Miners, Banks Lead Big Gains In Strong Q3 Earnings Season
Faisal Maliki Baskoro
Jakarta. A wide array of companies on the Jakarta Composite Index posted strong third-quarter profits, with the banking and mining sectors showing significant growth, thanks to a healthy economy, low interest rates and strong consumer spending.
Edwin Sebayang, head research at Bhakti Securities, said on Sunday that 41 of the country’s biggest companies posted an average earnings increase of 42.9 percent, with banks and miners outperforming.
“The banking sector is growing on the back of strong credit growth of up to 24 percent, the growing quality of debtors and a recovery from non-performing loans,” he said.
State lenders Bank Mandiri and Bank Rakyat Indonesia recorded profit gains of 38.2 percent to Rp 6.4 trillion ($716 million) and 25.56 percent to Rp 6.7 trillion, respectively, from the year-earlier period. Private lender Bank Central Asia saw earnings rise 20 percent to Rp 6.1 trillion, while Bank Danamon booked Rp 2.2 trillion for a 61 percent jump.
The central bank’s key interest rate has remained at a record-low 6.5 percent since August 2009, paving the way for strong lending growth to boost the economy.
“The mining sector also showed significant growth on the back of high commodity prices and increasing production, except for coal which was heavily affected by rainfall,” Edwin said.
State-owned Aneka Tambang saw profit grow a whopping 224.7 percent to Rp 950.5 billion amid record gold prices, while state tin miner Timah posted a 178 percent increase to Rp 475.4 billion. In energy, Medco Energi Internasional, the nation’s largest listed oil company, posted an 18.4 percent increase to $17.98 million.
Edwin said coal miners had recorded an average 30 percent drop in production over the quarter due to unseasonable downpours driven by the La Nina weather phenomenon.
State coal miner Bukit Asam posted a 37.6 percent fall in earnings to Rp 1.4 trillion in the third quarter this year from Rp 2.23 trillion. Bumi Resources, the nation’s biggest coal producer, has yet to report results.
Cece Ridwanulloh, an analyst from Ekokapital Sekuritas, said Astra International was the third quarter’s top performer. The nation’s biggest automotive retailer recorded a 46 percent increase in earnings to Rp 10.4 trillion.
“From cement makers to food producers, almost all companies are showing positive growth. Astra is phenomenal because it exceeded analyst expectations [by such a wide margin]. From the property sector, Ciputra has shown strong growth, while in the telecommunications sector it was XL Axiata,” he said.
Cece said the largest player in the crowded sector, state-owned Telekomunikasi Indonesia (Telkom), unperformed expectations by posting a 3.9 percent decline to Rp 8.9 trillion in profit.
Meanwhile, XL saw its earnings soar 73.3 percent to Rp 2.1 trillion as its expansion managed to steal customers from rivals. Indosat dropped 63.4 percent to Rp 530.9 billion.
For his fourth-quarter outlook, Edwin saw little movement on the JCI despite the strong earnings season.
“I estimate that until the end of this year, the index will hover near the 3,625 level on the assumption of an average 45 percent increase in earnings, but the index could reach 3,690 if earnings increased to 47.5 percent,” Edwin said. He said he expected companies’ growth to slow down as they planned their budgets for next year.