Bret Ginesky raised his TP for Bank Mandiri (BMRI IJ) from Rp5,800 to Rp6,600and maintains our BUY rating. We are also increasing our earnings estimates (see the table below). The rerating in BMRI shares has more to go. Our new TP reflects a 2011CL PE and PBV multiple of 13.6x and 2.8x respectively. Given that BMRI is on pace for an ROE of 23% at that time, this reflects a min premium to peer group.
We trust that premium is justified by increasing ROE, improving credit quality, falling cost to income ratio, and BMRI’s rising fee ratio. The charts below support the case for BMRI to trade at premium to the peers.
Bret’s loan growth target for FY10 is 22%. This sounds aggressive, bearing in mind 1Q10 loan growth of 1.6% (with all loan growth in 1Q10 appeared to happen in March). However, the chart below shows Bank Mandiri (BMRI IJ)’s quarterly loan growth and clearly 1Q is seasonally a weak quarter.
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