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IPO Prospect of Bank Jabar Banten

As you have known, one of the most popular regional banks, Bank Jabar Banten, will hold Initial Public Offering (IPO) for its 20% of stock, which is as much as 1.8 billion shares with nominal of Rp250 per share. The IPO will be held on the next June 5th. Bank Jabar Banten will be listing on the exchange, starting from July 8, 2010, with ticker of BJBR (if I’m not mistaken). How’s the prospect? Is it worth to be collected?

Although the basic price is only 250, the specified offering price is quite high, which is 510 - 680, and the percentage of the share released can increase to 30% if the market’s response is good. Hmm… how can it be so confident? Does BJBR’s performance is  good and quite promising?

If we look at its balance sheet, BJBR has quite steady upward trend in performance. Its assets on full year 2009 was reached Rp32.4 trillion, with equity of Rp3.1 trillion, and the rest of it is the liabilities. BJBR’s assets, equity, and liabilities increase of 24% (in average) than in 2008. If we look at the increase trend on the last five years, BJBR always recorded equity rise above 20% every year, except for 2008, which was only 14.0%. If averaged, its assets were also rose 20% every year. BJBR never recorded decrease in certain point in the balance sheet, at least not on the last five years. Well, judging from here, it looks like BJBR is actually good.

Then how about the income statement? BJBR’s income in the last two years indeed increase above 20%, although in the last five years, BJBR had recorded an increase in revenue of 3.2% on 2007 (it seems that 2007 is a hard year for BJBR). But overall, BJBR’s revenue was always increase every year. The operating profit and the net income were also always increasing with greater percentage every year. That increase becomes greater particularly in the last two years, but the peak is in 2008. On 2008, BJBR’s net income increase of 46.3%, while on 2009 it only increased by 30.8%.

However, as already mentioned above, a great increase in profit in 2008 may be due to the performance of BJBR in 2007 that was slightly decreased. Thus, the performance in 2009 might be called as: not less good as the 2008. So if seen from here, BJBR once again, looks good. The other important thing to be observed is the CAR position. On 2009, BJBR’s CAR was 20.9%. pretty good!

If BJBR is released on its highest price, which is Rp680 per share, was it a reasonable price?

Because number of total shares placed  by BJBR is 8.7 billion shares, then the price of 860 will result a market cap of Rp5.3 trillion or 1.7 times of BJBR’s equity (per 31 December 2009).

And because BJBR’s net income is Rp709 billion, then the PER was 5.3 times. If we use the top three banks namely BMRI, BBCA, and BBRI as comparison, then fundamentally, BJBR seems very cheap. But note this: it must be differentiated because those three banks are national bank, while BJBR is only regional bank.

Meanwhile, if we reflect on the banks that had held IPO, such as BBTN, then BJBR is worth to be collected. Why so? It is because BJBR has much in common with BBTN. BBTN’s performance is roughly as good as BJBR. Its size if judging from the asset side is also similar (although actually not really. BBTN’s final position was Rp56 trillion, while BJBR was only Rp32 trillion). But it was pretty close when compare to the top three banks above whose assets are over hundreds of trillion). Both BJBR and BBTN have specialization respectively, promising a consistent profit. BJBR is the bank of the civil servants in the region of West Java and Banten, while BBTN is the bank for those who would like to get a housing credit. Well, BBTN’s stock price at IPO on last February soared from 8,00 to 1,650 before now it's on the position between 1,300-1,400. It’s not impossible for BJBR to experience the same thing.

The conclusion? BJBR is indeed worthy to be collected, particularly for those who haven’t had banking stock collection, because besides has quite big name, the performance is also fine. There is a chance for BJBR to boost up into the level of 1,000 (in average) on the next three months.

Performance rating on full year 2009: AA
Stock rating on 680: AA
Stock rating on 510: AAA

Original article was written on June 15, 2010.

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