high

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Alam Sutera Realty
• Citicore Renewable Energy

• Amman Mineral Internasional (AMMN IJ) raised around US$714m in its Indonesia IPO, after pricing the deal at IDR1,695/share. Its eight-month lockup will expire on 21st Feb 2024.
• Amman Mineral International (AMI) carries out exploration, development, mining, and processing. The company operates an open pit copper and gold mine known as the Batu Hijau mine in Indonesia.
• In this note, we will talk about the lock-up dynamics and updates since our last note.

• Bank Negara Indonesia (BBNI IJ) remains a laggard amongst the top 4 banks in Indonesia in valuation terms, with improving returns leading to some upward re-rating. 
• The bank continues to grow its high-quality corporate loans and consumer banking with a dramatic increase in its mobile banking users, which is helping to grow its low-cost CASA. 
• BBNI remains an interesting proxy for Indonesia’s economy, with digital banking helping to drive returns. Valuations remain below peers but the bank is now approaching fair value.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• Kawasan Industri Jababeka
• Lippo Karawaci
• MGM China Holdings

• BMRI is more profitable than BBNI, less cyclical than BBRI  and less expensive than BBCA. This combination makes it an attractive play on the Indonesia credit growth story.
• BMRI’s FY23 results are a strong beat with industry-leading loan growth and strong ROE; BMRI also has the potential to aggressively grow its retail portfolio which still is likely under-appreciated
• BMRI still trades at a discount to BBRI and has the potential to re-rate by another 20% in the near term, apart from the compounding driven by strong loan growth.

• Bank Mandiri (BMRI IJ) stood out from its peers with higher loan growth and lower cost of credit with PPOP growth of +17.3% YoY and its ROE reaching 23%. 
• The bank experienced a slight decline in NIM in 4Q2023 but asset quality remains solid and its digital initiatives continue to reduce costs and attract new users.
• Bank Mandiri‘s guidance for 2024 is more positive than peers for loan growth, as it continues to push out its value chain lending strategy into higher-yielding segments. Valuations remain attractive.

• Bank Rakyat Indonesia’s results reflected its ability to offset a tighter liquidity environment with a higher margin loan mix as it continues to shift to commercial Kupedes microloans. 
• The bank has also seen the benefit of increasing digitalisation benefitting costs with more BRILink agents and users of mobile banking through BRIMO, which has also helped to grow CASA.
• Guidance for 2024 remains positive on loan growth, NIMs,  increasing leverage, and rising loan yields, with stable credit quality. Valuations look attractive relative to a forecast ROE of above 20%. 

• Singapore-based agritech startup DayaTani has raised US$2.3 million in a seed funding round led by Ascent Venture Group with participation from KBI Investment, MDI Ventures, Northstar Ventures, BRI Ventures, and Gentree Fund.
• Founded in 2023, DayaTani works to enhance yields for Indonesian farmers, operating research and development sites across the Java island that focus on horticulture and grain crops.
• The company is developing hardware and software including data science models for more accurate recommendations, such as what fertilizer to use, based on real-world conditions.