汇丰银行-印尼银行业-bank mandiri persero tbk：hold：credit cost driven earnings rebound in 2q17-20170719-hsbc

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1、19July2017EQUITIESBankMandiriPerseroTbkCOMMERCIALBANKS(BMRIIJ)Hold:Creditcostdrivenearningsreboundin2Q17IndonesiaAssetqualityisclearlyonthemendMAINTAINHOLDBMRIhintsatpotentialcapitaldeploymentaheadTARGETPRICE(IDR)PREVIOUSTARGET(IDR)WerateBMRIHoldwithanIDR10,900targetpric

2、e10900.0010900.00SHAREPRICE(IDR)UPSIDE/DOWNSIDE2Q17withinexpectationsandearningsshouldpickupfurther.Afterdecliningsteadilyfrom3Q16to1Q17,totalincomereboundedandrose2%q-o-qand7%y-o-13525.00-19.4%(asof18Jul2017)y.DespitePPoPrisingbyonly1%q-o-q,netprofitwasup32%q-o-qthankstoabigim

3、provementincreditcost.Weconsidertheresultstobein-linewithexpectationsMARKETDATAeventhoughannualizednetprofitisonly82%ofourfullyearforecastasweexpectMarketcap(IDRb)315,583Freefloat40%Marketcap(USDm)23,711BBGBMRIIJearningstopickupinsubsequentquarters.3mADTV(USDm)19RICBMRI.JKTop-l

4、inetrends.Aftercontractingmarginallyin1Q17,creditgrowthreboundedwithFINANCIALSANDRATIOS(IDR)totalloansup4%q-o-q.Despitethis,netinterestincomewasflatq-o-qasNIMYearto12/2016a12/2017e12/2018e12/2019eHSBCEPS591.71057.61232.11310.1slipped9bpq-o-qto5.58%.Thismarksthethirdstraightquar

5、terofNIMslippage.OnHSBCEPS(prev)----abrighternote,BMRIdidstatethatlendingratesareunlikelytofallfurther.TotalChange(%)----ConsensusEPS673.6843.41065.01244.2incomewasliftedmainlybytradingprofits.PE(x)22.912.811.010.3Dividendyield(%)1.72.02.32.4Assetqualityonthemend.Managementstat

6、edthatcreditdowngradeshaveP/NAV2.21.91.71.5ROEinc.gwill(%)10.315.516.015.1peakedin2Q17whileslippageintherestructuredloanportfoliohasbeentrendingdownfromitspeakof13.9%in4Q16to3.6%in2Q17.OverallgrossNPLhasbeen52-WEEKPRICE(IDR)trendingdownfortwostraightquartersandisnowat3.82%(1Q17

7、:3.98%).More15000.00importantly,totalstressedloanscomprisingNPLs,specialmentionloansand12150.00restructuredloansimprovedto11.85%from13.13%in1Q17.BMRI’sloanlosscoveragelevelof136%isalsoclosetoitstargeted140%mark.9300.0007/1601/1707/17Targetprice:10900.00Managementhintedatpotenti

8、alforcapitaldeployment.BMRIbelievesthatitsHigh:13575.0