Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

Equity Bottom-Up

<p>The high-margin Shariya lender to women only has fared exeptionally during FY20, and this is especially clear in the quarterly progression. Reserve build has been tremendous, possibly allowing for far lower credit costs this year, or even reversals.</p>

The high-margin Shariya lender to women only has fared exeptionally during FY20, and this is especially clear in the quarterly progression. Reserve build has been tremendous, possibly allowing for far lower credit costs this year, or even reversals.

<p>The credit card company came out with results that do not appear to support its surge in valuations during November and December. This may partly explain the sharp contraction over the past week, but it’s not likely done. </p>

The credit card company came out with results that do not appear to support its surge in valuations during November and December. This may partly explain the sharp contraction over the past week, but it’s not likely done. 

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Private Capital Markets

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<p><a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> has bought a further 18% stake in Indonesia's <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> bringing its total state to 22.16%. The transaction was executed at 1.14x PBV and a significant discount to the last traded price.</p>
<p><a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> has a market capitalization of IDR42.3tn (US$2.9bn), which values Gojek's stake in the bank at IDR9.3tn (US$641m).</p>
<p>Gojek's Indonesia users will in the future be able to open a bank account with <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> and manage their finances through the <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> App. </p>
<p>The <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> deal marks an opportunity for <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> to capitalize on its vast user base, especially through GoPay, to offer customers digital banking products and other financial services.</p>
<p><a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> has already moved its focus to digital banking, targeting SMEs and retail customers. GoPay also recently received investment from <a href="https://www.smartkarma.com/entities/facebook-inc-a" target="_blank" data-smartkarma-citation="entities:665:1" rel="noopener">Facebook Inc A (FB US)</a> and <a href="https://www.smartkarma.com/entities/paypal-holdings-inc" target="_blank" data-smartkarma-citation="entities:4747:1" rel="noopener">Paypal Holdings (PYPL US)</a>, which also provides a strong backing and the potential for collaboration from two heavyweight foreign investors</p>
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<div>For <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ</a>, this will help it develop a process through which it can work with other banks, as well as providing customers with an increasing array of digital financial solutions.</div>
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<div>The deal also demonstrates that management is focused on building its competitive advantage in Indonesia rather than being sidelined any merger considerations with <a href="https://www.smartkarma.com/entities/grabtaxi-holdings-pte-ltd" target="_blank" data-smartkarma-citation="entities:26950:1" rel="noopener">Grab (0967655D SP),</a> which seems increasingly unlikely. </div>
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<p>Gojek is also seen to be on the path to profitability, with all its services generating positive margins on a product basis. <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> also recently received US$150m in new money from <a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ),</a> which represented another heavyweight local shareholder on top of <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> and Djarum Group. </p>
<p>We look at the background of the <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago (ARTO IJ)</a> management team below the fold, which seems well-suited to building this future collaboration.</p>
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Gojek (1379371D IJ) has bought a further 18% stake in Indonesia's Bank Jago (ARTO IJ) bringing its total state to 22.16%. The transaction was executed at 1.14x PBV and a significant discount to the last traded price.
Bank Jago (ARTO IJ) has a market capitalization of IDR42.3tn (US$2.9bn), which values Gojek's stake in the bank at IDR9.3tn (US$641m).
Gojek's Indonesia users will in the future be able to open a bank account with Bank Jago (ARTO IJ) and manage their finances through the Gojek (1379371D IJ) App. 
The Bank Jago (ARTO IJ) deal marks an opportunity for Gojek (1379371D IJ) to capitalize on its vast user base, especially through GoPay, to offer customers digital banking products and other financial services.
Bank Jago (ARTO IJ) has already moved its focus to digital banking, targeting SMEs and retail customers. GoPay also recently received investment from Facebook Inc A (FB US) and Paypal Holdings (PYPL US), which also provides a strong backing and the potential for collaboration from two heavyweight foreign investors

For Gojek (1379371D IJ, this will help it develop a process through which it can work with other banks, as well as providing customers with an increasing array of digital financial solutions.

The deal also demonstrates that management is focused on building its competitive advantage in Indonesia rather than being sidelined any merger considerations with Grab (0967655D SP), which seems increasingly unlikely. 



Gojek is also seen to be on the path to profitability, with all its services generating positive margins on a product basis. Gojek (1379371D IJ) also recently received US$150m in new money from Telekomunikasi Indonesia (TLKM IJ), which represented another heavyweight local shareholder on top of Astra International (ASII IJ) and Djarum Group. 
We look at the background of the Bank Jago (ARTO IJ) management team below the fold, which seems well-suited to building this future collaboration.











































Gojek (1379371D IJ) - Upping the Ante on Financial Services

<p>The recent announcement that the three state-owned Syariah banks including Mandiri Syariah, <a href="https://www.smartkarma.com/entities/bank-brisyariah-tbk-pt" target="_blank" data-smartkarma-citation="entities:26981:1" rel="noopener">Bank Brisyariah (BRIS IJ),</a> and BNI Syariah will merge together to form a new state-owned Syariah entity signals a change of pace in the space. </p>
<p>It is not surprising that Syariah banking is becoming increasing popular in Indonesia given the fact that the population is nearly 80% Muslim, with the largest population of Muslim in the world.</p>
<p>This is compounded by an increasing trend within society to "be a good Muslim", with the wearing  of Hijabs, the consuming of Halal products, making charitable donations ("Zakat"), pilgrimages to Mecca (Umrah and Hadj), and obviously Islamic Syariah Banking. </p>
<p>Syariah Banking can be a very profitable business, with an inherently low cost of funds and a different way of collecting "interest" on loans but this is not always the case. </p>
<p>Syariah lenders such as <a href="https://www.smartkarma.com/entities/bank-tabungan-pensiunan-nasi" target="_blank" data-smartkarma-citation="entities:27088:1" rel="noopener">Bank BTPN Syariah (BTPS IJ)</a> achieve super-normal returns with an ROA above 10% Pre-COVID and Mandiri Syariah (Indonesia's largest Syariah Bank by assets &amp; deposits) achieved an ROE of 15.7% in 2Q2020. </p>
<p>Other such as <a href="https://www.smartkarma.com/entities/bank-brisyariah-tbk-pt" target="_blank" data-smartkarma-citation="entities:26981:1" rel="noopener">Bank Brisyariah (BRIS IJ)</a> and BNI Syariah are much less profitable, with the former achieving an ROE of only 3%, with the latter close to zero. Even BCA Syariah ( <a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a> only achieved an ROE of 4.0% in 2019. </p>
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<p>Bringing the three SOE Shairya Banks together with Mandiri Syariah as the lead, will bring with it better scale and cost synergies, with targetted ROEs in the mid-teens in the medium-term. Though unconfirmed as yet, it is likely that <a href="https://www.smartkarma.com/entities/bank-mandiri-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:441:1" rel="noopener">Bank Mandiri (BMRI IJ)</a> will have a controlling interest in the merged entity, which will make it the key beneficiary of growth in the new entity. </p>
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The recent announcement that the three state-owned Syariah banks including Mandiri Syariah, Bank Brisyariah (BRIS IJ), and BNI Syariah will merge together to form a new state-owned Syariah entity signals a change of pace in the space. 
It is not surprising that Syariah banking is becoming increasing popular in Indonesia given the fact that the population is nearly 80% Muslim, with the largest population of Muslim in the world.
This is compounded by an increasing trend within society to "be a good Muslim", with the wearing  of Hijabs, the consuming of Halal products, making charitable donations ("Zakat"), pilgrimages to Mecca (Umrah and Hadj), and obviously Islamic Syariah Banking. 
Syariah Banking can be a very profitable business, with an inherently low cost of funds and a different way of collecting "interest" on loans but this is not always the case. 
Syariah lenders such as Bank BTPN Syariah (BTPS IJ) achieve super-normal returns with an ROA above 10% Pre-COVID and Mandiri Syariah (Indonesia's largest Syariah Bank by assets &amp; deposits) achieved an ROE of 15.7% in 2Q2020. 
Other such as Bank Brisyariah (BRIS IJ) and BNI Syariah are much less profitable, with the former achieving an ROE of only 3%, with the latter close to zero. Even BCA Syariah ( Bank Central Asia (BBCA IJ) only achieved an ROE of 4.0% in 2019. 

Bringing the three SOE Shairya Banks together with Mandiri Syariah as the lead, will bring with it better scale and cost synergies, with targetted ROEs in the mid-teens in the medium-term. Though unconfirmed as yet, it is likely that Bank Mandiri (BMRI IJ) will have a controlling interest in the merged entity, which will make it the key beneficiary of growth in the new entity. 


Bank Mandiri Persero (BMRI IJ) - The Unsung Hero of Syariah?

<p>There are few banks that compare with profit measures for the all-female Shariya micro-finance lender, <a href="https://www.smartkarma.com/entities/bank-tabungan-pensiunan-nasi" target="_blank" data-smartkarma-citation="entities:27088:1" rel="noopener">Bank BTPN Syariah (BTPS IJ)</a>. Where forbearance is key in banking globally at present, those that have highly profitable lending can be even more spared. This is due to banks being able to stagger credit costs over time, where strong core income can mitigate the provisioning impact.  What is also important is that BTPS generally takes high credit costs even before shutdown, suggesting it well manages default, loss. Even where cash accounting on loans in forbearance can upset profit, stylized figures for BTPS do not suggest the figures as being dire. </p>

There are few banks that compare with profit measures for the all-female Shariya micro-finance lender, Bank BTPN Syariah (BTPS IJ). Where forbearance is key in banking globally at present, those that have highly profitable lending can be even more spared. This is due to banks being able to stagger credit costs over time, where strong core income can mitigate the provisioning impact.  What is also important is that BTPS generally takes high credit costs even before shutdown, suggesting it well manages default, loss. Even where cash accounting on loans in forbearance can upset profit, stylized figures for BTPS do not suggest the figures as being dire. 

Indonesia

PT Bank BTPN Syariah Tbk is a sharia commercial bank in Indonesia, providing banking products and services based on Islamic principles. The bank focuses on financial inclusion, catering to productive underprivileged communities, particularly women, by offering savings, deposits, and various sharia financing products. It also provides financial education through its Daya program. The company was founded in 1991 as PT Bank Sahabat Purba Danarta, converted to a sharia bank in 2014, and is headquartered in Jakarta Selatan, Indonesia.

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Bank BTPN Syariah (BTPS IJ)

BTPS – Potential Profit Surge

The high-margin Shariya lender to women only has fared exeptionally during FY20. Reserve build has been tremendous, possibly allowing for far lower...

Daniel Tabbush

KTC – Disconnect Remains

KTC came out with results that do not appear to support its surge in valuations during November and December. We see a disconnect with market...

Daniel Tabbush

Gojek (1379371D IJ) - Upping the Ante on Financial Services

Gojek's recent move to increase its stake in Bank Jago to 22% signals it intends to move into providing a broader range of financial services.

Angus Mackintosh

Bank Mandiri Persero (BMRI IJ) - The Unsung Hero of Syariah?

The merger of the three state-owned banks Syariah Banking units will form a much more significant operator with the potential to make higher...

Angus Mackintosh

BTPS – Exceptional Core

There are few banks that compare with profit measures for the all-female Shariya micro-finance lender, Bank BTPN Syariah (BTPS IJ). Where...

Daniel Tabbush

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