CIMB Bank Central Asia Result note - Prudence remains the watchword

(BBCA IJ / BBCA.JK, UNDERPERFORM - Maintained, Rp5,700 - Tgt. Rp4,700, Financial Services)

Maintain Underperform on BCA. FY09 results met consensus and our expectations, with net and core profits forming 101% of our FY09 forecasts. Despite a drop in its gross NPL ratio to 0.7%, BCA raised its provisioning coverage to 476% from 294% as at Sep 09. Strategy-wise, management has given the assurance that it would stay prudent, which we see as a reality check that effectively underscores our contrarian doubts over BCA's aggressive entry into the riskier motorcycle-lending business. We reiterate that investors should trim down their BCA holdings while the shares are trading at an all-time high of 4.6x forward P/BV, driven by recent high market expectations for its motorcycle-lending that could lead to disappointments. No change to our FY10-11 earnings estimates. We also maintain our target price of Rp4,700, still using DDM with a discount rate of 15.8%.