CEO Danantara: Indonesian Banking Stocks Still Below Fair Value - BCA Sekuritas

In remarks at a press conference at the BEI Building in Jakarta on Tuesday, Rosan Roeslani, Chief Executive Officer of Danantara Indonesia, said that banking stocks on the Indonesia Stock Exchange were currently trading at undervalued levels, with the price-to-book value (PBV) below 1. In normal conditions, he explained, valuations of banking sector equities should be in the range of more than 2 to 3 times PBV. “Moreover, when we look at banking, from its Price to Book, it is below 1; under normal circumstances it would be above 2 to 3. So there is definitely upside potential,” Rosan said. He added that price volatility in the stock market is normal. He stressed that, fundamentally, the issuers in Indonesia’s capital market are solid and offer attractive potential returns. “So, we from Danantara see that there will indeed be ups and downs in the exchange. But if we look at the company’s fundamentals, it is good, with high yield, and current pricing is very good,” Rosan said. He noted that this conviction aligns with the positive development in the number of retail investors in Indonesia’s capital market. He revealed that the number of retail investors has reached 26–27 million, a significant rise from around 20 million in the previous year, an increase of about 6 million investors. He said the rise reflects growing confidence in the prospects for Indonesia’s capital market going forward. “Logically, this increase happens because our investors believe the exchange will improve and be promising. If not, the number of investors would actually fall. If this market had no prospects, the logic would be different,” Rosan said. He added that investor growth is inseparable from ongoing educational efforts by BEI and the Financial Services Authority (OJK), especially towards domestic investors and younger demographics whose growth is considered significant. He argued that such education is important to show that investing in the capital market is a medium- to long-term instrument that can yield good returns while supporting economic growth. “Investing in the capital market is a medium- to long-term investment that can yield good returns and contribute to our ongoing growth,” Rosan said.