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Company Update

24 Juli 2019

BCAP 1Q19 - MNC Sekuritas Equity Report

PT MNC Kapital Indonesia Tbk (BCAP)

Financial Sector

 

One-Stop Financial Solution

Diversified Financial Service Group with a Full Suite of Licenses

PT MNC Kapital Indonesia Tbk (BCAP) is a reputable financial services company, with more than a 20-year track record in Indonesia. BCAP owns a full suite of 17 licenses across its eight subsidiaries: 1) PT Bank MNC Internasional Tbk (BABP) has four (4) licenses as a conventional commercial bank, foreign exchange bank, tax payment recipient bank, and a credit card issuing bank; 2) PT MNC Finance has two (2) licenses for multi-finance and sharia financing; 3) PT MNC Guna Usaha Indonesia has two (2) licenses for multi-finance and sharia financing; 4) PT MNC Sekuritas has five (5) licenses including a brokerage license, both a conventional and sharia online trading system, an underwriting license and is a licensed mutual fund Sales Agent (APERD); 5) PT MNC Asset Management has an asset management license with a sharia asset management sub-unit.; 6) PT MNC Asuransi Indonesia has two (2) licenses for general and sharia insurance; 7) PT MNC Life Assurance has a license for Life insurance; and 8) PT MNC Teknologi Nusantara. As of 1Q19, BCAP has IDR18.53 trillion of total assets and is supported by over 295 representative offices all across Indonesia in 5M19.

 

Turnaround Story toward Integrated Financial Supermarket

BCAP is focused on developing a stronger foundation to strengthen the operations of all its subsidiaries through an experienced management team.  As a result, BCAP is successfully creating a turnaround story by recording a positive net income of IDR12.36 billion in 1Q19 from underperforming profitability in the past three (3) consecutive years. Looking ahead, BCAP has several key investment highlights, including: 1) Strong macroeconomic growth of Indonesia and a growing emphasis to deepen financial services penetration; 2) Well-positioned as the most diversified and integrated financial services group in Indonesia; 3) Further leverage and optimization within the MNC Group network and BCAP; 4) Ongoing digitization to a single digital financial service platform; 5) Proven track record of management and a well-connected founder.

 

Embracing the Challenge in Age of Disruption

BCAP plans to bring up digital capabilities from all subsidiaries onto a single digital financial services platform. Currently the subsidiaries within BCAP have initiated various digitization processes across its value chains through more than 35 active applications, which can be downloaded from the Play Store and App Store. BCAP is also leveraging on MTN (MNC Technology Nusantara), through the development of Smart Payment Indonesia (SPIN), which features e-wallet, e-money, digital payment, fintech, and P2P lending. SPIN aims to become the single digital customer touch point and increase MTN customers’ product usage, engagement and loyalty. SPIN is scheduled to be launched in FY19E.

 

Valuation : Attractive with only 1.17x of PBV

Based on company data, BV of BCAP is IDR131.08 per share in 1Q19. The stock is trading at 1.17x of trailing PBV 1Q19, near to 0 STD of PBV. The realization of a commitment of capital injection and moat from the MNC Group ecosystem, along with the digitization of the company, will hopefully deliver a good catalyst ahead. MNCS is affiliated with the company. However, MNCS does not give any recommendation related to company prospect. Recommendation : NOT RATED.

 

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