Macquarie Bank Central Asia: FY09 EPS upgrade around the corner?

Bank Central Asia: FY09 EPS upgrade around the corner?
Looking at BCA’s strong operating results for 4Q08 (seting aside the Rp1.72trn bad debt provision vs. Macq Rp0.57trn), we could potentially see FY09 consensus (EPS Rp239) and Macq estimate (Rp232) being upgraded by 10-15%. Currently the market is looking at 10.0x ’09 P/E for BCA; a 15% upgrade (if any) would place BCA on 8.6x. Since 2005 the stock never trades below 10x. In terms PBV multiple, the stock is sitting on its trough at 2.2x ’09. Furthermore, during election year 2009, investors should get the extra protection by holding privately owned banks compared to those of state-banks (government KUR loan program a questionmark for me).

Net interest income was particularly strong in 4Q08 (+21.5% QoQ) and non-interest income was solid as well (+9.3% QoQ). There seems to be a big shift in earning asset composition during 4Q08, with government bond holding declined from 26% to 21% (QoQ as %-age of total earning asset) while gross loan increased from 54% to 55% and SBI holdings increased from 9% to 14%. To me, the favorable shift in asset mix looks sustainable and can be rolled-forward to 2009, resulting in an earnings upgrade.