As an investor, the world of finance often seemed as intricate as a labyrinth. With each step, I learned that every choice held the potential to shape our financial destiny.
It's during these moments that I discovered the power of adaptability, a quality that resonates across the dynamic realm of financial institutions.
In the midst of my exploration, a remarkable story emerged – from a mere participant to one of the market leader, BFI Finance overcoming challenges with finesse, and embracing opportunities with zeal.
The company demonstrated remarkable tenacity and managed to expand its market share from 5.3% to an impressive 6.1% in the first half of 2023.
This feat was underpinned by robust financing growth during the initial quarter of 2023, setting the stage for a resounding comeback.
BFIN's market share to industry
Central to BFIN's resurgence is its steadfast commitment to non-dealer financing (NDF), a strategic move that paid off handsomely. With an astounding 15% yoy growth, BFIN's NDF portfolio soared to Rp7.6 trillion by mid-2023, supported by an expansive distribution network boasting over 12,000 active agents.
Notably, these agents played a pivotal role in contributing around 48% of BFIN's total new bookings during the 1H23, showcasing the symbiotic relationship between BFIN and its network.
BFIN's new bookings composition
Buoyed by its vision for growth, BFIN secured a game-changing joint-financing (JF) partnership with Bank Jago, elevating its external funding potential significantly.
With a newly granted Rp2 trillion JF limit (up from Rp300 billion previously), BFIN is poised to navigate uncharted waters.
This collaboration is expected to not only fuel BFIN's expansion but also contribute to its revenue streams through administrative fees and interest income spreads.
A testament to its ambition, BFIN also raised Rp3.8 trillion in bonds during the 1H23, further enhancing its financial firepower to steer its growth journey.
Recognizing the critical role of technology, BFIN embarked on enhancing its IT security system, a journey set to culminate in full completion by the end of the 3Q23.
As BFIN's history suggests, the second half of the year typically witnesses strong new loan bookings (comprising 55-58% of the total).
This sets an optimistic tone for BFIN's future, as it strives to achieve a respectable loan growth of 10% and 17% yoy in 2023 and 2024, respectively.
BFIN's total financing
As BFI Finance looks ahead, its trajectory is adorned with opportunities for growth, sustained by its three pillars of strength: the flourishing NDF portfolio, robust asset quality fortified by ample provision coverage, and an enviable return on equity (ROE) that outshines many of its peers at 22%-23%.
BFIN's ROE compared with peers
Our analyst, Yoga, maintains his BUY recommendation with a GGM-based TP of Rp1,700, implying a 2.4× 2024F PB. With a promising canvas painted before it, BFI Finance is poised to captivate the financial landscape with its projected growth and profitability.