Jakarta, CNBC Indonesia – The share price of PT Bank BRISyariah Tbk (BRIS) has successfully shot to touch the level Auto Reject Up (ARA) for 2 consecutive days on Tuesday and Wednesday (14/10/2020.
The increase in BRIS shares by 56% over the past 2 days was none other than due to the certainty that state-owned Islamic banks will merge into one entity in which BRIS will later become the shell.
This is stated in the MoU or Memorandum of Understanding (Conditional Merger Agreement/ CMA) between the three banks and their respective parent companies which were signed on Tuesday afternoon (13/10/2020).
In this merger, BRISyariah Bank is designated as a bank survivor or the entity that receives the incorporation (surviving entity) from the merger of three BUMN Islamic banks.
Two other banks, namely PT Bank Syariah Mandiri (BSM) owned by PT Bank Mandiri (Persero) Tbk (BMRI), and PT Bank BNI Syariah or BNIS owned by PT Bank Negara Indonesia (Persero) Tbk (BBNI).
“Paying attention to the Conditional Merger Agreement, after the merger becomes effective, BRIS will become the entity that receives the merger, and the shareholders of BNI Syariah and the shareholders of BSM, will be the shareholders of the entity that accepts the merger,” wrote BRIS management in an information disclosure, quoted on Tuesday (13 / 10/2020).
Judging from this statement, it is most likely that later PT Bank Rakyat Indonesia Tbk (BBRI), BMRI (majority shareholder of BSM), BBNI (majority shareholder of BNIS), and DPLK Bank Rakyat Indonesia-Syariah, and public shareholders will become shareholders. this new number one Islamic financial entity in Indonesia.
According to the news circulating among the market makers, this merger bank shariah bank will be named Bank Amanah.
Of course, with the entry of new shareholders, public shareholders will be diluted, but how big is the dilution of public shares?
Will this merger benefit the public?
Is it too late to get into BRIS shares or is the potential for these shares still large?
Of course this question will arise in the minds of investors.
Well, the ins and outs of this merger have yet to be announced how it will be implemented.
In a merger, generally the valuation of each company will be recalculated at a fair price through the appointed Public Appraisal Service Office (KJPP).
However, if you look at one of the possible scenarios without intending to precede, namely the valuation of the merger will be carried out using the book value or equity of each Islamic institution, the public shareholders will be the big winners in this merger.
To answer the first question, how much is the dilution of public shares, if it is true that the merger valuation will be carried out in accordance with the equity of each company and the calculation using the first semester 2020 financial statements of the three companies.
The following are the statistics of the three giant Sharia Red Plate financial entities.
It is observed that BSM is the largest owner of equity so that later the majority owner of BSM is BMRI will own 53.25% of ‘Bank Amanah’ shares.
In the second position is BNIS with the majority owner of BBNI who will embrace ‘Bank Amanah’ as much as 23.65%.
Furthermore, BBRI, which now holds 73% of BRIS shares, will be diluted to only 16.86%.
Furthermore, the BRI DPLK, which currently holds 8.53%, will be diluted to the remaining 1.97%.
Meanwhile, the long-awaited one is that the public shareholders who currently control 18.47% of BRIS shares will be diluted to 4.27%.
Although it is diluted, it turns out that the effect of this merger will benefit public shareholders so that the euphoria of the increase in BRIS shares over the past 2 days can be justified.
Public shareholders benefit because the profit performance of BSM and BNIS is much better than BRIS so that when it is merged with equity valuation, the earnings per share of BRIS shareholders will skyrocket.
At its current position, with a net profit of Rp. 117 billion, the annual earnings per share (EPS) of BRIS shareholders is Rp. 24 / unit.
After being merged, the total net profit of ‘Bank Amanah’ will be IDR 1.1 trillion or if annualized it will be IDR 2.2 trillion, which represents an EPS of IDR 52.5 / unit or an increase of 118.75%.
This clearly shows that although later after the merger, public shareholders will be diluted in their ownership in ‘Bank Amanah’, but actually the public will benefit massively in this merger because their earnings per share has more than doubled.
Later the valuation of the Price Earning Ratio (PER), aka the comparison of the share price with the company net profit (PER) of BRIS at the current price of IDR 1,405 / unit is 26.7 times, while the valuation of the market price is compared to the book value (price to book value). PBV) is at 2.6 times.
When compared with the only other large Islamic banking that is listed on the stock exchange, namely PT Bank BTPN Syariah Tbk (BTPS), it seems that the valuation of BRIS can still be said to be cheaper. This is because the PER of BTPS is at 35.6 times, while the PBV is at 5.35 times.
In addition, the business prospects for Islamic entities, which will become number one in Indonesia in the future, are very good.
Because the total assets of ‘Bank Amanah’ can make other Islamic banks look dwarfed.
With assets of Rp. 214 trillion, the total assets of ‘Bank Amanah’ are equivalent to 40.37% of the total assets of all Islamic banking and sharia business units (UUS) in Indonesia. This means that this entity has assets of nearly half of the total assets of all its competitors.
In fact, in a virtual press conference regarding the merger last Tuesday (13/10/20), Hery Gunardi, Head of the Merger Team who is also Deputy Director of Bank Mandiri, explained that the projected total assets of the three Islamic banks will reach Rp 390 trillion or 55.16%. of the total assets of all Islamic banking and UUS (sharia business units).
Thus, not only on a local scale, on a global scale also ‘Bank Amanah’ will be able to show off. This is because this bank will later enter the top 10 ranks of the largest Islamic banking assets in the world.
The merger of state-owned sharia banks will later be ranked as the 10th largest sharia banking in the world with total assets of US $ 26.44 billion (exchange rate of 1US $ = Rp 14,750) above Bank Rakyat from Malaysia which has assets of US $ 25.84 billion. Islamic banking data released by The Asian Banker.
Not only has jumbo assets, this fused bank also has a total financing of Rp. 165 trillion or 44.99% of the total financing of all Islamic banks and UUS in Indonesia, which is at Rp. 368 trillion.
When referring to the financing target called Hery, which is at Rp. 272 trillion, the total syariah banking financing resulting from this merger will reach 57.26% of the total financing of all Islamic banks and UUS.
In terms of the funds collected, it is no less fantastic, namely Rp. 157 trillion, which is 37.33% of the total funds raised by all Islamic banking and UUS.
It is this brilliant prospect of ‘Bank Amanah’ that has led many investors to categorize BRIS as growth stock aka stocks with very fast future business prospects.
CNBC INDONESIA RESEARCH TEAM
(trp/trp)
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