BFIN The Election Ended, So Why Did New Financing Keep Falling?

The Election Excuse Ran Out, and a New One Took Its Place

Last quarter's post took the company at its word that new financing's 19.5% year-over-year drop was a temporary, election-driven "wait and see" pause - Indonesia's presidential election landed on 17 April 2019, two weeks after that quarter closed. This quarter is the first full post-election period, and it's a genuinely useful test of that explanation: new financing originations for the six months ended 30 June 2019 fell 16.8% year-over-year, to Rp7,130,306M from Rp8,566,082M (per the company's own cash flow statement) - still a double-digit decline, well after the "wait and see" period should have lifted.

But the quarter-by-quarter shape tells a more interesting story than the half-year headline. Second-quarter new financing alone was Rp3,780,004M, up 12.8% from Q1's Rp3,350,302M - a real sequential recovery, confirmed independently in the company's own analyst deck, which reports "New booking in 2Q19 was Rp 3,780 bn, 12.8% (Rp 430 bn) higher QoQ." Measured against Q2 2018's Rp4,404,962M, though, Q2 2019 booking was still down 14.2% year-over-year - an improvement on Q1's 19.5% YoY drop, but not a return to growth. So the election explanation was directionally right (the sharpest YoY declines came in the pre-election quarter, and the second quarter's sequential trend improved), but the company's own investor presentation now offers a different, more structural reason for why the year-over-year gap hasn't closed: "16.8% lower YoY due to product shifting from Dealer to Non Dealer Financing." Non-Dealer bookings reached 81% of the total in H1 2019, up sharply from H1 2018, as BFI Finance deliberately pulled back from dealer-sourced financing (much of it used-car) in favor of financing it originates and prices itself. That's a strategic reallocation the company is choosing, not a demand problem it's suffering - but it means the "moderate growth" framing from last quarter has evolved into "different-mix growth," and a reader shouldn't expect origination volume to snap back to the old trend even once any residual election effect is fully gone.

Total income kept growing through all of this - up 3.4% to Rp2,507,397M - carried by the existing financing book rather than fresh originations, the same pattern as last quarter. But profit before tax fell 1.6% to Rp867,350M, and net income fell 1.8% to Rp690,167M from Rp702,801M - the second consecutive year-over-year profit decline this backlog has recorded, following Q1's first-ever decline. The rate of decline eased (1.8% versus Q1's 3.9%), consistent with a business that's stabilizing rather than deteriorating further, but a second straight quarter of shrinking profit is a real pattern now, not a one-off.

The Prescription

Report the product-mix shift as its own metric, not just a line in the analyst deck. The single most useful fact in this quarter's materials - that Non-Dealer financing reached 81% of H1 2019 bookings, up from a much lower share a year earlier - lives only in the investor presentation's booking-composition chart, not anywhere in the filed financial statements' own notes. A reader working only from the statutory statements has no way to distinguish "the company is losing origination momentum" from "the company is deliberately walking away from a lower-quality channel," which are very different stories for a lender's future asset quality. BFI Finance should put a Dealer/Non-Dealer split in the financial-statement notes themselves (it already tracks and discloses NPL by this same split, so the data clearly exists), not leave the explanation stranded in a deck a bondholder or the OJK may never see.

What it should stop doing: redrawing its own segment note for the second consecutive quarter. Last quarter flagged the shift from the old finance-lease/consumer-financing split to a four-way Cars/Motorcycles/Non-automotive/Others breakdown. This quarter's segment note (Note 29) drops "Non-automotive" entirely, reporting only Cars, Motorcycles, and Others - folding heavy equipment and machinery into a catch-all bucket alongside property and sharia financing, with no note explaining why (see Beyond the Usual). Two segment redefinitions in two consecutive quarters is no longer a one-time comparability cost; it's a pattern that makes this backlog's segment-level trend-tracking function unreliable exactly when it should be building up multi-quarter history.

Key Financial Metrics

Six months ended 30 June 2019 vs. six months ended 30 June 2018

FX: Rp14,141 = USD 1 (30 June 2019, the mid rate published by Bank Indonesia and used in the company's own financial statements). Both periods below are converted at this same rate for comparability, following the same convention used last quarter - it is not a historical rate for the 2018 column.

Metric	H1 2019 (IDR)	H1 2019 (USD)	H1 2018 (IDR)	YoY
Total Income ("Net Revenue" equivalent)	Rp2,507,397M	~$177.3M	Rp2,425,656M	✅ +3.4%
Profit Before Tax ("Operating Income" equivalent)	Rp867,350M	~$61.3M	Rp881,071M	⚠️ -1.6%
Net Income	Rp690,167M	~$48.8M	Rp702,801M	⚠️ -1.8% - second straight quarter of YoY decline, though a slower rate than Q1's -3.9%
Total Cash and Cash Equivalents	Rp756,243M	~$53.5M	Rp681,560M (period-end, per the cash flow statement)	✅ +10.9% vs. H1 2018's period-end balance; essentially flat (+0.1%) vs. December 2018's Rp755,247M

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 transcript was located for this quarter; the analysis below draws on the company's unaudited interim consolidated financial statements (reviewed, not audited, as is standard for a half-year filing) and its own analyst-briefing presentation, dated July 2019.

Operating cash flow's swing this quarter is even larger in absolute terms than Q1's Rp1,343,749M swing - operating cash flow benefited from lower cash spent on new financing (Rp7,130,306M disbursed versus Rp8,566,082M a year earlier) outpacing the decline in cash collected from existing financing transactions. The same dynamic that made Q1 look healthier despite falling volume - a smaller, more moderate-growth business needing less cash to fund itself - continued and compounded through Q2.

Balance sheet metric	Jun 2019 (IDR)	Jun 2019 (USD)	Dec 2018 (IDR)	Change (vs. Dec 2018)
Total Assets	Rp18,369,144M	~$1,298.9M	Rp19,117,305M	⚠️ -3.9%
Financing Receivables (gross)	Rp22,053,855M	~$1,559.9M	Rp22,687,472M	⚠️ -2.8%
Total Liabilities	Rp12,261,058M	~$867.1M	Rp12,913,509M	✅ -5.1%
Fund Borrowings (net)	Rp6,839,336M	~$483.7M	Rp6,899,860M	⚠️ -0.9%, but with a much larger currency-mix shift than last quarter's (see Beyond the Usual)
Securities Issued (bonds + MTNs, net)	Rp4,593,110M	~$324.8M	Rp5,196,220M	✅ -11.6% - bond repayments continued to outpace new issuance
Total Equity	Rp6,108,086M	~$432.0M	Rp6,203,796M	⚠️ -1.5% - the first sequential equity decline in this backlog, driven by a large annual dividend payment (see below) rather than a weaker business

Total equity's small dip is a one-time capital-return event, not a profitability problem: the company paid a Rp733,255M cash dividend (Rp49 per share) on 28 June 2019, its full-year 2018 payout, more than triple the Rp239,430M (Rp39/share) paid from FY2017 earnings a year earlier - a straightforward function of FY2018 net income growing 23.6%, not a change in payout policy. Retained profit for the half (Rp690,167M) didn't fully offset the dividend outflow, so book equity fell slightly even as the underlying business kept generating cash.

Key Operational Metrics

• New financing originations: Rp7,130,306M for H1 2019, down 16.8% from Rp8,566,082M a year earlier (see above); Q2 alone (Rp3,780,004M) grew 12.8% quarter-over-quarter from Q1's Rp3,350,302M, per the company's own quarterly booking trend, though it remained 14.2% below Q2 2018's Rp4,404,962M.
• Booking composition: Non-Dealer financing reached 81% of H1 2019 bookings (company's own disclosure), up sharply from H1 2018, as part of what the company calls a deliberate "product refocus" strategy away from Dealer-sourced (largely used-car) financing.
• Non-Performing Loan ratio (NPL)^» (company's own disclosed figure, defined as receivables past due more than 90 days, calculated on total managed receivables including off-balance-sheet joint financing - a broader base than the balance-sheet-only figure below): 1.43%, up from 1.24% a year earlier. The company attributes part of the rise to "past due accounts in Palu as the result of earthquake in late Sep'18" - a genuine one-off event that predates this quarter - plus "declining Used Car Dealer collection," consistent with the Dealer-segment pullback above. NPL coverage held at 1.6x, unchanged from Q1's 1.6x.
• Receivables overdue more than 90 days (calculated from the filed statement's own overdue-day disclosure, on-balance-sheet gross financing receivables only - the same narrower convention used every quarter in this backlog, distinct from the company's own broader managed-receivables NPL figure above): 1.16% of gross financing receivables (Rp256,351M of Rp22,053,855M), up from December 2018's 0.98% (Rp222,064M of Rp22,687,472M).
• Cost of Credit: 2.36% of average receivables (company's own disclosure), down from 2.57% a year earlier - asset-quality costs actually improved even as the NPL ratio worsened, which the company attributes to conservative growth and sound risk management rather than looser provisioning.
• Debt-to-Equity Ratio (DER)^»: ~1.87x on a gross basis (fund borrowings plus securities issued, both net of unamortized costs, against equity - the same convention used every quarter in this backlog), up modestly from March 2019's ~1.71x but still below December 2018's ~1.95x - leverage ticked up this quarter without reversing the year's broader deleveraging trend. The company's own "gearing ratio" (net debt over total capital, a slightly different formula) shows 1.9x at both June 2019 and December 2018 - "healthy," per its own risk-management note - and its investor deck cites 1.9x versus 2.3x a year earlier.
• Outlets: 229 branches, 170 kiosks, and 45 sharia branches (444 total) as of June 2019, up from December 2018's 228 branches, 173 kiosks, and 22 sharia branches (423 total) - the sharia network roughly doubled in a single half-year.
• Earnings per share: Rp46 basic and diluted (rounded), down from H1 2018's Rp47, consistent with the ~1.8% net income decline since the share count didn't change (14,964,383,620 shares, unchanged).
• Not available this quarter: no earnings-call transcript was located, so no dedicated management-commentary section is included; the analyst presentation stands in as the closest available source for management's own framing.

A Segment Table That Changed Shape Again

The company reports three segments this quarter - Cars, Motorcycles, and Others - down from the four-way Cars/Motorcycles/Non-automotive/Others split used just one quarter ago. "Non-automotive" (heavy equipment and machinery) no longer appears as its own line; it's presumably folded into "Others" alongside property and sharia financing, though the filing doesn't say so explicitly (see Beyond the Usual).

Cars - still the largest segment: Rp1,703,125M of income (67.9% of the total), roughly flat as a share versus H1 2018's 69.8%, with profit before tax of Rp580,214M, down 7.0% year-over-year from Rp623,617M. This segment again accounts for the entire year-over-year profit decline at the consolidated level.

Motorcycles - Rp504,141M of income (20.1% of the total), up from 18.7% a year earlier, with profit before tax of Rp178,019M, up 21.2% from Rp146,909M - the standout performer for the second consecutive quarter, repeating Q1's pattern of growing both share and profitability while Cars contracts.

Others (now combining what was previously split out as Non-automotive, plus property and sharia) - Rp300,131M of income (12.0% of the total), roughly flat as a share versus H1 2018's 11.5%, with profit before tax of Rp109,117M, down 1.3% from Rp110,545M. Because this bucket now absorbs the segment's own income tax expense in the reported format, its "profit for the period" line (a loss of Rp68,066M) isn't comparable to the other two segments' pretax figures and shouldn't be read as the bucket actually losing money operationally.

Comparing the three: the pattern from last quarter repeats almost exactly - Cars carries the business by size but is the sole drag on consolidated profit, while Motorcycles is small but growing fast enough to meaningfully offset Cars' decline. With the segment lines redrawn for the second straight quarter, though, this comparison is now only valid against Q1 2019's restated figures, not against anything from FY2018 or earlier - a comparability cost that keeps compounding (see Beyond the Usual).

Beyond the Usual

The segment note was redrawn for the second consecutive quarter, with the same lack of explanation as last time

Last quarter's post flagged the shift from finance-lease/consumer-financing to a four-way Cars/Motorcycles/Non-automotive/Others segment split as a mid-backlog redefinition with no explanatory note. This quarter's Note 29 changes again, dropping "Non-automotive" and reporting only Cars, Motorcycles, and Others - with, again, no note explaining what changed or why. Two consecutive segment redefinitions turn what was already a one-time comparability cost into a genuine pattern: a reader trying to track this company's segment-level performance now has three incompatible datasets (pre-2019 two-way, Q1 2019 four-way, H1 2019 three-way) covering barely six months of filings.

US-dollar borrowings nearly doubled again, and the newly enlarged BCA facility got its first real drawdown

Q1 flagged US-dollar fund borrowings rising 33.4% to Rp2,188,828M-equivalent, and noted the underlying BCA-led syndicated facility had already been enlarged from USD 55 million to USD 200 million as a subsequent event. This quarter shows what that enlarged facility actually did: US-dollar-denominated fund borrowings rose a further 44.7% quarter-over-quarter (93.0% since December 2018) to Rp3,167,584M-equivalent, as the company drew roughly USD 150,000,000 of the USD 200,000,000 BCA facility (agreement dated 15 April 2019, maturing 15 August 2022). Rupiah-denominated borrowings fell a further 16.4% over the same quarter, to Rp3,703,223M. Total gross borrowings barely moved (-0.8% versus December 2018, to Rp6,870,807M) - this is almost entirely a currency-mix shift, not new net borrowing, continuing last quarter's reversal of FY2018's de-dollarization at a faster pace than before. The Rupiah stayed relatively calm through this quarter, which limits the near-term risk, but the currency-mix trajectory is now unambiguous across three straight quarters.

Fitch cut BFI Finance's national rating alongside seven other financial institutions, not for company-specific reasons

Fitch Ratings' recalibration of its Indonesia National Scale resulted in BFI Finance's National Long-Term Rating being revised down to A+(idn) from AA-(idn), per the company's own investor presentation. The same recalibration affected seven other financial institutions, including Bank Mandiri, Bank Rakyat Indonesia, and FIF (Federal International Finance) - a scale-wide methodology change rather than a company-specific credit deterioration. Still, a rating downgrade is a rating downgrade regardless of cause, and it affects the pricing BFI Finance gets on future bond issuance and bank facilities even if the underlying credit story hasn't changed.

The Aryaputra Teguharta administrative court ruling that triggered April's cassation appeal was in BFI Finance's favor

The Kasasi (cassation) appeal flagged as a subsequent event last quarter - filed by PT Aryaputra Teguharta (APT) on 10 April 2019 against a Jakarta administrative court ruling - is now clarified by the company's own investor presentation: the underlying Pengadilan Tinggi Tata Usaha Negara (PTTUN, the administrative high court) ruling was in BFI Finance's favor, in the case where both BFI and the Ministry of Law and Human Rights were named defendants. APT's cassation appeal is therefore an attempt to overturn a decision that already went against it, not a new offensive move. The case remains under examination by the Supreme Court, and the three separate civil suits in the Central Jakarta District Court - naming BFI's controlling shareholders, current and former directors, notaries, OJK, and the Indonesia Stock Exchange - remain under examination there too, with no new developments in either venue this quarter.

The United Tractors related-party loan's maturity was quietly extended by five months during a normal amortization

The working-capital loan from PT United Tractors Tbk - which nearly doubled in size in FY2018 and began amortizing down last quarter - continued shrinking as expected, to Rp874,862M from Rp1,032,020M at December 2018. But the facility's latest agreement, dated 8 March 2019, now shows a maturity of 3 May 2022, versus the November 2021 maturity disclosed as unchanged just last quarter. The facility ceiling (Rp1,250,000M) is unchanged. A five-month maturity extension on a related-party facility is routine on its own, but it's worth noting precisely because the loan is with a related party (United Tractors shares a controlling-shareholder lineage with BFI Finance through the Astra/Trinugraha ecosystem) - any change to its terms deserves the same scrutiny as its size did in FY2018.

Off-balance-sheet joint financing continued its multi-quarter growth streak, rising 51.7% from December 2018's Rp684,296M to Rp1,037,842M at June 2019 - the fastest single-quarter growth rate this metric has shown in this backlog. PT Bank Rakyat Indonesia now accounts for Rp1,039,258M of the Rp1,039,891M gross balance, 99.9% of the total, an even tighter single-counterparty concentration than Q1's already-high 99.3%.

The company's sharia branch network roughly doubled this quarter, from 22 to 45 branches, while total branches and kiosks stayed essentially flat (229 branches, down from 171 to 170 kiosks). Sharia income remains tiny in absolute terms (Rp925M of the Rp2,507,397M total for the half) but the branch build-out suggests the company is investing ahead of that segment's current contribution, not scaling it down.

Target Valuation Range

Market cap ~Rp8,978,630M (~$635.0M) at ~6.2x trailing P/E and ~1.47x P/B - fairly valued, trading at slightly cheaper multiples than three months ago on both earnings and book value; a modest re-rating that tracks the share price drifting down roughly in line with (not faster than) the quarter's slightly softer numbers.

Shares closed at Rp600 on 28 June 2019 (the last trading day of the quarter, since 30 June fell on a Sunday), down 9.1% from March 2019's Rp660 close - both figures on the same post-May 2017 stock split basis, with no further split since. The quarter's intra-period range was modest by this backlog's standards: shares held near Rp640 through most of May and early June, dipped to around Rp575 in mid-to-late June, then partially recovered to close at Rp600 - a roughly 12% peak-to-trough range within the quarter, well inside the 36%-plus swings FY2018 saw. Using 14,964,383,620 shares outstanding net of treasury stock (unchanged this quarter) and the Rp600 closing price:

Market cap buildup	Q2 2019
Share price (period-end)	Rp600
Shares outstanding	14,964,383,620
Market capitalization	Rp8,978,630M (~$635.0M)
Book value (total equity)	Rp6,108,086M

Peer-multiple sanity check	Q1 2019	Q2 2019	Change
P/E	~6.8x	~6.2x (trailing-twelve-month)	down
P/B	~1.51x	~1.47x	down

Both multiples are down modestly from March 2019's ~6.8x P/E and ~1.51x P/B - roughly proportionate to the share price's 9.1% quarterly decline, not a sign the market is pricing in anything beyond what the numbers already show. A full multi-year DCF still isn't included here: this backlog now has close to two and a half years of quarterly history, but with new financing volume still shifting mix (Dealer-to-Non-Dealer) as much as growing or shrinking outright, a durable terminal-growth assumption remains premature. The peer-multiple read stays the honest lens - a lender under 6.5x trailing earnings and 1.5x book, with leverage still contained and cash flow solidly positive, isn't priced for trouble, even against two consecutive quarters of shrinking profit.

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