UBS Initiates Buy Rating on BFI Finance Indonesia Tbk PT Stock with IDR1,200.00 Price Target
UBS, the renowned financial firm, has recently initiated coverage on BFI Finance Indonesia Tbk PT (BFIN:IJ) stock, giving it a Buy rating and setting a price target of IDR1,200.00. This move comes as BFI Finance solidifies its position as Indonesia's sixth largest multi-finance company, specializing in automotive financing with a 4% market share.
Key strengths of BFI Finance include a robust 10-year average return on equity (ROE) of 18.6%, a net interest margin (NIM) around 15%, and an impressive 11% compound annual growth rate (CAGR) for loans, higher than the industry average. The company has effectively managed rising delinquency rates by slowing down its growth, leading to a decrease in non-performing loan (NPL) formation.
UBS is optimistic about BFI Finance's future, especially with the anticipated interest rate cuts by Bank Indonesia. These cuts, totaling 150 basis points by the end of 2025, are expected to drive revenue growth for BFI Finance from a flat performance in the first half of 2024 to a 10% increase by the end of 2026.
The firm also forecasts an expansion in BFI Finance's ROE, projecting an increase from 14% to 17% by 2026. Additionally, the valuation of BFI Finance at 1.4 times the 12-month forward price-to-book value (P/BV) and a 5% dividend yield played a significant role in UBS's decision to issue a Buy rating. The price target of IDR1,200.00 indicates a 19% upside potential for the stock.
In conclusion, with UBS's endorsement and positive outlook on BFI Finance Indonesia Tbk PT, investors may want to consider adding this stock to their portfolio for potential growth and returns in the coming years.