PT Bank MNC Internasional Tbk (BABP IJ)
Financial Sector
Digital Banking On Board!
PT Bank MNC Internasional Tbk, also known as MNC Bank, provides integrated banking products and services for both corporate and consumer markets under the auspices of PT MNC Kapital Indonesia Tbk or “MNC Financial Services” (subsidiary of MNC Group). MNC Bank is now claiming the digital sphere with MotionBanking.
Provides End-to-End Digital Banking System to Create Future Growth
BABP expect to scaling-up its business by FY25F through a robust digital banking development supported by a captive market from MNC Group’s ecosystem. Thus, BABP launched digital bank “MOTION”. Targeting retail customers of Indonesia’s citizens home and abroad, MotionBanking provides online lending, artificial intelligence for credit scoring comes with various transaction features and offers the convenience of doing all banking transactions through smartphones. BABP targets to acquire ~30mn number of accounts (NOA) by FY25F, on the back of MNC Group’s captive market. Hence, BABP expects its loan to grow by 137.7% CAGR FY21E-FY25F. MotionBanking will implement the concept of Open Banking and Open API to provide seamless integration with both internal and external MNC Group’s ecosystem, enriching its users with various digital products.
Strong Competitive Advantage: Leveraging MNC Group's Ecosystem
We strongly believe BABP has a better bargaining position among others banking institutions in Indonesia. As part of MNC Group, BABP is positively buoyed by the well-known MNC Brand as the largest and most integrated Media Group in South-East Asia, allows them to rapidly expand distribution networks and business partnerships. In order to achieve the Company’s goal as a modern, digital and integrated banking institution, all business line of BABP has opportunity to capitalize MNC Group ecosystem which has the largest userbases in Indonesia, with more than 390mn userbases, including : 1) Combined Pay TV subscribers, which now reach nearly 9mn and growing 3-4mn annually; 2) 70mn monthly active users (MAU) from OTT and super apps through RCTI+ and Vision+; 3) Combined nation-wide FTA’s audience shares of more than 53% during prime time through RCTI, MNCTV, GTV and iNews; 4) 75mn readers from portal userbase through Okezone, Sindonews, iNews and Celebrities portals every month; 5) 253mn subscribers and followers on social media and other platforms (YouTube, Facebook and Tiktok), with accumulative views of more than 42bn.
Right Issue Agenda to Support Story Growth
BABP plans to raise capital through a right issue, targeting up to 14,234,614,925 series B shares with the nominal value of new shares is IDR50/share (max. 33.33% of the total paid-in capital after the right issue). The total proceed will be used for : 1) Strengthening MNC Bank’s capital structure; 2) Expanding MNC Bank’s lending capacity digitally and users acquisition to support business growth; 3) Supporting the development of MotionBanking app, including the development of AI based credit scoring and the integration of MotionPay and virtual creditcards (Visa and Mastercard) and other related fintech.
Digital Value Creation is Creating Re-Rating in Valuation
Based on Mckinsey and case of KakaoBank, the valuation method using for digital bank is per-Customer Value based. Average deposit per user for Asia Digital Bank is around USD700-USD1,040 per users. Meanwhile the Gojek users around 38 mn in Nov-2020. Assuming the 40% of the current Gojek's users will become ARTO's customers, the est. valuation of ARTO is around USD10.5 bn, on the back of 15mn potential subscriber with USD700 deposit per user. We run the numbers to show how this is possible boosting up BABP valuation. Based on the conservative scenario, the Company set 3.75mn NoA in FY22F or equal to only 1% of 390mn users base of MNC group’s ecosystem. With the equal assumption of average deposit per user at USD700 and total equity is IDR6.17 tn in FY22F, the est. valuation of BABP could be USD700 x 3.75mn = USD2.63 bn, which implies 6.0x of PBV FY22F (vs currently traded at 5.43x PBV).
