Mansek Bank Rakyat Indonesia a takeaway from a company visit (BBRI,Rp10,600, Buy,Rp12,000)

We have just visited BRI and below are the highlights:
The increase in primary reserves will lower the bank ’s interest income by around Rp200bn, however there has yet intention from the bank to increase the lending rate.The bank plans to maintain its LDR below 100% and above 78%hence will not be required to have additional RR by Mar11 (at end Jun10,LDR recorded at 88.9%).

There is no firm statement on whether Bukopin will be taken over by BRI.So far BRI has yet appointed advisor for this possible transaction or conducted internal due diligence for such transaction.However,a possibility remains even though in the short term it might affect the bank ’s performance negatively due to Bukopin ’s much lower NIM and ROAE.

Until Aug10 there has yet significant improvement in terms of medium size NPL (recorded at 14.9%at end Jun10).The management still focused on efforts to settle the NPL rather than performing aggressive write off.

At current price,BRI is trading at 2011P/BV of 3.0x and PER of 10.2x.We still like BRI for its ability to generate higher than average NIM and ROAE.

Mandiri Sekuritas Bank Rakyat Indonesia: 1H10 results below our expectation and consensus estimates (BBRI, Rp10,050 Buy, Rp12,000)

􀂄 Bank Rakyat Indonesia recorded a net profit of Rp4.3tn (+22.8% yoy) in 1H10, which was below our expectation and consensus estimates.
􀂄 The bank reported higher than expected provisioning/impairment expenses as its NPL increased to 4.3% at end Jun10 from 4.1% at end Mar10.
􀂄 The bank’s loan growth remained strong at 8.6% qoq or 24.0% yoy to Rp230.5tn, thus bringing its LDR to 88.4% at end Jun10 vs 87.0% at end Mar10.
􀂄 At present, BRI is trading at 2010F P/BV of 2.8x and PER of 9.4x. We maintained our buy recommendation on the counter.

Mandiri Sekuritas Unilever Indonesia: FY09 results, slightly above our expectation (UNVR, Rp12,450, Buy, TP: Rp13,000)

􀂄 Given global economic downturn, Unilever posted Rp18.2tn net sales (+17.1% yoy) and Rp3.0tn earnings (+26.5% yoy) in FY09. This earnings figure is slightly above our and consensus expectations as it represents 104-105% of the earnings forecast.

􀂄 We think a top-line growth of 17.1% yoy and an operating margin improvement of 110bps are good achievement for the company, considering the weakening rupiah exchange rate on yearly basis (FY09: Rp10,397/US$, FY08: Rp9,684/US$). On a quarterly basis, however, operating profit declined by 2.1%, which largely due to heavy advertising
spending, in our view.

􀂄 Therefore, with an outlook of stronger rupiah exchange rate this year, we foresee Unilever could easily reach our earnings target of Rp3.4tn in FY10F (+15.7% yoy).

􀂄 Currently, UNVR is trading at PER10F of 28.1x. Maintain Buy.