Reliance Securities Initiate Coverage Bank Jatim at Target Price 490
Date: 22 october 2014Categories : IRU
We initiate coverage on BPD Jawa Timur (BJTM) with a Buy recommendation and a 12-month target price of IDR490,
Our target price implies FY14E-15E P/E of 5.9x-5.6x and P/TBV of 1.1x-1.0x.
Accelerating Growth Trajectory
BJTM’s loan grew 21.7% FY02-13 CAGR. We believe this rate would likely to persist in near term since East Java economic
growth has been outpacing the national growth since FY08.In fact, BJTM set its eyes on an ambitious 25.5% loan growth this
year. As of 1H14, underpinned by Commercial segment (29.7%YoY) and SME segment (22.1% YoY) loan grew 21.5% (YoY), up
from 20.6% in 1Q14.
Deposits (Third Party Fund) grew 15.4% FY02-13 CAGR. What we like from BJTM is that it has the highest CASA (78%) among banks
in our coverage, and the highest Current Account market share (31.9%) in East Java, thus placing BJTM in a prime position to
benefit from interest rate hikes.
We expect Net Interest Margin (NIM) expand to 10% by FY16 from current 7%, on the back of newly penetrated micro loan which
Strong Income Visibility Share Performance