Beneficiaries Of BI Rate Cut - RHB
Stay OVERWEIGHT, Top Picks: Jasa Marga, Waskita Karya, Wijaya Karya, and PP Persero. Bank Indonesia’s (BI) recent rate cut – 50bps decline in just two months – should be positive for infrastructure firms. In our calculation, their FY20F earning should increase 6.5% on average, assuming the BI rate declines 50bps starting in Sep 2019. Heavily-leveraged firms like JSMR and WSKT are the biggest beneficiaries of lower financing costs. Meanwhile, PTPP has the strongest interest coverage among construction companies under our coverage.
BI’s second rate cut in a row. After Jul 2019’s rate cut, the central bank consecutively reduced its benchmark interest rate 25 bps in Aug 2019. This caused the BI benchmark rate to decline to 5.5% in Aug 2019 from 6% in Jun 2019 – indicating clearly that BI will be more pro-growth. We see this move directly affecting the infrastructure sector, as it should lower financing costs at an extent degree. Our calculations show that every 25bps reduction results in the sector’s FY20F earnings increasing 3.3% on average
Download analisanya pada link berikut dibawah ini: