Bank Bukopin: Key takeaways from company visit (BBKP, Rp720, Not Rated) - Mandiri

􀂄 We visited Bank Bukopin yesterday and below are the highlights:
􀂄 Of the total Rp926 bn proceeds from the rights issue, all have been extended as new loans. As of Jun2011, loans estimated to reach Rp31tn (vs Rp26.3 tn as of Mar11). The company targets total loans to grow by 20-25% yoy this year to Rp36.2-37.8tn at end Dec11.
􀂄 At end Mar11, 53% of total loans were extended to SME segment, 39% to commercial and the remaining to consumer. The SME segment is divided into loans to Bulog (34%) with lending rate of JIBOR + 200 bps (or equivalent to 8.6%), loans to Micro segment (8%) with lending rate of 18-23% and the remaining to others. The company expects to maintain its exposure to Bulog at around Rp9-10tn (maximum or representing 24.9% of total loans), thus expecting NIM to improve going forward. In 1Q11, NIM was recorded at 4.3%. Please note however, that NIM (exclude Bulog) was only recorded at 4.7%, the lowest compared to its peers.
􀂄 As of Mar11, NPL remained high at 3.7% compared with 2.6% for BNLI and 1.9% for NISP. The bank claimed to have special division to deal with the bad debt, however the progress seemed to be quite slow.
􀂄 While the prospects should be better for the bank post rights issue (CAR improved to = 16.7% at end Mar11 which will allow it to grow its loans to higher yielding assets or non Bulog assets), we still prefer to wait for the 1H11 results to come out. The management indicated that the NIM in 5M11 only improved by 10 bps, which is considered low given its increasing exposure to non Bulog. We remained concern with the bank's strategy to improve NIM and bring down its NPL level.
􀂄 At current price, stock is traded at PBV 2011F 1.4x and PER of 9.1x based on consensus estimates. We have no rating on this counter.