A Quarter of Numbers That Don't Match the Quarter of News
FY2019's headline was a one-off litigation settlement that made a normal year look like a disaster on paper. Q1 2020 is close to the opposite problem: the numbers on the page look almost boringly normal, while the three months they cover contain the start of a genuine crisis. On 11 March 2020 the World Health Organization declared Covid-19 a pandemic; Indonesia's own case count began climbing through the second half of March, and BFI Finance's own investor presentation - dated 28 April 2020, three weeks after quarter-end - describes a "conscious slowdown" in bookings that specific month "due to conscious effort to mitigate the risk amidst COVID-19 outbreak."
None of that shows up cleanly in the reported income statement. Net income for the quarter was Rp327,858M, down just 2.7% from Rp336,817M a year earlier - a smaller move than several pre-pandemic quarters in this backlog. New financing bookings actually grew 20.7% YoY to Rp4,043,147M, a healthy number set against 2019's weak comparisons. The disconnect between "the numbers look fine" and "the world just changed" is the real story of this filing, and it shows up most clearly in two places the income statement doesn't touch: the cash flow statement, where operating cash flow swung to a Rp232,502M outflow for the first time in over a year, and the loan book's aging schedule, where receivables 1-30 days overdue jumped from 12.3% to 18.4% of the total in a single quarter - the earliest-stage signal of stress, and the one that moves first when a shock hits.
The investor presentation is unusually candid about what's coming: by the time it was published, more than 10% of the loan portfolio had already requested restructuring under Indonesia's newly issued POJK No. 14 relief regulation (issued 14 April 2020, following President Jokowi's directive), and management states plainly that Q2 "will impact the Indonesian economy badly." None of that quantified restructuring figure appears in the audited financial statements themselves - see Beyond the Usual.
The Prescription
Lean into conservative booking discipline now, even at the cost of near-term growth, rather than chasing the 20.7% YoY bookings growth this quarter reported. That headline growth number is largely a base effect against a weak Q1 2019 and against bookings that were already visibly slowing by March - the company's own deck shows the deceleration starting mid-quarter, not at quarter-end. A multifinance company's real risk in an economic shock isn't slow growth, it's underwriting into a book that's about to lose repayment capacity; the 1-30 day overdue jump from 12.3% to 18.4% this quarter is exactly the early warning that should be driving underwriting decisions in Q2, not the trailing bookings number.
What it should stop doing: treating the audited financial statements' Covid-19 disclosure as a placeholder. Note 39 of the filed financial statements says only that management "will continue to monitor the situation" and that its assessment "may change as a result of events or conditions in the future" - generic language with no numbers attached, filed at the same company, for the same quarter, as an investor deck that discloses a specific >10% restructuring-request figure. A filed financial statement that says less than the marketing material released alongside it is backwards; the audited numbers are the more authoritative document and should carry the more specific disclosure, not the less specific one.
Key Financial Metrics
Three months ended 31 March 2020 vs. three months ended 31 March 2019
FX: Rp16,278 = USD 1 (31 March 2020, Bank Indonesia's mid rate). Both periods below are converted at this same rate for comparability, following the convention used throughout this backlog - it is not a historical rate for the Q1 2019 column.
| Metric | Q1 2020 (IDR) | Q1 2020 (USD) | Q1 2019 (IDR) | YoY |
|---|---|---|---|---|
| Total Income ("Net Revenue" equivalent) | Rp1,374,609M | ~$84.4M | Rp1,248,004M | ✅ +10.1% |
| Profit Before Tax ("Operating Income" equivalent) | Rp414,476M | ~$25.5M | Rp423,804M | ⚠️ -2.2% |
| Net Income | Rp327,858M | ~$20.1M | Rp336,817M | ⚠️ -2.7% |
| Total Cash and Cash Equivalents | Rp579,577M | ~$35.6M | Rp660,032M (period-end, Dec 2019) | ⚠️ -12.2% vs year-end |
Profit before tax remains the closest operating-income equivalent for this lender - no separate operating-income line exists because interest expense is a core product cost, not financing overhead, for a multifinance company. The investor presentation dated 28 April 2020 is the source for the management-commentary section below; the analysis of the financial statements themselves draws on the company's unaudited consolidated interim financial statements as of and for the three-month period ended 31 March 2020.
Total expenses grew faster than income (+16.5% vs +10.1%), which is why profit before tax slipped despite revenue growth - the entire gap traces to provisioning: the provision for impairment losses on financing receivables rose to Rp212,009M from Rp123,972M (+71.0%), which the company attributes partly to first-time adoption of PSAK 71 (Indonesia's IFRS 9 equivalent, effective 1 January 2020 - see Beyond the Usual) and partly to early Covid-19 provisioning. Salaries and benefits also rose 26.1% (Rp333,607M from Rp264,606M), which the deck attributes to annual compensation adjustments rather than headcount growth.
Operating cash flow swung from a Rp765,754M inflow to a Rp264,416M outflow, the sharpest quarter-over-quarter reversal in operating cash generation this backlog has recorded. It isn't itself a distress signal - cash used for new financing transactions rose to Rp4,043,147M from Rp3,350,302M as bookings grew 20.7%, and a lender funding faster growth typically burns more operating cash in the short run - but combined with the "Others" cash outflow line jumping to Rp451,849M from Rp24,993M (largely unexplained in the notes beyond the standard "Others" catch-all), it's worth watching whether Q2's cash generation recovers or worsens as the pandemic's economic impact deepens.
| Balance sheet metric | Mar 2020 (IDR) | Mar 2020 (USD) | Dec 2019 (IDR) | Change |
|---|---|---|---|---|
| Total Assets | Rp19,677,823M | ~$1,208.9M | Rp19,089,633M | ✅ +3.1% |
| Financing Receivables (gross) | Rp23,061,677M | ~$1,416.7M | Rp22,925,194M | ✅ +0.6% |
| Total Liabilities | Rp13,372,210M | ~$821.5M | Rp13,009,453M | ⚠️ +2.8% |
| Fund Borrowings (net) | Rp9,848,859M | ~$605.0M | Rp7,730,021M | ⚠️ +27.4% |
| Securities Issued (bonds + MTNs, net) | Rp2,546,677M | ~$156.5M | Rp3,758,283M | ✅ -32.2% - bond repayments continued to outpace new issuance |
| Total Equity | Rp6,305,613M | ~$387.4M | Rp6,080,180M | ✅ +3.7% |
Debt-to-equity, on the same gross basis used throughout this backlog (fund borrowings plus securities issued, both net of unamortized costs, against equity), rose to ~1.97x from December's ~1.89x - the company drew down a large new Rp350,000M BCA facility and several other Rupiah-denominated lines during the quarter to fund the bookings growth, while continuing to repay maturing bonds.
Key Operational Metrics
- New financing originations: Rp4,043,147M for Q1 2020, up 20.7% from Rp3,350,302M in Q1 2019 - but the growth wasn't evenly spread across the quarter. The company's own deck shows booking momentum continuing from late 2019 through January-February before a deliberate slowdown in March as Covid-19 risk assessment took hold; the quarter's full number still beat 2019's weak base, but doesn't reflect the trajectory it ended on.
- Non-Performing Financing (NPF/NPL) (company's own disclosed figure», calculated on total managed receivables including off-balance-sheet joint financing): 1.12% at end-Q1 2020, improved from 1.33% a year earlier, but worse than December 2019's 0.85% - the first sequential deterioration in this ratio in several quarters.
- Receivables overdue more than 90 days (calculated from the filed statement's own overdue-day disclosure, on-balance-sheet gross financing receivables only - the narrower convention used throughout this backlog): 0.90% of gross financing receivables (Rp207,266M of Rp23,061,677M), up from December 2019's 0.69% - a modest worsening on this measure.
- Receivables 1-30 days overdue: 18.42% of gross financing receivables at end-Q1 2020, up sharply from 12.26% at year-end 2019 - the earliest-stage delinquency bucket, and the one most likely to reflect a shock that hit in the final weeks of the quarter rather than a slow-building credit problem. This is the number worth watching most closely into Q2.
- Cost of Credit: 4.18% (annualized, per the company's own presentation), up from 2.49% a year earlier - the company attributes the jump to both PSAK 71's forward-looking provisioning requirement and Covid-19-related additional provisioning.
- Debt-to-Equity Ratio (DER)»: ~1.97x on a gross basis (see Key Financial Metrics above). The company's own "Net Gearing Ratio" shows 1.9x, unchanged from year-end 2019.
- Outlets: 427 total, up from 423 at year-end 2019 - but the company states in its deck that it plans to close approximately 20 kiosks in Q2 2020 "due to consolidation amidst Covid-19," meaning the network is about to shrink for the first time in this backlog.
- Earnings per share: Rp22 basic, down 4.3% from Rp23 in Q1 2019, on an unchanged 14,964,383,620 shares outstanding net of treasury stock.
Three Segments, With Cars Absorbing the Quarter's Extra Provisioning
The company again reports Cars, Motorcycles, and Others - the same three-way split held stable since early 2019.
Cars - still the largest segment: Rp908,666M of income (66.1% of total, up from 68.0% a year earlier), with profit before tax of Rp266,624M, down 6.3% from Rp284,546M. Income grew 7.1%, but profit fell - the gap is almost entirely the segment's own impairment provision, which rose 48.6% to Rp133,203M from Rp89,611M. Cars is where the quarter's extra Covid-related and PSAK 71 provisioning landed hardest.
Motorcycles - Rp317,598M of income (23.1% of total, up from 19.7%), with profit before tax of Rp104,255M, up 13.9% from Rp91,557M - the standout performer for a fifth straight period, extending the trend tracked every quarter since Q1 2019 of growing both share and profitability faster than the rest of the business, even this quarter.
Others (heavy equipment/machinery, property, and sharia financing, plus corporate tax) - Rp148,345M of income (10.8% of total, down from 12.3%), with a pretax profit of Rp43,597M, down 8.6% from Rp47,701M, though after the full corporate tax allocation this segment still shows a Rp43,021M net loss - the same segment-allocation artifact flagged in the FY2019 post.
Comparing the three: Motorcycles kept compounding as the fastest-growing, most profitable segment even in a quarter that started turning difficult. Cars carried the bulk of the balance sheet and stayed roughly flat on income, but its profit fell because that's where the quarter's provisioning increase concentrated - a segment-level early read on where credit risk is actually building, ahead of what the aggregate NPF number alone would suggest.
Beyond the Usual
The audited financial statements disclose almost nothing about Covid-19 that the investor deck doesn't say more specifically
Note 39 of the filed financial statements ("Economic Impact of Covid-19 Pandemic") states that the pandemic "has distracted business and economic activities globally, including in Indonesia," that management "will continue to monitor the situation," and that its assessment "may change as a result of events or conditions in the future that are beyond the control of the management" - three sentences of boilerplate with no numbers attached. The investor presentation released three weeks later for the same reporting period states plainly that more than 10% of the loan portfolio had already submitted restructuring requests under POJK No. 14 (the government's Covid-19 loan relaxation regulation, issued 14 April 2020), details the specific restructuring schemes on offer (a six-month grace period with interest-only payment, a payment extension of up to six months, or a combination), and states that Q2 2020 "will impact the Indonesian economy badly." A reader relying only on the audited statements - the more authoritative document - would come away knowing almost nothing about the single most consequential development affecting the company's near-term credit quality, while the marketing deck released alongside it discloses the actual scale of the problem.
First-time adoption of PSAK 71 added Rp152,436M to the impairment allowance on day one, inflating the quarter's reported provisioning increase
Indonesia's PSAK 71 (equivalent to IFRS 9's expected-credit-loss model) took effect 1 January 2020, replacing the prior incurred-loss approach. The transition added Rp152,436M directly to the opening allowance for impairment losses as a one-time "impact of adoption," separate from the Rp212,009M in net new provisioning booked during the quarter itself. This means the ending allowance balance (Rp645,163M, nearly double December 2019's Rp354,682M) reflects both a genuine credit-quality response to Covid-19 and a mechanical, one-off accounting-standard transition that has nothing to do with this quarter's actual loan performance - a distinction the company's own "Cost of Credit rose from 2.49% to 4.18%" framing in its investor deck acknowledges but doesn't fully disentangle for a reader trying to isolate the pandemic's real impact from the standard's.
The United Tractors related-party loan's maturity was extended for a third time in five quarters
The working-capital facility from PT United Tractors Tbk - nearly doubled in size during FY2018, extended once in H1 2019, and extended again to 11 December 2022 as of year-end 2019 - now shows a disclosed maturity of 4 March 2023, nearly three months later still. The Rp1,250,000M facility ceiling remains unchanged, and the outstanding balance continued amortizing normally, falling to Rp807,530M from Rp856,156M (-5.7%). A third extension within roughly five quarters, still with no disclosed change to pricing or the facility ceiling, keeps this worth tracking as an established pattern for this related-party lender rather than a one-off accommodation.
Off-balance-sheet joint financing shrank for the first time in this backlog, still 100% concentrated in a single bank
Off-balance-sheet joint financing fell to Rp585,854M at end-Q1 2020 from Rp727,714M at year-end 2019 (-19.5%) - the first quarter-over-quarter decline this backlog has recorded for this line, after several consecutive quarters of growth. PT Bank Rakyat Indonesia remains the sole counterparty, continuing the full concentration reached by year-end 2019. Whether this is early Covid-19 caution on BRI's side, normal amortization outpacing new joint-financing originations, or something else isn't disclosed.
US-dollar borrowings' share of total fund borrowings actually eased this quarter, even as absolute USD debt kept growing
US-dollar borrowings rose in absolute terms to Rp5,229,257M from Rp4,506,241M (+16.0%), including a new USD 100 million Standard Chartered-led syndicated facility signed 17 March 2020 - during the same week global markets were repricing pandemic risk. But because Rupiah-denominated borrowings grew even faster in percentage terms (multiple new BCA, Bank Pan Indonesia, and Bank KEB Hana lines drawn during the quarter), USD borrowings' share of total gross fund borrowings actually fell to 52.9% from December 2019's 58.0%. This is the first quarter since early 2019 that this ratio has moved in the de-dollarizing direction, breaking the rising-USD-exposure trend flagged across FY2019 - worth watching whether it's a deliberate shift or just this quarter's particular mix of facility drawdowns.
Management's Reading of Its Own Quarter
The 28 April 2020 investor presentation is explicit that Q1 2020 was a "conscious slowdown" quarter, not a weak one: management frames the 20.7% YoY bookings growth as real, but points out the deceleration was deliberate starting in March "due to conscious effort to mitigate the risk amidst COVID-19 outbreak," rather than a demand collapse. On asset quality, management directly connects the NPL deterioration and the Cost of Credit jump to two distinct causes - PSAK 71's new forward-looking provisioning requirement and Covid-19's expected impact on repayment capacity - and states plainly that it has "factored in the additional provision needed due to Covid-19" already this quarter, ahead of any visible deterioration in the >90-day NPL numbers. The most forward-looking statement in the deck - the >10% restructuring-request figure and the plan to close roughly 20 kiosks in Q2 - goes well beyond anything in the filed financial statements themselves (see Beyond the Usual above); on the call's own terms, management appears to be preparing investors for a materially worse Q2 while this quarter's own numbers still look nearly untouched.
Stock Price: A 57% Crash on a 2.7% Profit Decline
BFI Finance shares closed at Rp240 on 31 March 2020, down 57.1% from December 2019's Rp560 close - by far the sharpest single-quarter move in this backlog, and part of a broader collapse: shares are down 70.4% from their Rp810 level in April 2018, two years earlier. Both figures are on the same post-May 2017 stock split basis, with no further split since. The move tracks Indonesia's broader market crash as Covid-19 fears peaked in March 2020 (the JCI itself fell roughly 27% that month) rather than anything specific to BFI Finance - a financial-sector stock, exposed to both credit-quality fears and a general risk-off flight from emerging-market equities, was always going to move more than the index itself.
Target Valuation Range
Market cap ~Rp3,591,452M (~$220.6M) at ~5.1x TTM P/E (~2.4x normalized) and ~0.57x P/B - undervalued on the numbers available today, with the obvious caveat that Q2 2020's numbers, not Q1's, will be the real test.
Using 14,964,383,620 shares outstanding net of treasury stock (unchanged from December 2019) and the Rp240 closing price:
| Market cap buildup | Q1 2020 |
|---|---|
| Share price (period-end) | Rp240 |
| Shares outstanding | 14,964,383,620 |
| Market capitalization | Rp3,591,452M (~$220.6M) |
| Book value (total equity) | Rp6,305,613M |
| Peer-multiple sanity check | Q4 2019 | Q1 2020 | Change |
|---|---|---|---|
| P/E (TTM, reported) | ~11.7x | ~5.1x | down sharply - price fell faster than TTM earnings |
| P/E (TTM, normalized, ex-2019-settlement) | ~5.6x | ~2.4x | down |
| P/B | ~1.38x | ~0.57x | down - first time in this backlog trading below book |
The TTM P/E using Rp702,723M (FY2019's Rp711,682M, less Q1 2019's Rp336,817M, plus Q1 2020's Rp327,858M) and the normalized version applying FY2019's normalized net income of approximately Rp1,489,035M to the same roll-forward, both fell far faster than Q1's own 2.7% net-income decline - the repricing is almost entirely the 57.1% stock-price crash, not a change in earnings. A P/E in the 2.4x-5.1x range and a P/B under 0.6x, for a lender whose equity base actually grew 3.7% quarter-over-quarter, is not a valuation a stable business normally trades at - it reflects the market pricing in a Q2-and-beyond scenario meaningfully worse than what Q1's own numbers show, consistent with the >10% restructuring-request figure in management's own disclosure. Whether that repricing turns out to be justified depends entirely on data this filing can't yet contain: how deep Indonesia's 2020 economic contraction gets, and how much of that 10%-plus restructured book converts to genuine credit losses rather than temporary payment relief. The peer-multiple read is the honest lens available right now: a well-capitalized lender (DER ~1.97x, essentially unchanged from a year ago) trading at under 0.6x book is either a genuine opportunity or a market that knows something about Q2 that Q1's filing doesn't yet show - and only the next post in this backlog will say which.
PT BFI Finance Indonesia Tbk's unaudited consolidated interim financial statements as of and for the three-month period ended 31 March 2020 (with comparative figures for 31 March 2019 and 31 December 2019), together with the company's 1Q 2020 investor presentation dated 28 April 2020.