• Sectoral Review

    • sectoral review
    • sectoral review
      • August-2021: Keeping High Growth Pace Amid a Pandemic
        We are of the view that the prospect for the pharmaceutical industry to remain prospective in the near to medium term. Demand for pharmaceutical products should remain robust, especially those related to handle the Covid-19 pandemic, despite the weakening purchasing power and supply chain disruptions due to mobility restrictions. The pandemic has spurred the growing awareness of health, encouraging people to access more pharmaceutical products, such as multivitamins and other supplements. Long-term growth is also prospective, given the favorable demographic profile, easier access to healthcare facilities, and better digital health ecosystem. However, the high dependence on imported raw materials will remain a challenge in this industry due to its vulnerability to logistic disruptions and fluctuation of exchange rate. Regarding the competitive landscape, the local pharmaceutical industry is highly fragmented with numerous players, especially in the downstream segment. However, we expect domestic companies to remain dominant, while deregulation of foreign ownership may threaten the existing players. More detail ...
      • June-2021: Maintaining Business Continuity Amid Pressure
        We are of the view that the banking growth prospect will remain relatively weak in the short term. Loan growth fell into the negative territory, the first time in a decade. Demand for loans remains timid in line with the slow pace of the economic recovery, and banks will continue to exercise caution in extending loans to maintain credit quality. Profitability will remain under pressure, especially due to the modest performance of their core business. Although the net interest margin ratio has remained relatively stable, this is mainly accounted for by the increase in income from the non-core business, as banks’ credit quality continues to be under intense pressure, as reflected in the NPL ratio. We view that the solution to this situation requires a more extensive reserve policy. The subdued demand has resulted in the accumulation of liquidity in the banking industry, as reflected in a drop of the loan-to-deposit ratio, as is the case of the short-term interest rates on the interbank market. However, we see positive progress in banks’ capital, with the capital adequacy ratio maintained at a relatively high level compared to that of the minimum requirement. In addition, small banks have also raised their core capital to above IDR1 trillion through various corporate actions. More detail ...
      • April-2021: Seizing Opportunities Amid The Economic Recovery Progress
        We are of the view that the outlook for the oil palm sector is stable in the short term on the back of balanced fundamental supply and demand. The expected increasing production volume in the short term resulting from higher rainfall and on-farm intensification will benefit the producers during the increasing price momentum, raising higher profit margins. Demand steadily grew within its historical percentage range over the last seven years. We expect economic recovery and mobility of people and goods to drive future demand, particularly from the food and biodiesel industries. Palm oil remains the preferred choice among other vegetable oils, given its more affordable price and high supply. However, spiking palm oil prices have narrowed price gap with other vegetable oils, exerting pressure on the palm oil demand. Meanwhile, competition in the market was stable, with several large players maintaining their dominance, due to the need for sizable capital and a more integrated business. More detail ...
      • February-2021: Surviving Amid Shocks
        We view the outlook for the multi-finance industry to remain stable over the short and medium term, despite the persistent pressure in asset quality and profitability. We expect the industry growth outlook to remain weak but will improve in 2021 compared to 2020. Competition has also remained intense amid the weak market growth, resulting in the disadvantaged position of independent finance companies relative to their bank-related or principal-related peers. Indeed, its growth prospect in 2021 will also not be spared from the speed of the economic recovery, dependent on factors, such as the rise of household incomes, unemployment level, consumer expectations of future financial conditions and jobs, credit policies, and availability of funding. We view that asset quality will take time to improve given the uncertainty of economic recovery, while the multi-finance companies’ profitability will continue to come across pressure in 2021 in line with the high provisioning expenses and weak growth forecast. More detail ...
      • December-2020: Property Industry Prospects is Weak in The Rental Segments but Relatively Tough in Th
        We are of the view that the prospects of the property industry are mixed in the short term. We expect sluggish demand for the rental property market, while for the selling segment, especially landed houses, demand to remain quite strong. The property market has been operating on its fundamentals following the end of the commodity boom in 2014. Starting from early 2020, however, the Covid-19 pandemic brought about a contraction of economic activity, hence economic growth, resulting in the subdued demand for rental properties and to a lesser extent properties for sale. More detail ...
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