Full Throttle Financing

Referring to official website from Indonesia's election commission (KPU), as of February 17th, candidate number 2, Prabowo-Gibran leads the presidential election with 57.46% votes from 64.14% votes gathered. This indicates that a 1 round election is likely to happen, just as how the surveys have mentioned.

Source : Antaranews.com as of 16 February

1 round election is likely to benefit investors as seen from recent JCI rally post the election day in which the quick count states candidate number 2 wins almost 60% of votes. JCI has gained +1.75% from the two days rally streak, trying to push through its record high.

In our view, 1 round election eliminates the political uncertainties, providing both local and foreign investors with confidence that government policy is likely to be stable. Hence, creating room for JCI to go higher as it compells investor to join the strong rally.

JCI Index

Source : RTI Business

We believe the optimism will continue to benefit market in general as we also seen from the financial industry's solid results, with one that we want to higlight, BFI Finance Indonesia (BFIN).

Starting fron the top-down analysis, as mentioned, 1 round presidential election is likely to boost confidence in economic growth, which means loan disbursement has greater chance to be distributed in higher pace. For the case in BFIN, our analyst's last channel check to management indicates that FY23 BFIN is likely to book high teen growth rate.

From the bottom-up side, BFIN has recovered from the cyber attack that happened last year, squeezing down its NPF from 2.1% to 1.35%, beating management's expectation at 1.5%. This was mainly due to the combination of write-offs and collection which got back on tracks.

Based on our channel check, management has set their target for 2024, aiming for high double-digit growth and to achieve NPL below 1%. Management mentioned to us that company is planning to loosen its risk appetite. We see this is not just acceptable, yet suits and align with BFIN's position and target really well by helping the financing growth to move in faster pace.

Although the risk from rising NPF should move in the same direction as their financing growth with this strategy, wee see that their NPF is very manageable as the NPF turns out to beat management's guidance. Management also mentioned that they will try to push more contribution from 4-wheelers, which in our view, will allow the company to reach its NPF target as they usually represent higher and more stable income.