On Tuesday, JPMorgan revised its stance on Bank Rakyat Indonesia Persero Tbk PT (BBRI:IJ) (OTC: BKRKF), upgrading the stock from Neutral to Overweight, while adjusting the price target to IDR5,200.00 from the previous IDR5,500.00. The firm's analyst cited an anticipation of asset quality (AQ) issues being resolved by mid-next year as restructured loans mature.
The industry is expected to face higher costs of funds (CoF) and slower growth over the next couple of years. However, despite these challenges, the analyst believes that the stock's multiples will likely stay within a certain range. A significant factor contributing to the total shareholder return (TSR) for Bank Rakyat Indonesia is projected to be its dividend yield, which is estimated to be around 8% for the years 2024 and 2025.
The analyst recommends that investors maintain a disciplined approach to taking profits from the stock over the upcoming quarters. This suggestion comes with the expectation that book value growth for Bank Rakyat Indonesia will be relatively modest, with a compound annual growth rate (CAGR) of 4% from 2023 to 2026.
In the immediate future, the analyst does not dismiss the possibility of the stock experiencing further weakness if macroeconomic conditions remain stringent. Nevertheless, JPMorgan advises investors to consider increasing their holdings in the event that the stock's price declines, viewing such a scenario as a potential buying opportunity.
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