CLSA BCA (BBCA IJ) downgarde

Bret downgrades BCA (BBCA IJ) to Outperform from BUY. He keeps his TP at Rp6000.

Shares have fared well, outperforming the JCI on a 3mth and 12mth basis, and trading at 14.5x 11CL PE and 3.7x 11CL PBV, representing a sector premium of 14% and 40%, respectively.

Key issues for BBCA:
BBCA’s LDR of 51% has not increased in two years, placing greater pressure on bonds to support earnings.
Bonds compose 42% of earning assets, and 27% are fixed rate, in an environment where bond yields in Indonesia are declining.
BI regulations on required reserves + low interest rates pressuring bond yields + Rp12.9tn in high yielding fixed rate government bonds (yielding over 11%) maturing through 2012 = downward pressure on the NIM.