Kiwoom Recommends AMAR Shares, Potentially Up 42.8 Percent

Shares (Photo: Antara)

JAKARTA - Kiwoom Sekuritas recommends investors to buy (buy) shares of PT Bank Amar Indonesia Tbk (share code: AMAR). Where, the stock has the potential to increase by 42.8 percent compared to AMAR's share price at the close of the market on July 1, 2024, amounting to IDR 210.

This was revealed by Kiwoom Sekuritas in the latest report published in early July 2024. Kiwoom Sekuritas assessed that Amar Bank's solid and efficient performance reflects effective risk management and a sustainable growth strategy.

"The solid performance of AMAR and successful operational efficiency have made us confident that Amar Bank is ready to move in the direction of movement and the long-term growth prospects of this company, especially in financing MSMEs," said PT Kiwoom Sekuritas Indonesia Head of Research Sukarno Alatas quoting Antara.

Amar Bank's net profit in the first quarter of 2024 increased to IDR 48.86 billion, growing 41.9 percent year-on-year (YoY) on an annual basis. Operating efficiency also succeeded in reducing the cost-to-income ratio, as seen from the BOPO ratio (Operational Differences to Operational Revenue) down to 83.84 percent in the first quarter of 2024.

In his research, Kiwoom Sekuritas projects Amar Bank's operating income to increase 26 percent YoY to IDR 1,507 billion by the end of 2024, with a net profit of IDR 199 billion, an increase of 12 percent YoY.

Kiwoom Sekuritas also underlined the role of the micro, small and medium enterprises (MSMEs) sector in a significant increase in Amar Bank's performance, both in terms of lending and company revenue.

In the first quarter of 2024, Amar Bank disbursed total loans of IDR 2.75 trillion, an increase of 14.7 percent YoY, with credit disbursement to the MSME sector reaching 52 percent or higher than the government credit distribution target.

Amar Bank's non-performing loan (NPL) ratio is also in the lowest position in the last 3 years, namely 0.84 percent in the first quarter of 2024, describing the success of prudent credit disbursement strategies.

Regarding MSME financing, Kiwoom Sekuritas research shows that bank loans to MSMEs in Indonesia are still relatively low compared to neighboring countries, reaching only 21 percent.

Sukarno said that the high risk perception and lack of financial information made conventional banks generally hesitate to lend to MSMEs.

This, he said, is a potential space for digital banks such as Amar Bank, which from the start has focused on building its fundamentals to fill this role.

Our research shows that digital banks such as Amar Bank can reach customers who have not been served through digital platforms and extensive networks of agents. In addition, the easy and fast onboarding process makes this service more attractive to MSMEs," he also said.

In addition, Kiwoom Sekuritas research also highlighted the use of alternative data that allows digital banks such as Amar Bank to conduct credit assessments for MSMEs that are faster and more accurate.

By using machine learning algorithms, digital banks can also accelerate the loan process and offer more flexible credit products according to MSME needs.

Responding to the research, Bank's SVP Finance David Wirawan said that his party is committed to continuing to support MSMEs in Indonesia by providing innovative financial solutions that are easy and reliable.

Amar Bank's plan to develop digital MSME solutions, said David, encourages his party to continue to improve the ability to personalize better services to customers with secure management of financial transactions.

"The growth we achieve is proof of our dedication to providing the best service to customers. This Kiwoom Sekuritas research shows that Amar Bank is on the right track to continue to achieve solid performance," said David.