Reiterate BUY on the back of earnings surprise & share price lag
Key Takeaways
• Solid performance : 9M22 net profit jumped +50.1% YoY to IDR2,275bn (~80% FY22F consensus estimate) driven by declining CoF. NIM improved ~100 bps to 4.51%.
• What we like from BBTN business maneuver : 1) digital transformation through m-banking CX improvement; 2) RTO mortgage targeting niche yet rewarding millennial segment; 3) releasing large distressed asset to improve asset quality; 4) right issue to strengthen capital.
• Expect : 1) manageable CoF; 2) higher loan yield; 3) NIM improvement; 4) strengthening tier-1 capital & CAR (will likely to be equivalent to KBMI IV peers).
• BBTN share price has lagged its peers despite solid performance and positive outlook after right issue, we reiterate BUY with a TP of IDR2,300/share implying +11.2% YoY FY23F EPS growth & 0.93x FY23F P/B using DDM-valuation model (Rf : 7.4%; CoE : 10.4%; terminal growth : +3.0%).
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