● BMRI reported 9M09 net income of Rp4,620 bn, +17%YoY, with 3Q09 earnings up 26% YoY and 11% QoQ. 9M09 earnings came at 75% of our and consensus forecasts. We find positive surprise from management’s guidance of minimal 4Q09 provisioning.
● 9M09 PPOP was on the soft side (69% of our old FY09E) but management’s guidance for minimal 4Q09 provisioning leads to our 7% FY09E earnings hike. We also hike our FY10/FY11 earning estimates by 14%/16% on a lower credit costs outlook.
● Our estimates have yet to build potentially over Rp3 tn collectable from Garuda Indonesia (not listed), Rp1.4 tn upon IPO (yet to be approved by government) and Rp2 tn from the government guarantee.
● Despite a strong outlook, BMRI’s valuations are demanding and we would recommend investors to accumulate only on any weakness. We maintain our NEUTRAL rating and increase our target price from Rp3,700 to Rp4,400 on higher earning estimates.
● For further details, refer to our flash note, 3Q09: Supported by lower credit costs, 30 October 2009.
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