Bank Panin A little positive lift - by Mulya Chandra CFA / Hadi Soegiarto (PNBN IJ / PNBN.JK, OUTPERFORM - Upgraded, Rp790 - Tgt. Rp1,000, Banks)
________________________________ Upgrade to Outperform. Although Clipan's planned rights issue appears not to have been well received judging by the sharp drop in its share price, we believe it may just provide the lift required for Panin Bank. Subscribing for the Clipan rights allows Panin to deploy its excess capital faster and eventually help lift its ROE while allowing Clipan to expand more aggressively into the higher-margin, albeit riskier, used car financing business. After the central bank said it may limit foreign ownership of banks, Panin's share price quickly shed its M&A premium and it is now the second cheapest bank stock in our universe, at FY11 1.4x P/BV and 13.9x P/E. We upgrade to OUTPERFORM from Neutral but keep our target price unchanged at Rp1,000 (GGM , ROE: 15.7%, CoE: 14.3%, growth: 11.9%). Catalysts include a market rebound and improvements in its ROE outlook.
