May 6, 2021 One-Asia Morning Focus

Today’s reports HYBE Corporation (352820 KS/Buy/TP: W340,000) – Foreign buying is happening for a reason Kakao Games (293490 KQ/Hold/TP: W49,000) – New title effects to be concentrated in 3Q21 Semen Indonesia (SMGR IJ/Buy/TP: IDR12,755) Upgrade rating – 1Q21 review: Broadly in line with expectations Bank CIMB Niaga (BNGA IJ/Not Rated) – 1Q21 earnings: Improved fundamentals Global performance monitor: Two-day change (%) Asia xJPN World EM World DM Korea Japan China Taiwan HK India Indonesia Singapore Thailand Index -0.99 -0.93 -0.55 0.99 -0.27 -0.78 -1.76 -0.35 0.06 1.05 N/A -2.32 Growth -0.67 -1.13 -2.33 1.09 -0.27 -0.91 -1.64 -0.39 0.01 0.56 N/A -2.98 Value -0.89 -0.92 1.05 0.90 -0.27 -0.63 -1.93 -0.30 0.10 1.55 N/A -1.67 Semicon. & equip. -2.20 -2.20 -2.77 0.49 -0.27 -0.20 -1.80 -2.13 N/A N/A N/A N/A Tech hardware & equip. -1.24 -1.23 -2.00 1.16 -0.27 -0.20 -3.27 -2.22 -1.49 N/A N/A N/A Comm. & prof. services 0.70 0.70 0.66 -1.12 -0.27 -0.20 -0.57 N/A -3.54 1.05 N/A N/A Software & services -0.86 -1.00 -2.19 -0.01 -0.27 -0.20 -2.00 -1.39 0.27 N/A N/A N/A Media & entertainment -0.95 -1.04 -1.80 0.50 -0.27 -0.20 -6.34 -5.09 -0.50 N/A N/A N/A Consumer goods -0.18 -0.12 -0.06 0.47 -0.27 -0.20 -0.89 N/A 0.19 -1.46 N/A -1.96 Consumer services -0.95 -1.20 -1.37 -0.29 -0.27 -0.20 -3.07 0.06 -1.89 1.46 N/A -3.11 F&B & tobacco -0.64 -0.39 0.16 -0.38 -0.27 -0.20 -1.92 -0.77 -0.37 -1.63 N/A -1.61 Food & staples retailing -0.21 -0.48 0.15 -0.93 -0.27 -0.20 -1.20 N/A -0.83 N/A N/A -2.12 Retailing -1.52 -1.52 -1.71 0.98 -0.27 -0.20 -1.26 -1.93 0.81 N/A N/A -3.48 HH & personal products 1.34 1.07 0.20 0.18 -0.27 -0.20 -3.39 N/A -0.23 -2.02 N/A N/A Pharma & life sciences -2.11 -2.07 0.25 1.70 -0.27 -0.20 -3.80 N/A 1.71 0.80 N/A N/A Autos & parts -0.28 -0.30 -2.33 1.66 -0.27 -0.20 -5.62 -1.46 -0.10 1.95 N/A N/A Transportation 0.49 0.79 1.29 0.71 -0.27 -0.20 -6.05 -0.24 -2.08 N/A N/A -2.63 Capital goods -0.67 -0.80 0.19 -0.01 -0.27 -0.20 -6.41 -0.38 -0.61 N/A N/A -1.35 Materials -0.15 -0.18 1.08 1.65 -0.27 -0.20 0.64 N/A 0.50 2.16 N/A -0.34 Real estate -0.31 0.18 -0.66 0.06 -0.27 -0.20 -0.05 -0.33 0.24 N/A N/A -4.25 Energy -0.85 -0.01 1.95 5.28 -0.27 -0.20 2.06 N/A -1.19 4.56 N/A -1.18 Banks -1.25 -1.01 0.14 -0.16 -0.27 -0.20 -0.86 -0.28 0.20 1.10 N/A -4.14 Diversified financials -0.40 -1.12 0.18 0.30 -0.27 -0.20 -0.17 0.07 -0.45 N/A N/A -5.21 Telecom services -0.13 -0.40 0.48 1.76 -0.27 N/A -0.66 0.89 -0.14 0.98 N/A -1.04 Utilities 0.66 0.01 -0.34 -0.69 -0.27 -0.20 -2.40 0.70 1.07 0.51 N/A -2.31 Key thematic ETFs: Change (%) Market movers Mkt cap US dollar total returns (%) Robotics & AI (Global X) Name Ctry Sector (US$mn) 1D 1M 3M 6M 1Y 3Y Cloud Computing (Global X) Top seven performers Lithium & Battery (Global X) Lupin IN Healthcare 7,369 13.5 15.7 10.8 29.1 49.6 39.3 Internet of Things (Global X) China Steel TW Materials 22,094 8.2 55.1 67.8 93.5 116.7 98.3 Digitalisation (iShares) PI Industries IN Materials 5,486 7.3 19.8 17.4 17.0 79.2 182.2 FinTech (Global X) SK Innovation KR Energy 22,737 7.2 18.2 -9.9 99.2 209.7 41.4 Genomics & Biotech (Global X) Aurobindo Pharma IN Healthcare 8,071 6.4 14.5 6.7 30.0 65.7 52.6 Health & Wellness (Global X) Sun Pharmaceutical IN Healthcare 22,180 5.9 11.4 7.1 35.4 54.9 22.5 Ageing Population (iShares) Apollo Hospitals IN Healthcare 6,490 4.8 13.4 20.1 58.2 153.7 178.3 EM Consum Growth (iShares) Bottom seven performers Clean Energy (iShares) Airtac International Grp TW Industrials 7,168 -5.8 4.4 2.0 46.1 106.7 140.9 Water Resources (Invesco) Nan Ya Printed Circuit TW Information tech. 6,681 -6.2 -16.2 9.1 131.3 345.3 1,131.1 Agribusiness (iShares) MediaTek TW Information tech. 57,176 -7.4 6.6 5.8 47.3 171.8 256.2 Global Infrastructure (iShares) KrungThai Card TH Financials 5,803 -8.1 -9.5 5.8 71.5 120.2 106.3 ESG US Leaders (iShares) Novatek Microelectr. TW Information tech. 11,603 -8.3 -4.6 11.3 101.4 212.5 420.6 2D 10D GlobalWafers TW Information tech. 12,029 -10.0 3.3 21.4 84.5 125.7 103.8 (12) (9) (6) (3) 0 3 6

Delta Electronics Thai TH Information tech. 12,633 -10.9 -16.1 -33.2 58.6 661.0 438.5

This publication contains summaries of reports prepared by Mirae Asset Securities Co., Ltd. and/or its non-US affiliates (“Mirae Asset Securities”). Please review the compliance notices contained in the original reports. Information and opinions contained herein have been compiled in good faith from sources deemed to be reliable. However, the information has not been independently verified. Mirae Asset Securities makes no guarantee, representation, or warranty, express or implied, as to the fairness, accuracy, or completeness of the information and opinions contained in this document. Mirae Asset Securities accepts no responsibility or liability whatsoever for any loss arising from the use of this document or its contents or otherwise arising in connection therewith. Information and opinions contained herein are subject to change without notice. This document is for informational purposes only. It is not and should not be construed as an offer or solicitation of an offer to purchase or sell any securities or other financial instruments. This document may not be reproduced, further distributed, or published in whole or in part for any purpose.

May 6, 2021 One-Asia Morning Focus

MSCI valuations (DM, EM, Asia ex-JP)

19 12M forward P/E (x) 23 2.6 12M trailing P/B (x) 3.4

2.4 3.2 21 17 3.0 2.2 19 2.8 15 2.0 2.6 17 1.8 2.4 13 1.6 15 2.2 1.4 11 2.0 13 1.2 1.8

9 11 1.0 1.6 05/20 08/20 11/20 02/21 05/20 08/20 11/20 02/21 MSCI Asia ex-JP (L) MSCI World EM (L) MSCI World DM (R) MSCI Asia ex-JP (L) MSCI World EM (L) MSCI World DM (R)

MSCI 12M forward P/E (x) Currencies (vs. USD) Value Change (%) Korea Vietnam 17 1D 3M YTD KRW 1,122.7 0.00 -0.11 -2.92 15 19 CNY 6.5 0.00 -0.11 -7.10 13 16 JPY 109.2 0.01 3.56 0.50 11 IDR 14,435.0 0.03 2.89 3.98 13 9 HKD 7.8 0.02 0.22 -0.29 TWD 28.0 0.07 -0.05 -6.75 7 10 05/20 08/20 11/20 02/21 05/20 08/20 11/20 02/21 SGD 1.3 -0.10 0.03 -0.70 THB 31.1 -0.11 3.40 3.84 Indonesia India 19 26 INR 73.9 0.07 1.35 3.55 24 PHP 48.0 -0.01 -0.08 -5.15 17 22 MYR 4.1 -0.13 1.15 0.66 15 20 VND 23,061.5 -0.03 0.23 -0.48 13 18 16 Commodities 11 14 Latest Change (%) 9 12 05/20 08/20 11/20 02/21 05/20 08/20 11/20 02/21 close 1D 3M YTD Crude oil (US$/bbl) 68.9 1.7 38.1 1.6

Hong Kong China Thermal coal (US$/tonne) 92.2 0.0 43.2 37.7 19 20 Iron ore (US$/tonne) 189.7 2.5 22.8 107.3 18 17 Copper (US$/tonne) 9,961.0 0.1 28.5 61.8

16 Nickel (US$/tonne) 17,861.0 2.2 5.6 27.6 15 Tin (US$/tonne) 32,397.0 0.6 61.1 92.3 14 Gold (US$/ozt) 1,775.8 -0.9 -4.9 16.9 13 12 Palm oil (INR/tonne) 1,075.0 0.0 6.8 23.5

11 10 Soybean oil (c/lb) 70.8 0.0 70.5 106.4 05/20 08/20 11/20 02/21 05/20 08/20 11/20 02/21 Corn (US$/bu) 7.3 2.1 60.3 82.6 Wheat (US$/bu) 7.4 1.6 19.4 31.9

Source: FactSet, Mirae Asset Securities Research (updated on 5/6/20 at 06:00 KST)

[Korea] Entertainment May 6, 2021

HYBE Corporation Buy (352820 KS) (Maintain)

Foreign buying is happening for a reason TP: W340,000 Upside: 42.0%

Mirae Asset Securities Co., Ltd. Jeong-yeob Park [email protected]

1Q21 review: Above our Revenue of W178.3bn (+28.7% YoY), OP of W21.7bn (+9.2% YoY) expectations and in line with  While there were no offline performances or album releases (except for TXT in Japan) in the consensus quarter, merchandising/licensing revenue was strong.  Direct revenue was W67.5bn (-24.1% YoY), not far off from our estimate (W70.8bn), affected by a lull in artist activities. Indirect revenue surprised at W110.8bn (+123.4% YoY), as merchandising sales remained steady even in the absence of activities.  Despite a 12%p QoQ rise in the indirect revenue mix, OP margin declined to 12.2% (-2.2%p YoY, -5.6% QoQ). This was largely due to the absence of activities and one-off expenses related to the company’s office relocation, name change, and M&A, and is thus not a cause for concern.

Establishing no. 1 platform Global fan platforms: Pioneering the development of fandom communities and position artist/celebrity merchandising market  In 2020, Weverse recorded revenue of W219.1bn (+180% YoY) and operating profit of W15.6bn (turn to profit YoY). MAU in 1Q21 reached 4.9mn.  Platform indicators to improve: With the resumption of label activities in 2Q21 and the upcoming inclusion of Ithaca Holdings/YG Entertainment artists, we expect Weverse/Weverse Shop traffic to improve in both quantity and quality (increases in MAU and ARPPU). Expectations outweigh concerns in the long run: Artist activities to resume  In 2Q21, BTS will release a new single (“Butter”; May 21), and TXT, Enhypen, NU'EST, and Seventeen will resume album activities.  Ithaca Holdings will be consolidated from 2Q21. Offline live performances could resume in 2H21 or be replaced by online shows if necessary.  That said, higher costs related to labor, acquisition, and new talent development should limit the extent of improvement in quarterly and full-year OP margins.  The company dismissed the possibility of selling its equity stake in Big Hit Music (label), confirming its commitment to maintaining the independence of its multi-label system.

Valuation and recommendation Focus on imminent no. 1 platform status and income model expandability  We reaffirm our Buy rating on HYBE Corporation with a target price of W340,000, which is based on a P/E of 60x our 2021-22F average net profit attributable to owners of the parent.  We continue to believe the company is comparable to Nasdaq-listed social network/content platforms and deserves a multiple consistent with these specialized platform peers.  User inflow following new artist inclusion could trigger significant upside.

Key data Current price (5/4/21, W) 239,500 Market cap (Wbn) 8,532 160 HYBE Corporation KOSPI 140 OP (21F, Wbn) 260 Shares outstanding (mn) 39 120 Consensus OP (21F, Wbn) 244 Free float (%) 41.5 100 EPS growth (21F, %) 70.4 Foreign ownership (%) 8.6 80 P/E (21F, x) 50.0 Beta (12M) 1.48 60 40 Market P/E (21F, x) 12.0 52-week low (W) 140,580 5.20 9.20 1.21 5.21 KOSPI 3,147.37 52-week high (W) 273,240

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2018 2019 2020 2021F 2022F Absolute -0.4 62.4 0.0 Revenue (Wbn) 301 587 796 1,323 1,862 Relative -1.5 21.6 0.0 OP (Wbn) 80 99 146 260 381 OP margin (%) 26.6 16.9 18.3 19.7 20.5 NP (Wbn) -70 74 86 180 254 EPS (W) -2,536 2,574 2,811 4,791 6,559 ROE (%) -80.8 56.5 12.5 14.0 16.9 P/E (x) - - 56.3 50.0 36.5 P/B (x) - - 4.8 6.7 5.7 Div. yield (%) - - 0.0 0.0 0.0 Notes: Under consolidated K-IFRS; NP is attributable to owners of the parent Source: Company data, Mirae Asset Securities Research estimates Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. [Korea] Game May 4, 2021

Kakao Games Hold (293490 KQ) (Maintain)

New title effects to be concentrated in 3Q21 TP: W49,000 Downside: -5.2%

Mirae Asset Securities Co., Ltd. Chang-kwean Kim [email protected]

1Q21 review: In-line results PC revenue declines on end of Black Desert publishing  For 1Q21, Kakao Games reported revenue of W130.1bn (+35% YoY) and operating profit of W15.6bn (+22.9% YoY), in line with our estimates (W131bn and W15bn, respectively).  Despite the full-quarter revenue recognition of Elyon (released in 4Q20), revenue declined 8.4% QoQ due to: 1) the waning effects of Guardian Tales; and 2) the discontinuation of Black Desert service (overseas) in February.  Operating expenses fell 8.7% QoQ on declines in market commissions and developers’ profit share.  A one-off non-operating profit of W2bn was reflected in relation to the cancellation of a new release.

Four big titles due in 2021 New title rollouts: Three in 2Q21, three in 3Q21, and five in 4Q21  One of the year’s most anticipated titles is Odin: Valhalla Rising, an open world MMORPG developed by Lionheart Studio that supports cross-play between PC and mobile.  The title, which has attracted 1.8mn pre-registrations in just five days, will be rolled out in late 2Q21. Revenue recognition will likely begin in 3Q21.  There are also several big titles coming out in 3Q-4Q21: Eternal Return (3Q21), World Flipper (3Q21 global rollout), and Elyon overseas (4Q21).  The Legendary Moonlight Sculptor overseas (mobile) and Golf Party with Friends (mobile) will be launched globally in 2Q21.

New title success needs to be Maintain Hold and TP of W49,000 confirmed to justify current  Following a strong post-IPO rally, Kakao Games’ stock has consolidated at around W50,000, as valuation investors wait to see how the company’s various new titles will perform.  Based on 2021F EPS, the stock is trading at a P/E of 40x.  We derived our target price by applying to our 2022F EPS a P/E of 35.3x, the post-IPO three-year average multiple of gaming companies that went public in recent years.

Key data Current price (5/3/21, W) 51,700 Market cap (Wbn) 3,855 140 Kakao Games KOSDAQ OP (21F, Wbn) 108 Shares outstanding (mn) 75 120 Consensus OP (21F, Wbn) 106 Free float (%) 42.5 100 EPS growth (21F, %) 0.7 Foreign ownership (%) 8.6 80 P/E (21F, x) 37.2 Beta (12M) 1.56

60 Market P/E (21F, x) 12.2 52-week low (W) 44,050 4.20 8.20 12.20 4.21 KOSDAQ 961.81 52-week high (W) 81,100

Share performance Earnings and valuation metrics (%) 1M 6M 12M (Dec.) 2018 2019 2020 2021F 2022F 2023F Absolute -0.4 10.1 0.0 Revenue (Wbn) 421 391 496 630 659 715

Relative 0.5 -6.3 0.0 OP (Wbn) 47 35 67 108 134 144 OP margin (%) 11.2 9.0 13.5 17.1 20.3 20.1 NP (Wbn) 19 11 86 104 113 126 EPS (W) 352 197 1,379 1,389 1,511 1,689 ROE (%) 6.2 2.6 12.1 9.8 9.7 9.8 P/E (x) - - 33.4 37.2 34.2 30.6 P/B (x) - - 3.4 3.5 3.2 2.9 Div. yield (%) - - 0.0 0.0 0.0 0.0 Notes: Under consolidated K-IFRS; NP is attributable to owners of the parent Source: Company data, Mirae Asset Securities Research estimates Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including the US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. [Indonesia] Cement

Semen Indonesia Buy (SMGR IJ) (Upgrade)

1Q21 review: Still coming up to expectation TP: IDR12,755 Upside: 26.9%

Mirae Asset Sekuritas Indonesia Mimi Halimin [email protected]

SMGR’s 1Q21 net profit: SMGR books 1Q21 net profit of IDR450.4bn (+0.9% YoY, -64.0% QoQ) Broadly in line with our  Semen Indonesia (SMGR IJ) posted 1Q21 net profit of IDR450.4bn (+0.9% YoY, -64.0% QoQ), realizing and consensus’ estimates 13.2% of our FY21 net profit estimate and 14.3% of the consensus’. We deem this achievement broadly in line with our and the consensus’ expectation. Historically, in 2016-2020, SMGR’s first- quarter net profit achieved a very wide range of run-rates, from 11.2% (1Q19) to 46.1% (1Q17).  The sizeable QoQ decline in 1Q21 net profit was quite normal due the seasonality effect, in our view.  Gross margin was lower YoY (28.6% in 1Q21 vs. 31.5% in 1Q20), but we regard its operating margin relatively stable YoY (13.0% in 1Q21 vs. 13.5% in 1Q20), which is quite encouraging.  Finance costs declined by 27.1% YoY to IDR443.6bn during the quarter, along with lower debt position as SMGR has been trying to reduce its substantial debt position post SMCB acquisition. As of the end of March 2021, SMGR’s total debt was at IDR25.3tr (vs. IDR28.7tr as of the end of March 2020).  From the top-line perspective, SMGR booked 1Q21 revenue of IDR8.1tr (-5.9% YoY, -15.4% QoQ), broadly in line with our FY21 revenue estimate (at 20.9% run-rate) and the consensus’ (at 21.1% run- rate). For reference, SMGR’s 1Q revenue achievement ranged between 20.1% (1Q19) and 24.4% (1Q20) in 2016-2020.  Although SMGR’s cumulative 1Q21 domestic sales volume declined by 8.4% YoY, regional sales volume surged by 58.1% YoY, which brings its total sales volume to 9.7mn tonnes (+2.1% YoY). Looking ahead, we expect a recovery in its domestic sales volume, especially in the third and fourth quarters (as the second quarter is usually still a low season for cement demand).

Maintaining our forecasts Maintain our revenue and net profit forecasts  Even though the economic condition remains challenging, we still expect a recovery in SMGR’s performance this year, supported by the potentially accelerated infrastructure spending and a potential recovery story from the property sector.  We also expect that SMGR will reduce its debt level further this year, translating into lower finance cost estimate. We predict that SMGR’s debt to equity ratio would be at 0.63x in FY21 (vs. 0.75x in FY20).  We maintain our FY20 revenue and net profit forecasts on SMGR. We estimate SMGR’s FY21 revenue and net profit to arrive at IDR38.6tr (+9.6% YoY) and IDR3.4tr (+22.5% YoY), respectively.

Valuation and Upgrade recommendation to Buy due to higher upside potential recommendation  We maintain our revenue and net profit forecasts on SMGR.  Meanwhile, we upgrade our recommendation to Buy (from Trading Buy) as our unchanged TP currently implies more than 20% upside potential (based on the closing price on May 4).  Risks to our call: Slower-than-expected demand growth, higher-than-expected costs (e.g. rising fuel prices), and/or worse-than-expected oversupply.

Key data (D-1yr=100) JCI SMGR Share Price (5/4/21, IDR) 10,050 Market Cap (IDRbn) 59,611.8 180 Consensus NP (21F, IDRbn) 3,116 Shares Outstanding (mn) 5,931.5 160 NP Mirae Asset vs. consensus (21F,%) 9.8 Free Float (%) 49.0 140 EPS Growth (21F, %) 22.5 Beta (Adjusted, 24M) 1.2 120 P/E (21F, x) 17.4 52-Week Low (IDR) 7,250 100 Industry P/E (Current, x) 54.4 52-Week High (IDR) 13,000 80 5/20 7/20 9/20 11/20 1/21 3/21 5/21 Benchmark P/E (21F, x) 16.2

Share performance Earnings and valuation metrics (%) 1M 6M 12M FY () 12/17 12/18 12/19 12/20 12/21F 12/22F Absolute -3.6 10.1 33.6 Revenue (IDRbn) 27,814 30,688 40,368 35,172 38,561 40,853 Relative -2.8 -6.7 4.1 OP (IDRbn) 2,633 4,773 6,093 5,653 6,365 7,177 OP margin (%) 9.5% 15.6% 15.1% 16.1% 16.5% 17.6% NP (IDRbn) 1,621 3,079 2,392 2,792 3,420 4,361 EPS (IDR) 273 519 403 471 577 735 ROE (%) 5.7% 9.9% 7.4% 8.2% 9.4% 11.0% P/E (x) 36.8 19.4 24.9 21.3 17.4 13.7 P/B (x) 2.1 1.9 1.8 1.7 1.6 1.5 Dividend yield (%) 3.0% 1.4% 2.1% 0.4% 1.9% 2.3% Notes: Net profit refers to net profit attributable to controlling interests Source: Company data, Mirae Asset Sekuritas Indonesia Research estimates PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT. [Indonesia] Banks

Bank CIMB Niaga Not Rated (BNGA IJ)

1Q21 earnings: Improved fundamentals

Mirae Asset Sekuritas Indonesia Handiman Soetoyo Hariyanto Wijaya Rizkia Darmawan [email protected] [email protected] [email protected]

1Q21 result review Strong PPOP comeback in 1Q21  Bank CIMB Niaga (BNGA) posted a net profit of IDR995.9bn in 1Q21 (-5.6% YoY, +573.0% QoQ). Higher provision expenses (+62.2% YoY) dragged down net profit, although net profit has improved significantly on a QoQ basis. The strong QoQ comeback was driven by both NII and Non-II growth.  Interest income declined by 9.8% YoY and 6.7% QoQ due to diminishing loan portfolio (-10.7% YoY, -0.8% QoQ). Meanwhile, interest expenses took a deep plunge (-32.3% YoY and 20.9% QoQ), pushing NII up by 6.5% YoY and 1.7% QoQ. We attribute the sharp decline in interest expenses to lessening total deposit (-1.2% YoY, -3.6% QoQ) and deposit mix shift from TD to CASA. PPOP grew by 16.1% YoY and 23.3% QoQ.  Non-II was supported mostly by FX and derivative transactions and gains from marketable securities, yet fee and commission from core retail and transactional banking have shown signs of improvement.

Operational highlights Declining loan and deposit; Improvement in restructured loan  Loan fell by 10.7% YoY as loan demand was relatively weak, largely during 2Q20-4Q20. The drop was mainly seen in the corporate and commercial segments, while mortgage and auto loan expanded due to aggresive promotional campaign, including the offered competitive rates. In 1Q21, the drop receded. Following weak loan growth, excess liquidity mainly went to the government bond and marketable securities.  The drop in deposits was seen in TD (-9.2% YoY), while CASA grew by 4.1% YoY. As a result, CASA ratio improved from 60% (March 2020) to 63% (March 2021). BNGA is the only bank among 10 big banks that recorded a YoY drop in deposits and had the weakest CASA growth (see Table 2), raising our concern about its deposit franchise as a transactional bank. LDR eased to 85.3%, from 94.3% in March 2020.  Gross NPL inched up QoQ from 3.6% to 3.8%, mainly due to the downgrade of restructured loan. Nevertheless, restructured loan portfolio continues to improve, now making up 13.0% (IDR22.5tr) of total loan, from 14.6% (IDR25.5tr) in December 2020, and 15.8% (IDR28.6tr) in September 2020.

Valuation Trading at undemanding valuation  Currently, BNGA is trading at IDR995/share, implying a P/B of 0.60x of FY20 trailing BPS, which is quite undemanding, in our view, given its consistent earnings growth and status as a BUKU-4 bank. Risks include: 1) weaker than expected loan growth; and 2) deteriorating asset quality.

Key data (D-1yr=100) JCI BNGA Share Price (5/4/21, IDR) 995 Market Cap (IDRbn) 25,005.9 200 Consensus NP (21F, IDRbn) 3,176 Shares Outstanding (mn) 25,131.6 180 NP Mirae Asset vs. consensus (21F, %) N/A Free Float (%) 8.5 160 EPS Growth (21F, %) N/A Beta (Adjusted, 24M) 1.3 140 120 P/E (21F, x) N/A 52-Week Low (IDR) 595 100 Industry P/E (21F, x) 17.3 52-Week High (IDR) 1,245 80 5/20 7/20 9/20 11/20 1/21 3/21 5/21 Benchmark P/E (21F, x) 16.2

Share performance Earnings and valuation metrics (%) 1M 6M 12M FY (Dec.) 12/15 12/16 12/17 12/18 12/19 12/20 Absolute -3.4 33.6 60.5 Total OP (IDRbn) 13,736 14,916 15,756 15,828 16,825 16,358 Relative -2.6 16.7 31.0 PPOP (IDRbn) 6,502 7,548 8,235 7,881 8,570 8,351 Net Profit (IDRbn) 428 2,082 2,978 3,482 3,914 2,012 EPS (IDR) 34 75 119 140 157 81 BPS (IDR) 1,141 1,361 1,482 1,587 1,736 1,646 P/E (x) 29.20 13.34 8.40 7.12 6.34 12.33 P/B (x) 0.87 0.73 0.67 0.63 0.57 0.60 ROE (%) 2.99 5.81 8.34 9.09 9.35 5.01 ROA (%) 0.47 1.09 1.70 1.85 1.47 0.73 Source: Company data, Mirae Asset Sekuritas Indonesia Research

Analysts who prepared this report are registered as research analysts in Indonesia but not in any other jurisdiction, including the US. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES AND DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.