Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Index Rebalance

<ul>
<li>The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 29 July.</li>
<li>Potential adds are <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a>, <a href="https://www.smartkarma.com/entities/adaro-minerals" target="_blank" data-smartkarma-citation="entities:35927:1" rel="noopener">Adaro Minerals (ADMR IJ)</a>, <a href="https://www.smartkarma.com/entities/bumi-resources-minerals-tbk" target="_blank" data-smartkarma-citation="entities:9136:1" rel="noopener">Bumi Resources Minerals Tbk (BRMS IJ)</a>, <a href="https://www.smartkarma.com/entities/transcoal-pacific-tbk-pt" target="_blank" data-smartkarma-citation="entities:28449:1" rel="noopener">Transcoal Pacific Tbk PT (TCPI IJ)</a> and <a href="https://www.smartkarma.com/entities/pt-dayamitra-telekomunikasi" target="_blank" data-smartkarma-citation="entities:34741:1" rel="noopener">Mitratel (MTEL IJ)</a>.</li>
<li>Potential deletions are <a href="https://www.smartkarma.com/entities/pembangunan-perumahan-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:19840:1" rel="noopener">Pembangunan Perumahan (Persero) (PTPP IJ)</a>, <a href="https://www.smartkarma.com/entities/pabrik-kertas-tjiwi-kimia-pt" target="_blank" data-smartkarma-citation="entities:19184:1" rel="noopener">Pabrik Kertas Tjiwi Kimia (TKIM IJ)</a>, <a href="https://www.smartkarma.com/entities/media-nusantara-citra-tbk-pt" target="_blank" data-smartkarma-citation="entities:6881:1" rel="noopener">Media Nusantara Citra (MNCN IJ)</a>, <a href="https://www.smartkarma.com/entities/gudang-garam-tbk-pt" target="_blank" data-smartkarma-citation="entities:722:1" rel="noopener">Gudang Garam (GGRM IJ)</a> and <a href="https://www.smartkarma.com/entities/chandra-asri-petrochemical" target="_blank" data-smartkarma-citation="entities:2556:1" rel="noopener">Chandra Asri Petrochemical (TPIA IJ)</a>.</li>
</ul>


The review period for the LQ45 Index ends on 30 June. The changes should be announced in the last week of July, becoming effective after the close on 29 July.
Potential adds are Bank Jago Tbk PT (ARTO IJ), Adaro Minerals (ADMR IJ), Bumi Resources Minerals Tbk (BRMS IJ), Transcoal Pacific Tbk PT (TCPI IJ) and Mitratel (MTEL IJ).
Potential deletions are Pembangunan Perumahan (Persero) (PTPP IJ), Pabrik Kertas Tjiwi Kimia (TKIM IJ), Media Nusantara Citra (MNCN IJ), Gudang Garam (GGRM IJ) and Chandra Asri Petrochemical (TPIA IJ).


LQ45 Index Rebalance Preview (July 2022): Candidates for Change

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

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat Indonesia (BBRI IJ)</a> booked strong growth in net profit in FY2021 beating its own guidance on most metrics and growing its exposure to MSMEs significantly.</li>
<li>Loan growth to micro, ultra-micro &amp; smaller corporate borrowers saw significant growth while its cost of funds came down and the cost of credit improved increasing profitability.</li>
<li>With the increasing use of digital channels to grow its customer base and huge potential to cross-sell to 137m depositors, <a href="https://www.smartkarma.com/entities/bank-rakyat-indonesia-persero" target="_blank" data-smartkarma-citation="entities:484:1" rel="noopener">Bank Rakyat</a> is a core holding amongst the Indonesian banks.</li>
</ul>



Bank Rakyat Indonesia (BBRI IJ) booked strong growth in net profit in FY2021 beating its own guidance on most metrics and growing its exposure to MSMEs significantly.
Loan growth to micro, ultra-micro &amp; smaller corporate borrowers saw significant growth while its cost of funds came down and the cost of credit improved increasing profitability.
With the increasing use of digital channels to grow its customer base and huge potential to cross-sell to 137m depositors, Bank Rakyat is a core holding amongst the Indonesian banks.


Bank Rakyat Indonesia (BBRI IJ) - MSME Marvel in the Making

Private Capital Markets

<ul>
<li>The recent <a href="https://www.smartkarma.com/entities/allo-bank-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:33551:1" rel="noopener">Allo Bank Indonesia Tbk PT (BBHI IJ)</a> transaction exemplifies the rush to build digital banking capabilities in Indonesia with strong shareholder ecosystem now in place</li>
<li>Mainstream banks are not standing still on digital banking capabilities building internal capabilities and in some cases standalone digital banks presenting tough competition for newcomers.</li>
<li>From a consumer digital banking perspective we see blu, <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> , SeaBank, and <a href="https://www.smartkarma.com/entities/allo-bank-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:33551:1" rel="noopener">Allo Bank (BBHI IJ)</a> as having the greatest chance of success.</li>
</ul>


The recent Allo Bank Indonesia Tbk PT (BBHI IJ) transaction exemplifies the rush to build digital banking capabilities in Indonesia with strong shareholder ecosystem now in place
Mainstream banks are not standing still on digital banking capabilities building internal capabilities and in some cases standalone digital banks presenting tough competition for newcomers.
From a consumer digital banking perspective we see blu, Bank Jago (ARTO IJ) , SeaBank, and Allo Bank (BBHI IJ) as having the greatest chance of success.


CrossASEAN Digital - All Rise Indonesia's Digital Banks

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<div class="content-highlight">
<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia (BBNI IJ)</a> released 3Q2021 results this week, which presented a mixed bag due to the onset of a new wave of COVID-19 and subsequent Emergency PPKM measures, which slowed business activity at least in July and August, with some recovery in September.
Despite the more restrictive economic backdrop, the bank still managed to grow its loans with a focus on lower-risk sectors both in corporate and consumer lending. Its digital efforts continue to yield positive results, both for consumer and wholesale banking, and we see more to come in the coming months. 
</div>
The bank grew its loans QoQ bringing 9M2021 loan growth to +3.7% YoY and it grew its third-party funds by +3.4% QoQ in 3Q2021. The cost of funds in 3Q2021 was the lowest ever at 1.54%, down by -10bps QoQ. 
The bank's PPOP (pre-provisioning operating profit) increased by +21% YoY for 9M2021, whilst its net profit was up by +79.3% YoY and +5.0% QoQ in 3Q2021, mainly due to an -18% decline in the bank's provisioning in 3Q2021. 
<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia (BBNI IJ)</a> continued to focus on growing its loan portfolio, with a focus on low-risk areas such as top tier corporates but also lower risk consumer loans.
<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia (BBNI IJ)</a> continues to focus on its ongoing digital transformation, both digitalising its own internal platform as well as developing digital native products.
<section class="figure">
<figure class="editor-figure mceNonEditable"></figure>
</section>
One key change in the bank's strategy and the fourth leg to its digital strategy is its move toward setting up a stand along the digital bank.
<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia (BBNI IJ)</a> continues to capitalise on the Fintech boom through collaboration with e-commerce players including <a href="https://www.smartkarma.com/entities/traveloka-indonesia-pt" target="_blank" data-smartkarma-citation="entities:32155:1" rel="noopener">Traveloka</a> and Shopee on BNPL
In a landmark deal, <a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia (BBNI IJ)</a> has issued Indonesia's first AT1 Perpetual Bond, meaning that a future rights issue will likely be more moderate.
<a href="https://www.smartkarma.com/entities/bank-negara-indonesia-persero" target="_blank" data-smartkarma-citation="entities:8285:1" rel="noopener">Bank Negara Indonesia (BBNI IJ</a>) is often seen as the bank playing catch up with its peers but maybe this time is different and it may finally be ripe for a re-rating.
<figure class="editor-figure mceNonEditable"></figure>
</section>



Bank Negara Indonesia (BBNI IJ) released 3Q2021 results this week, which presented a mixed bag due to the onset of a new wave of COVID-19 and subsequent Emergency PPKM measures, which slowed business activity at least in July and August, with some recovery in September.
Despite the more restrictive economic backdrop, the bank still managed to grow its loans with a focus on lower-risk sectors both in corporate and consumer lending. Its digital efforts continue to yield positive results, both for consumer and wholesale banking, and we see more to come in the coming months. 

The bank grew its loans QoQ bringing 9M2021 loan growth to +3.7% YoY and it grew its third-party funds by +3.4% QoQ in 3Q2021. The cost of funds in 3Q2021 was the lowest ever at 1.54%, down by -10bps QoQ. 
The bank's PPOP (pre-provisioning operating profit) increased by +21% YoY for 9M2021, whilst its net profit was up by +79.3% YoY and +5.0% QoQ in 3Q2021, mainly due to an -18% decline in the bank's provisioning in 3Q2021. 
Bank Negara Indonesia (BBNI IJ) continued to focus on growing its loan portfolio, with a focus on low-risk areas such as top tier corporates but also lower risk consumer loans.
Bank Negara Indonesia (BBNI IJ) continues to focus on its ongoing digital transformation, both digitalising its own internal platform as well as developing digital native products.



One key change in the bank's strategy and the fourth leg to its digital strategy is its move toward setting up a stand along the digital bank.
Bank Negara Indonesia (BBNI IJ) continues to capitalise on the Fintech boom through collaboration with e-commerce players including Traveloka and Shopee on BNPL
In a landmark deal, Bank Negara Indonesia (BBNI IJ) has issued Indonesia's first AT1 Perpetual Bond, meaning that a future rights issue will likely be more moderate.
Bank Negara Indonesia (BBNI IJ) is often seen as the bank playing catch up with its peers but maybe this time is different and it may finally be ripe for a re-rating.



Bank Negara Indonesia (BBNI IJ) - Ripe for A Re-Rating?

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

*Solid Result, But Challenges Ahead: Bank Central Asia (BBCA.IJ) [BCA] reported 3Q21 results of IDR 8.7 tn, improving IDR 1.3 tn (17.9%) on a linked quarter basis. BCA’s positive operating performance was highlighted by a loss provision cut of 66.5%, a slightly reduced tax rate, and a modest decline in costs; and*Credit Challenges Abating: By our calculation, we find that 3Q21 net new NPLs amounted to IDR 942 bn for an annualized rate of increase of 27.2%, and comparing very favorably to the 92.4% rate in 2Q21. Despite the significant deceleration in net new NPL formation, we calculate that loss reserves are likely right where they need to be.

*Solid Result, But Challenges Ahead: Bank Central Asia (BBCA.IJ) [BCA] reported 3Q21 results of IDR 8.7 tn, improving IDR 1.3 tn (17.9%) on a linked quarter basis. BCA’s positive operating performance was highlighted by a loss provision cut of 66.5%, a slightly reduced tax rate, and a modest decline in costs; and*Credit Challenges Abating: By our calculation, we find that 3Q21 net new NPLs amounted to IDR 942 bn for an annualized rate of increase of 27.2%, and comparing very favorably to the 92.4% rate in 2Q21. Despite the significant deceleration in net new NPL formation, we calculate that loss reserves are likely right where they need to be.

Bank Central Asia – Substantial Credit Delta Improvement

Indonesia

PT Bank Raya Indonesia Tbk is an Indonesian commercial bank offering a comprehensive suite of financial services, including savings accounts, checking accounts, fixed deposits, and various loan products such as personal, housing, and vehicle loans. It operates through consumer, retail, middle, and micro segments, focusing on digital banking solutions and financial inclusion. The company is headquartered in Jakarta, Indonesia, and was founded in 1989.

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Bank Raya Indonesia (AGRO IJ)

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Thomas J. Monaco

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