New Financing Fell 19.5%, and Profit Followed
Every prior post in this backlog has been a story about growth decelerating - originations growing slower than income, income growing slower than the year before. This quarter is different in kind, not just degree: new financing transactions actually fell, from Rp4,161,120M in the first three months of 2018 to Rp3,350,302M this quarter, a 19.5% year-over-year drop (per the company's own cash flow statement). Total income still grew 6.1% (Rp1,248,004M, up from Rp1,176,182M), carried by interest on the existing book rather than fresh lending. But profit before tax fell 3.9% (Rp423,804M, down from Rp440,868M) and net income fell 3.9% too, to Rp336,817M from Rp350,608M - the first year-over-year profit decline this backlog has recorded across eight prior quarters.
The company itself frames this as deliberate. "Sepanjang tahun 2019, BFI Finance menargetkan pertumbuhan bisnis yang cukup moderat" - throughout 2019, BFI Finance is targeting fairly moderate business growth - said Corporate Secretary and Finance Director Sudjono in the company's own press release, citing investment in "infrastruktur dan teknologi" (infrastructure and technology) ahead of competition that's now coming from technology-based financing companies, not just traditional multifinance rivals. The press release also points to a specific macro backdrop: "kondisi wait and see terkait kontestasi politik dan pemilihan umum" - a wait-and-see mood tied to the political contest and general election - with businesses and consumers holding back on investment and capital spending until the five-year political picture clears. Indonesia's presidential election was held on 17 April 2019, roughly two weeks after this quarter closed - so Q1 2019 sat squarely inside the pre-election caution the company describes, a genuine seasonal/cyclical factor rather than a structural change in the business.
What makes this quarter genuinely interesting, though, is that a shrinking origination number didn't translate into a cash-strapped one. FY2018's big story was the operating-and-investing cash outflow shrinking by three-quarters after two years of heavy funding-and-growth spending. This quarter goes further: operating cash flow swung to a Rp765,754M inflow, from a Rp577,995M outflow in the same quarter last year - a company that originated a fifth less new financing needs a fifth less new cash to fund it, and that shows up directly in the cash flow statement (see Key Financial Metrics). Slower growth and a healthier balance sheet arriving in the same quarter isn't necessarily good news for a lender's long-term trajectory, but it is real, and it's consistent with what management says it's deliberately doing.
The Prescription
Say the moderate-growth strategy out loud in the actual financial statements, not just the press release. Sudjono's quote about targeting "cukup moderat" growth for 2019 is the single most useful sentence in this quarter's disclosures - it turns what would otherwise read as an alarming double-digit drop in new financing into a stated, plausible strategy. But that context lives only in a media release, not in the filed financial statements' own notes, which say nothing about why originations fell 19.5% or why management considers that acceptable. A reader working only from the audited numbers - which is what a bondholder or the OJK would actually be doing - has no way to distinguish "deliberate moderation ahead of an election" from "the business is losing origination momentum it can't get back." The company should put that explanation where the numbers live, not just where the news does.
What it should stop doing: redefining its own reportable segments without flagging the change as clearly as it flags a routine reclassification. This quarter's segment note switched from the finance-lease-versus-consumer-financing split used in every prior post in this backlog to a Cars/Motorcycles/Non-automotive/Others breakdown - a genuinely different lens on the same business, buried inside a segment note with no separate disclosure explaining the change (see Beyond the Usual). A segment redefinition this material deserves its own sentence, not silent adoption.
Key Financial Metrics
Three months ended 31 March 2019 vs. three months ended 31 March 2018
FX: Rp14,244 = USD 1 (31 March 2019, the mid rate published by Bank Indonesia and used in the company's own financial statements). Both periods are converted at this same rate for comparability; it is not a historical rate for the 2018 column. The 2018 comparative figures shown below are this year's own restated numbers (see the note under the table) following a reclassification the company made this quarter.
| Metric | Q1 2019 (IDR) | Q1 2019 (USD) | Q1 2018 (IDR) | YoY |
|---|---|---|---|---|
| Total Income ("Net Revenue" equivalent) | Rp1,248,004M | ~$87.6M | Rp1,176,182M | ✅ +6.1% |
| Profit Before Tax ("Operating Income" equivalent) | Rp423,804M | ~$29.8M | Rp440,868M | ⚠️ -3.9% - this backlog's first year-over-year decline |
| Net Income | Rp336,817M | ~$23.6M | Rp350,608M | ⚠️ -3.9% - also this backlog's first decline |
| Total Cash and Cash Equivalents | Rp640,213M | ~$45.0M | Rp573,145M (period-end, per the cash flow statement) | ✅ +11.7% vs. Q1 2018's period-end balance; down 15.2% from December 2018's Rp755,247M, a normal sequential drawdown |
Profit before tax remains the closest real operating-income equivalent for this lender - no separate operating-income line exists because interest expense is a core product cost, not a financing overhead, for a multifinance company. No investor presentation or earnings-call transcript was located for this quarter - the sixth of nine posts in this backlog without one - so this post relies on the company's unaudited interim consolidated financial statements (reviewed, not audited, as is standard for a Q1 filing) and its media release.
The prior-year (Q1 2018) figures above are this year's own restated comparatives following a routine reclassification: the company collapsed its separate "finance lease receivables" and "consumer financing receivables" line items into a single "financing receivables" line, and did the same on the income and expense sides, to match this quarter's new presentation. The absolute totals are unchanged - only the account structure moved - so this reclassification doesn't distort the year-over-year comparison in the table above, unlike some reclassifications earlier in this backlog. The same reclassification also touched the 31 March 2017 and 31 December 2017 comparatives inside this quarter's statements, for consistency across all periods shown.
| Balance sheet metric | Mar 2019 (IDR) | Mar 2019 (USD) | Dec 2018 (IDR) | Change (QoQ) |
|---|---|---|---|---|
| Total Assets | Rp18,462,170M | ~$1,296.1M | Rp19,117,305M | ⚠️ -3.4% - a normal first-quarter dip after a stronger fourth quarter, not a reversal of the year's growth (assets were still up 3.5% year-over-year per the company's own release) |
| Financing Receivables (gross) | Rp22,103,735M | ~$1,551.7M | Rp22,687,472M | ⚠️ -2.6% |
| Total Liabilities | Rp11,934,640M | ~$838.1M | Rp12,913,509M | ✅ -7.6% |
| Fund Borrowings (net) | Rp6,591,686M | ~$462.8M | Rp6,899,860M | ✅ -4.5%, but with a meaningful currency-mix shift (see Beyond the Usual) |
| Securities Issued (bonds + MTNs, net) | Rp4,591,312M | ~$322.4M | Rp5,196,220M | ✅ -11.6% - large bond repayments (Rp1,604,000M) outpaced this quarter's new issuance (Rp1,000,000M) |
| Total Equity | Rp6,527,530M | ~$458.3M | Rp6,203,796M | ✅ +5.2%, entirely from retained profit |
A first-quarter balance sheet naturally looks smaller than the December close for a vehicle and equipment lender: new financing typically picks up through the year, and this quarter's own 19.5% drop in new originations (see above) compounds the usual seasonal dip. The more meaningful comparison is the year-over-year one the company itself cites: managed financing receivables (including joint financing, a broader figure than the balance sheet's net financing receivables line) grew 6.1% to Rp17.905 trillion, and total assets grew 3.5%, both year-over-year.
Key Operational Metrics
- New financing originations: Rp3,350,302M this quarter, down 19.5% from Rp4,161,120M a year earlier (see above) - by far the sharpest single-quarter origination contraction anywhere in this backlog, against a company-cited industry backdrop of pre-election caution.
- Financing mix (company's own disclosure, media release): four-wheeled vehicles 67.5% of new financing, two-wheeled vehicles 17.7%, heavy equipment and machinery 13.5%, with property-backed and sharia financing making up the remainder.
- Non-Performing Financing (NPF): 1.33%, per the company's own disclosed figure, up from December 2018's 1.21% - a continued deterioration, though still far below the industry average of 2.71% the company cites. NPF coverage (provisioning against NPF) slipped to 1.6x from December 2018's 1.7x - the company is provisioning slightly less conservatively against a book that's still getting a little riskier, a reversal of last year's pattern of provisioning ahead of the trend.
- Receivables overdue more than 90 days (calculated from the filed statement's own overdue-day disclosure, the same convention used every quarter in this backlog, now on a combined basis since the finance-lease/consumer-financing split no longer exists - see Beyond the Usual): 1.08% of gross financing receivables (Rp237,868M of Rp22,103,735M), up from December 2018's 0.98% (Rp222,064M of Rp22,687,472M) on the same combined basis - consistent with the NPF trend above.
- Debt-to-Equity Ratio (DER)»: ~1.71x on a gross basis (fund borrowings plus securities issued, both net of unamortized costs, against equity), down further from December 2018's ~1.95x - the deleveraging trend flagged last quarter continued into this one, driven by a combination of bond repayments outpacing new issuance and equity growing from retained earnings.
- Outlets: 229 branches, 171 kiosks, and 22 dedicated sharia branches (422 total) as of March 2019, per the company's own count in this quarter's filing, essentially flat from December 2018's 228 branches, 173 kiosks, and 22 sharia branches (423 total).
- Earnings per share: Rp23 basic and diluted (rounded), roughly flat with Q1 2018's Rp23 despite the 3.9% net income decline - the rounding masks a real ~4% per-share decline (Rp22.51 versus Rp23.43 on an unrounded basis), since the share count didn't change.
- Not available this quarter: no investor presentation or earnings-call transcript has been located; return on assets/equity and headcount, both regularly disclosed in this company's annual report, aren't broken out in the interim filing.
A Different Lens on the Same Business
The company reported its two core segments as finance lease and consumer financing in every prior post in this backlog. This quarter's segment note abandons that split entirely in favor of a vehicle-type breakdown - Cars, Motorcycles, Non-automotive, and Others - applied retroactively to the Q1 2018 comparative too. It's a genuinely different way of slicing the same consolidated numbers, not a change to any underlying total, but it means this quarter can't be compared segment-by-segment against any earlier post in this backlog (see Beyond the Usual for why this matters).
Cars - the largest segment by a wide margin: Rp848,290M of income (68.0% of the total), down slightly from 70.6% a year earlier, with profit before tax of Rp295,118M, down 10.5% year-over-year from Rp329,822M. This segment alone accounts for the entire year-over-year profit decline at the consolidated level - every other segment either grew or held roughly flat.
Motorcycles - Rp246,252M of income (19.7% of the total), up from 18.1% a year earlier, with profit before tax of Rp92,266M, up 21.4% from Rp76,035M - the standout performer this quarter, growing both its revenue share and its profitability while the largest segment contracted.
Non-automotive (heavy equipment and machinery) - Rp131,815M of income (10.6% of the total), roughly flat as a share, with profit before tax of Rp26,102M, down 14.9% from Rp30,659M.
Comparing the three: Cars carries the business by size but was the sole drag on profit this quarter; Motorcycles, the smallest of the three main segments, grew fast enough to partially offset Cars' decline on its own. Without a comparable prior-quarter breakdown under the old segment lines, it isn't possible to say whether this is a genuine shift in where BFI Finance's growth and asset quality are concentrated, or simply how a familiar pattern looks different once resliced - which is exactly the comparability cost of a mid-backlog segment redefinition (see Beyond the Usual).
Beyond the Usual
The company redrew its own segment lines mid-backlog, with no explanation for why
Every prior quarter in this backlog reported BFI Finance's business as two core segments - finance lease and consumer financing - a split the company used consistently from its earliest filings through FY2018. This quarter's segment note (Note 29) replaces that entirely with a vehicle-type breakdown: Cars, Motorcycles, Non-automotive, and Others, applied retroactively to the Q1 2018 comparative as well. The consolidated totals are unaffected - this isn't a restatement of any number, just a different lens on the same business - but the filing gives no explanation for why the segmentation changed, unlike the same quarter's own separate reclassification note (Note 37), which spells out exactly which line items moved and why. A reader trying to track segment-level trends across this backlog now has to treat everything before this quarter and everything from this quarter forward as two different datasets that don't map onto each other cleanly.
US-dollar borrowings jumped a third in the same year the company was praised for cutting them in half
FY2018's de-dollarization - US-dollar bank borrowings roughly halved during the Rupiah's most volatile year since 1998 - partially reversed this quarter. US-dollar-denominated fund borrowings rose 33.4%, from Rp1,641,180M-equivalent at December 2018 to Rp2,188,828M-equivalent at March 2019, driven by a new USD 55,000,000 syndicated facility with PT Bank Central Asia Tbk as agent (drawn Rp783,420M-equivalent, agreement dated 28 December 2018) layered on top of the existing Standard Chartered-led syndication. Rupiah-denominated borrowings fell 16.2% over the same period, to Rp4,427,633M. The Rupiah itself was considerably calmer in this quarter than during 2018's crisis year, which makes the currency-mix shift less alarming than it would have been a year earlier - and the overall leverage ratio kept falling regardless (see Key Operational Metrics) - but it's a genuine reversal of a trend this backlog specifically flagged as a deliberate de-risking move only one post ago, worth watching if Rupiah volatility returns.
A subsequent event nearly quadrupled the size of that same US-dollar facility
Within two weeks of this quarter closing, on 15 April 2019, the company signed a Syndication and Amendment Agreement increasing the Bank Central Asia-led USD facility's total limit from USD 55,000,000 to USD 200,000,000 - the same facility disclosed as newly drawn inside this quarter's balance sheet (see above). The company's own media release frames this as the product of a roadshow led by four banks (ANZ, MUFG, Standard Chartered, and SMBC) that generated total commitments above USD 200 million, with the proceeds earmarked as working capital to support financing activity. Combined with a Rp1 trillion domestic bond tranche issued the same quarter (the second tranche under the Rp8 trillion shelf program opened in 2018), this is a company continuing to line up funding capacity even in a quarter where it deliberately originated less new financing - capacity for growth it isn't currently using, rather than growth it's currently short of cash for.
Off-balance-sheet joint financing kept growing, now concentrated almost entirely in a single bank
Net joint financing and channeling commitments with partner banks rose a further 13.1% this quarter, to Rp773,938M from December 2018's Rp684,296M - continuing the two-year growth streak flagged last quarter. PT Bank Rakyat Indonesia now accounts for Rp770,647M of the Rp776,187M gross balance - 99.3% of the total - after a newly enlarged Rp1,000,000M facility agreed in November 2018 alongside an existing Rp600,000M facility with the same bank. Bank Mandiri and Bank Tabungan Pensiunan Nasional's shares, already small, shrank further to a combined Rp5,540M. This financing sits off the balance sheet on a without-recourse basis - BFI Finance has no obligation to cover a customer's missed installment to the partner bank - but the concentration in a single counterparty is now close to total.
The related-party United Tractors loan shrank for the first time, but only because it's amortizing, not because the facility got smaller
The working-capital loan from PT United Tractors Tbk, which nearly doubled to Rp1,032,020M last quarter, declined to Rp927,298M as of March 2019 - a normal principal repayment on an amortizing facility whose Rp1,250,000M ceiling and November 2021 maturity are both unchanged this quarter. It remains among the largest individual credit lines on BFI Finance's balance sheet.
The decade-old APT/OM share dispute generated no new escalation this quarter
The litigation flagged as escalating sharply in the FY2018 post - three civil suits filed in September 2018 naming BFI Finance's own controlling shareholders, current and former directors, notaries, OJK, and the Indonesia Stock Exchange as parties, plus the administrative case against the Ministry of Law and Human Rights - remained under examination by the Central Jakarta District Court as of this quarter's filing date, with no new developments disclosed. As a subsequent event, PT Aryaputra Teguharta filed a Kasasi (cassation) appeal on 10 April 2019 against the Jakarta administrative court's earlier ruling - a procedural continuation of the existing dispute, not a new claim or a new defendant. Management repeats the same assessment as last quarter: the cases won't materially affect operations. The exposure - contesting ownership of 32.32% of the company's shares - is unchanged from what last quarter's post already flagged in detail.
Target Valuation Range
Market cap ~Rp9,876,493M (~$693.4M) at ~6.8x trailing P/E and ~1.51x P/B - fairly valued, trading at roughly the same multiples as three months ago; the stock is essentially flat quarter-over-quarter even as trailing earnings dipped slightly, a genuinely uneventful valuation quarter after the swings the last two posts described.
Shares closed at Rp660 on 29 March 2019 (the last trading day of the quarter), down slightly from December 2018's Rp665 close - both figures on the same post-May 2017 stock split basis, with no further split since. The quarter itself wasn't flat in between: shares rallied to around Rp695 in January 2019 before dipping back to around Rp645 in February, then recovering to close the quarter near where they started - a roughly 7% peak-to-trough range, modest enough not to warrant its own section, especially against the 36% swing described for full-year 2018. Using 14,964,383,620 shares outstanding net of treasury stock (unchanged this quarter) and the Rp660 closing price:
| Market cap buildup | Q1 2019 |
|---|---|
| Share price (period-end) | Rp660 |
| Shares outstanding | 14,964,383,620 |
| Market capitalization | Rp9,876,493M (~$693.4M) |
| Book value (total equity) | Rp6,527,530M |
| Peer-multiple sanity check | Q4 2018 | Q1 2019 | Change |
|---|---|---|---|
| P/E | ~6.8x | ~6.8x (trailing-twelve-month) | flat |
| P/B | ~1.60x | ~1.51x | down |
Both multiples sit close to December 2018's ~6.8x P/E and ~1.60x P/B - P/E essentially unchanged, P/B down modestly as equity kept growing faster than the share price. A full multi-year DCF still isn't included here: this backlog now has two-plus years of quarterly history, but a durable terminal-growth assumption for a lender whose new financing just fell 19.5% in a single quarter needs to see whether that's genuinely a one-quarter, election-driven pause or the start of something more structural before it's worth anchoring a long-run growth rate to it. The peer-multiple read remains the honest lens for now: a lender trading under 7x trailing earnings and 1.5x book, with leverage still falling and cash flow now solidly positive, isn't priced for trouble - the market doesn't appear to be reading this quarter's profit dip as the start of a real deterioration, and neither does the balance sheet.
PT BFI Finance Indonesia Tbk's unaudited (reviewed) consolidated interim financial statements as of 31 March 2019 and for the three-month period then ended (with comparative figures for 31 March 2018 and 31 December 2018, as reclassified), together with the company's media release dated 26 April 2019.