Indonesia

Robust earnings growth, but still traded at cheap valuation

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Astra Agro Lestari (AALI IJ) – Expecting higher earnings in 2022F

Expecting higher earnings in 2022F

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Feb 18

Indonesia: Asia High Yield Bond Index, Ultrajaya Milk Industry & Trading, ABM Investama and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

BOC HK Launches $ Bond; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
Ultrajaya Milk Industry (ULTJ IJ) – Perched on the top
Asia HY Trade Book – February 2022 – Lucror Analytics

BOC HK Launches $ Bond; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

S&P and Nasdaq were near flat on Wednesday, after rallying up 1.6% and 2.5% on Tuesday. Most sectors were in the green, led by Energy and Materials and Industrials, up over 0.5% each. The US 10Y Treasury yield was flat at 2.03%. European markets were marginally lower with the DAX, CAC and FTSE down 0.3%, 0.2% and 0.1% each. Brazil’s Bovespa closed 0.3% higher. In the Middle East, UAE’s ADX was up 0.3% and Saudi TASI closed 1.2% higher. Asian markets have opened broadly higher with Shanghai, HSI and STI up 0.4%, 0.3% and 0.4% respectively, while Nikkei was down 0.2%. US IG CDS spreads were 0.2bp tighter and HY CDS spreads were 4.9bp tighter. EU Main CDS spreads were 0.05bp wider and Crossover CDS spreads were 0.8bp tighter. Asia ex-Japan CDS spreads were 1.6bp wider.

Ultrajaya Milk Industry (ULTJ IJ) – Perched on the top

Perched on the top

Asia HY Trade Book – February 2022 – Lucror Analytics

By Charles Macgregor

The Asia HY Trade Book for the month of February includes a summary of our recommendations, as well as our high-conviction ideas. The report also features relative-value charts and lists of the bonds in the Lucror Asia HY index.

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Feb 17

Indonesia: Arwana Citramulia, Bank Central Asia, Asia High Yield Bond Index, Bank Brisyariah and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

Arwana Citramulia (ARNA IJ) – Tiling a Porcelain Path
Bank Central Asia: GEM Funds Hit Max Exposure
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
Bank Syariah Indonesia (BRIS IJ) – The largest sharia bank in the largest Muslim populated country

Arwana Citramulia (ARNA IJ) – Tiling a Porcelain Path

Tile manufacturer Arwana Citramulia (ARNA IJ)‘s 4Q2021 results confirmed a strong finish to the year and management expects an equally vibrant performance in 2022, as a top quality Indonesian industrial
Increased capacity, better product mix, greater efficiencies on gas usage, and the new line of porcelain tiles will help to drive better margins this year.
Arwana Citramulia throws off high returns with ROEs of more than 30%. Valuations do not look challenging with a strong EPS 30% growth and a forward PER of 11x.

Bank Central Asia: GEM Funds Hit Max Exposure

By Steven Holden

PT Bank Central Asia has ownership among GEM active funds has hit record highs.
Aggressive Growth managers account for 14 of the largest 20 positions in the stock, led by Virtus EM Growth (4.16%) and Mirae EM Great Consumer (4.07%).
It is the 12th most widely held stock globally and the 4th most widely held stock in the Financials sector. Competition lies in Sberbank, CCB and Ping An Insurance.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

S&P and Nasdaq saw a risk-on move, up 1.6% and 2.5%. Sectoral gains were led by IT and Consumer Discretionary, up 2.7% and 2.1% each. The US 10Y Treasury yield rose by 5bp to go back above the 2% mark to 2.03%. European markets were also higher with the DAX, CAC and FTSE up 2%, 1.9% and 1.1% each. Brazil’s Bovespa closed 0.8% higher. In the Middle East, UAE’s ADX was up 0.3% and Saudi TASI closed 1.2% higher. Asian markets have opened broadly higher with Shanghai, HSI, STI and Nikkei up 0.7%, 1.3%, 0.1% and 2.1% respectively. US IG CDS spreads were 1.9bp tighter and HY CDS spreads were 9.5bp tighter. EU Main CDS spreads were 1.8bp tighter and Crossover CDS spreads were 8.8bp tighter. Asia ex-Japan CDS spreads were 2.3bp wider.

Bank Syariah Indonesia (BRIS IJ) – The largest sharia bank in the largest Muslim populated country

The largest sharia bank in the largest Muslim populated country

Before it’s here, it’s on Smartkarma

Feb 10

Indonesia: Bukalapak, BNP Paribas and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

Bukalapak (BUKA IJ) – Storefronts, Specialty, and Financing
BNP Paribas’ Profits Jump, To Lift Payout Target

Bukalapak (BUKA IJ) – Storefronts, Specialty, and Financing

Bukalapak (BUKA IJ) continues to expand the range of products it offers to its Mitras including logistics services and financial products but it is now extending more service to merchants.
The platform’s Storefront offering aims to enable merchants which often operate through social commerce channels to improve their ability to attract and maintain customers and to facilitate payments and logistics.
The Allo Bank stake was bought at 1.7x PBV and will grow through an ecosystem of 100m potential customers. Bukalapak (BUKA IJ) looks like value with positive newsflow.

BNP Paribas’ Profits Jump, To Lift Payout Target

BNP Paribas reported a jump in its annual 2021 profits by 34.3% to €9.5bn ($10.9bn). The group’s revenues rose 4.4% to €46.2bn ($52.8bn). Profits were helped by its cost of risk falling 49% through the year to €2.9bn ($3.3bn) alongside a sharp 46% rise in operating income to €12.2bn ($13.9bn). Its cost of risk (Term of the Day, explained here) dropped due to the limited number of new defaults and a high basis of comparison with respect to 2020. Growth was visible across its domestic, international financial services, and investment banking divisions. BNP Paribas lifted its shareholder payout target to 60% of profits via a combination of cash dividends and share buybacks as compared to its prior 50% policy. Its CET1 ratio stood at 12.9% as of end-December 2021, up 10bp YoY.

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Feb 09

Indonesia: Asia High Yield Bond Index and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

Allianz’s 3.875% Perp Drops 5 Points After Skipped Call
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

Allianz’s 3.875% Perp Drops 5 Points After Skipped Call

German insurer Allianz saw its dollar-denominated 3.875% perpetuals fall about 5 points late on Monday after the 30-day call announcement window closed, indicating that the issuer will not be redeeming the bonds on the first call date of March 7. The fixed-for-life perpetuals (Term of the Day, explained below) fell 4.7 points this week thus far to currently trade at 93.85 cents on the dollar, yielding 4.13%. A senior syndicate banker told IFR, “There is a long, long track record of issuers making a call based on economics in the US dollar fixed-for-life market. This is not the first time this has happened. I’m quite amused, I can only infer from the price move that some people investing in the bond thought it was going to get called at the first call date, but I’m not sure why.” The bonds are now callable at any time and bankers expect the bond to move close to par once the dust settles, IFR reported.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

US equity markets fell with the S&P and Nasdaq ending 0.4% and 0.6% lower. Sectoral gains were led by Energy, up 1.3% while losses were led by Communication Services, down 2.2%. US 10Y Treasury yields rose 3bp to 1.94%. European markets were higher with the DAX, CAC and FT SE up 0.7%, 0.8% and 0.8%. Brazil’s Bovespa closed 0.2% lower. In the Middle East, UAE’s ADX was up 0.1% and Saudi TASI closed 0.4% higher. Asian markets have opened mixed with HSI and Shanghai down 1.54% and 0.90% while STI and Nikkei are up 0.57% and 0.24% respectively. US IG CDS spreads were 0.4bp wider and HY CDS spreads were 3.1bp wider. EU Main CDS spreads were 1bp wider and Crossover CDS spreads were 7bp wider. Asia ex-Japan CDS spreads were 3.9bp wider also.

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Feb 08

Indonesia: Bank Rakyat Indonesia Persero, Asia High Yield Bond Index and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

Bank Rakyat Indonesia (BBRI IJ) – MSME Marvel in the Making
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

Bank Rakyat Indonesia (BBRI IJ) – MSME Marvel in the Making

Bank Rakyat Indonesia (BBRI IJ) booked strong growth in net profit in FY2021 beating its own guidance on most metrics and growing its exposure to MSMEs significantly.
Loan growth to micro, ultra-micro & smaller corporate borrowers saw significant growth while its cost of funds came down and the cost of credit improved increasing profitability.
With the increasing use of digital channels to grow its customer base and huge potential to cross-sell to 137m depositors, Bank Rakyat is a core holding amongst the Indonesian banks.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

US equity markets rose with the S&P and Nasdaq ending 0.5% and 1.6% higher. Sectoral gains were led by Consumer Discretionary, up over 3%. US 10Y Treasury yields rose 7bp to 1.90%. European markets were lower with the DAX, CAC and FTSE down 1.8% 0.8% and 0.2%. Brazil’s Bovespa closed 0.5% higher. In the Middle East, UAE’s ADX was up 0.1% and Saudi TASI closed 0.5% higher. Asian markets have opened mixed with HSI and Nikkei down 0.31% and 0.73% while STI and Shanghai are up 0.32% and 1.91% respectively. US IG CDS spreads were 1bp wider and HY CDS spreads were 9.5bp wider. EU Main CDS spreads were 3.1bp wider and Crossover CDS spreads were 14.3bp wider. Asia ex-Japan CDS spreads were 3.2bp wider also.

Before it’s here, it’s on Smartkarma

Feb 05

Indonesia: Asia High Yield Bond Index, Bank Rakyat Indonesia Persero, MD Pictures Tbk PT and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers & Losers
Bank Rakyat Indonesia (BBRI IJ) – Set to take-off in 2022
MD Pictures (FILM IJ) – The Future is Streaming

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers & Losers

US equity markets dropped sharply with the S&P and Nasdaq ending 2.4% and 3.7% lower. Sectoral losses were led by Communication Services down 6.8%, while IT and Consumer Discretionary were down over 3%. US 10Y Treasury yields rose 7bp to 1.84%. European markets were also lower with the DAX, CAC and FTSE down 1.6% 1.5% and 0.7%. Brazil’s Bovespa closed 0.2% lower. In the Middle East, UAE’s ADX was down 0.1% and Saudi TASI closed 0.4% lower. Asian markets have opened mixed with HSI and STI up 2.4% and 0.2% while Nikkei was down 0.1%. Shanghai remains closed on account of the lunar new year holidays. US IG CDS spreads were 2.6bp wider and HY CDS spreads were 11.2bp wider. US IG CDX spreads are at its widest levels since November 2020 (see the chart below). EU Main CDS spreads were 4.6bp tighter and Crossover CDS spreads were 19.3bp wider. Asia ex-Japan CDS spreads were flat.

Bank Rakyat Indonesia (BBRI IJ) – Set to take-off in 2022

Set to take-off in 2022

MD Pictures (FILM IJ) – The Future is Streaming

The Future is Streaming

Before it’s here, it’s on Smartkarma

Feb 04

Indonesia: BFI Finance Indonesia, Asia High Yield Bond Index, PT Wijaya Karya Bangunan Gedung Tbk. and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

BFI Finance Indonesia (BFIN IJ) – Taking the Digital High Road
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
Wika Gedung (WEGE IJ) – Anticipating jump in FY22F new contract

BFI Finance Indonesia (BFIN IJ) – Taking the Digital High Road

The confirmation that Jerry Ng, one of the major shareholders of Bank Jago will take a controlling stake in BFI Finance Indonesia should create a win-win combination.
BFI Finance Indonesia brings best-in-class exposure to multi finance, whilst integration with Bank Jago and GoTo group should help it to accelerate the company’s digitalisation and boost growth.
The company trades on 2.7x FY21E PBV with a forecast ROE of 14.7% for FY2021E and 18.5% in FY2023E but historically it has generated ROEs of 25% plus.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

US equity markets rallied on Wednesday with the S&P and Nasdaq ending 0.9% and 0.5% higher. Sectoral gains were led by Communication Services up 3.1%, Real Estate and Utilities up 1.5-1.7%. US 10Y Treasury yields eased 2bp to 1.77%. European markets were broadly positive with the CAC and FTSE up 0.2% and 0.6% while DAX was flat. Brazil’s Bovespa closed 0.6% higher. In the Middle East, UAE’s ADX was up 0.2% while Saudi TASI closed 0.8% lower. Asian markets have opened mixed with STI up 2.1% while Nikkei was down 1.1%. Shanghai and HSI remain closed on account of the lunar new year holidays. US IG CDS spreads were 1.3bp wider and HY CDS spreads were 6.2bp wider. EU Main CDS spreads were 0.5bp tighter and Crossover CDS spreads were 0.3bp tighter. Asia ex-Japan CDS spreads were 0.4bp tighter.

Wika Gedung (WEGE IJ) – Anticipating jump in FY22F new contract

Anticipating jump in FY22F new contract

Before it’s here, it’s on Smartkarma

Feb 03

Indonesia: ABM Investama, Panca Budi Idaman and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

Asia HY Monthly – Ratings Transition Report – Lucror Analytics
Panca Budi Idaman (PBID IJ) – Continue to become market leader

Asia HY Monthly – Ratings Transition Report – Lucror Analytics

By Charles Macgregor

This month, we undertake a study of the ratings evolution of all the issuers that have been included in the Lucror Asia HY index (commenced in 2013).

The Asia Monthly focuses on providing updates on recent events, information on new issues and spread movements, as well as summarising our top picks, and discussing specific areas of interest in the “In-Focus” section. The Asia Monthly is intended to broaden investors’ understanding of the Asian USD high-yield market.

Panca Budi Idaman (PBID IJ) – Continue to become market leader

Continue to become market leader

Before it’s here, it’s on Smartkarma

Feb 01

Indonesia: Bank Negara Indonesia Persero, Asia High Yield Bond Index and more

By Smartkarma Daily Briefs | Daily Briefs, Indonesia

In today’s briefing:

Bank Negara Indonesia (BBNI IJ) – Catching the Digital Wave
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

Bank Negara Indonesia (BBNI IJ) – Catching the Digital Wave

Bank Negara Indonesia (BBNI IJ) released a solid set of FY2021 results last week, with its PPOP coming in above consensus and guidance being met on all fronts.
The bank’s loan mix is moving towards lower risk assets but cost of funds has fallen significantly at the same time plus its progress on digital banking is impressive.
The bank’s increasingly digital credentials should lead to an upward re-rating of the bank’s valuations, which look attractive given the expected recovery in earnings and higher ROEs beyond 2022.

Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

US equity markets saw a sharp rally on Friday with the S&P and Nasdaq ending 2.4% and 3.1% higher. Sectoral gains were led by IT and Real Estate, up 4.3% and 3.4% each. US 10Y Treasury yields eased 2bp at 1.79%. European markets recovered with the DAX, CAC and FTSE down 1.3%, 0.8% and 1.2%. Brazil’s Bovespa closed 0.6% higher. In the Middle East, UAE’s ADX was up 0.4% and Saudi TASI closed 0.7% higher on Sunday. Asian markets have opened broadly higher with HSI, STI and Nikkei up 1.3%, 0.5% and 1.5% while Shanghai was down 1%. US IG CDS spreads were 1.3bp wider and HY CDS spreads were 5.1bp tighter, EU Main CDS spreads were 1.7bp wider and Crossover CDS spreads were 5.7bp wider. Asia ex-Japan CDS spreads were 1.6bp wider.

Before it’s here, it’s on Smartkarma