Lean on Lagging Giant
Key Takeaways:
• IDX Finance has underperformed JCI despite large cap banks share price significant appreciation, this was driven by digi-banks valuation de-rating particularly ARTO (currently traded at 6.3x 22E P/B falling from its peak at 31.5x).
• We maintain positive outlook for FY23F due to : 1) positive loan & deposit growth outlook; 2) strong CASA franchise to offset NIM drop amidst rising interest rate; 3) rising CAR particularly for small banks under KBMI I post right issue; 4) expect EPS growth of +12.2% YoY FY23F for banks under our coverage.
• We maintain Overweight large-cap banks on the back of potential EPS growth with HOLD rating for BBCA & BMRI; BUY for BBRI & BBNI.
• We are Neutral to digi-banks as most of them are facing a challenge such as 1) some are heavily rely on high cost funding (low CASA ratio); 2) high investment for IT infra in early phase; 3) more volatile NPL and thus increase valuation sensitivity particularly during intense pressure on tech stock sell off.
• Our top picks : BBRI & BBNI for a saver play as BBRI share price lagged behind its peers and potentially sizeable DPR, and attractive valuation for BBNI.
Disclaimer On
