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Tuesday, April 5, 2011

Mandala Multifinance (MFIN)

Chasing a Momentum

by IndoPremier Securities


After booked remarkable new financing and net profit in 2010. Now MFIN are chasing benefit from continuing automotive acceleration in 2011 as the government finally postponed the regulation of removing subsidized fuel. MFIN strong point in distribution network and high quality employee are set to boost new financing in years to come. Supported by 15-20% YoY national motorcycles sales in 2011, we expect MFIN to deliver 30% new financing growth to reach Rp 4.8 tn. BUY recommendation for MFIN with TP Rp 810 per share (62% potential upside from current price).

Stunning Result

MFIN booked remarkable net profit by Rp 132.7 bn (19.4% YoY growth) in 2010, or 8.5% above our forecast. Interest income increased by 32.5% YoY to reach Rp 843.3 bn on the back strong new financing in the same period. We expect MFIN to deliver Rp 152 bn net profit, or increase 15% YoY from 2010.


Consumer Financing

MFIN successfully gathered Rp 3.7 tn (135% YoY growth) new financing in 2010 supported by automotive recovery. The achievements were inline with our projection. However, the consumer financing receivable was 17.8% below our forecast (Rp 3.4 tn vs 4.0 tn) due to higher than expected debt payment from costumers. Aside from short-term consumer financing (one year and below), the acceleration of payment by costumers was the main driver of high debt payment in 2010. We calculate total debt payment in 2010 reached Rp 2.7 tn, or equal 67% of new consumer financing. We expect MFIN to deliver new financing of Rp 4.8 tn, 30% YoY increase from 2010. We also foresee a debt payment of Rp 3.5 tn as we anticipate the payment acceleration will continue in 2011.

Chasing a Momentum

We believe the automotive sales will continue to increase as the government finally postponed the policy of subsidized fuel removal. As a result, we foresee the motorcycles sales will continue to beat 20% YoY growth (from conservative forecast of 10-15% previously). Chasing the momentum, MFIN has build up its employee’s professionalism by conducted management development program in recent two years, as well as expand 10 branch offices in outside-Java.

Buy Recommendation

We maintain BUY recommendation for MFIN with TP of Rp 830 per share on the back strong GDP and recent favorable government regulation. Our target price reflect 7.1x PER and 1.5x PBV in 2011.



2009

2010

2011F

2012F

2013F

Year End 31 Dec

Net Interest Income

427.6

593.1

704.3

840.8

929.5

Income Before Tax

148.2

176.9

210.5

250.7

299.8

Net Income

108.1

132.7

152.0

181.2

216.0

EPS

81.6

100.1

114.7

136.8

163.0

EPS Growth (%)

2.7

22.7

14.6

19.2

19.2

BVPS

356.9

440.8

533.6

644.2

774.3

PER (x)

3.0

4.3

4.3

3.6

3.0

PBV (x)

0.7

1.0

0.9

0.8

0.6

Source: company, IPS calculation


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