In today’s briefing:
- XL Axiata (EXCL IJ) – Linked Up for Future Growth
- Indonesian Banks Screener; Stick with Negara as Our Preferred Pick
XL Axiata (EXCL IJ) – Linked Up for Future Growth
- XL Axiata (EXCL IJ) continues to impress with its growth in revenues and data, driven by its 4G focus and high-quality network, with improving margins at the same time.
- The XL convergence story continues to build, with convergence penetration increasing but the real kicker wILL come once the restructuring with Link Net completes but benefits are already accruing.
- XL Axiata remains the purest data player in Indonesia, with convergence set to be the next driver. Valuations are attractive on 4.4x FY2024E EV/EBITDA with strong growth ahead.
Indonesian Banks Screener; Stick with Negara as Our Preferred Pick
- We retain Bank Negara as our top pick for its deep value attributes of low PE multiples and its attractive PEG ratio relative to sound returns and strong liquidity metrics
- We also stick with our positive call on Bank Mandiri, for its premium returns and undemanding PE multiples; Bank Central Asia, albeit fully valued, has impressive liquidity and return metrics
- Bank Rakyat again registered worsening pre-provision returns in 2Q23, even if there was QoQ cost of risk relief; its loan mix implies a high structural cost of risk going forward
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