HOLD with upgraded TP to IDR10,500/share
Key Takeaways :
• BMRI's quarterly earnings in 4Q22 slightly unchanged, yet FY22 result beating consensus estimate. FY22 net income +46.89% YoY to IDR41.17tn forming +104% consensus estimate.
• FY22 solid performance was driven by : 1) higher revenue collection amidst rising interest rate; 2) manageable Opex growth and 3) lower CoC as asset quality improved significantly.
• Outlook : management guidance of +10-12% loan growth; NIM 5.3-5.6%; CoC 1.3-1.5% still achievable given BMRI's adequate liquidity, potential repricing and tapping higher yield segment coupled with high CASA ratio as well as the possibility of continuous asset quality improvement.
• Using DDM valuation method, we derived BMRI's fair value at IDR10,500/share- 1.7x/1.6x FY23F/FY24F P/B. We upgraded our TP from previously at IDR10,000/share, but maintain HOLD rating.
• Key upsides to our call : 1) higher than expected NIM due to better asset allocation and liquidity utilization; 2) declining asset quality risk as well as 3) CIR improvement. Meanwhile on the flip side, key downsides include : 1) unfavorable macro condition due to monetary policy surprise that trigger FX volatility and 2) lower than expected loan growth.
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