Multifinance 20120328 IndustryE

Regional Industry Focus
Multi-finance Companies
DBS Group Research . Equity
Alternative lenders
Multi-finance companies are high-yielding
businesses despite higher cost of funds than
banks as they cannot take deposits; higher risk as
they are less regulated than banks
Potential headwinds from impending fuel price
hike and imposition of minimum down payment
for 2W, but long-term growth prospects for 4W
remain robust
28 Mar 2012
JCI :
4,079.4
Analyst
LIM Sue Lin +603 2711 0971
suelin@hwangdbsvickers.com.my
Indonesian Research Team +6221 3983 2668
research@id.dbsvickers.com
Peer Comparables: Multi finance companies
Valuations at a fraction of banks, given high ROE,

attractive NIM and low NPLs; liquidity an issue
High returns come with higher risks. Multi-finance
business, especially consumer financing, generate higher
yields than conventional bank loans. At end Dec11, multifinance companies ROE averaged 31.1% with 8.7% NIM,
while NPL ratios were low at 1.2%. However, these
companies are not allowed to collect deposits, hence, they
rely either on bank borrowings or bond issuances, and also
joint financing and channelling agreements with banks for
funding. Therefore, their cost of funds is higher than
banks, at 9-12%. These companies are also less tightly
regulated than banks, and have different NPL classification
and write-off policies.
ADMF
Market
cap
(US$m)
Price
(Rp/s)
PE (x)
FY11F FY12F
PBV (x)
FY11F FY12F
ROE (%)
FY11F FY12F
1,320
12,150
7.7x
NA
2.7x
NA
38.5%
BFIN
392
4,750
7.2x
5.5x
1.3x
1.0x
19.7% 19.3%
CFIN
209
510
6.9x
6.0x
0.9x
0.8x
15.3% 13.4%
MFIN
99
690
4.7x
4.0x
NA
NA
29.0% 27.0%
WOMF
58
265
88.3x
NA
1.2x
NA
1.2%
Weighted average
7.1x
5.4x
2.1x
0.8x
31.1% 18.6%
6.6x
5.2x
1.5x
0.9x
25.6% 21.2%
Closing prices as at 26 Mar 2012

* Weighted average PE excludes WOMF
^ Refers to 2-year EPS CAGR for CY11-13
Source: Bloomberg, Companies, DBS Vickers
Multi-finance companies: Total gross financing (2011)
Valuations at discount to banks. Multi-finance

companies are currently trading at 2.1x FY11 P/BV and
7.1x FY11 PE vs the banks at 3.2x FY11 P/BV and 13.9x
FY11 PE. The companies mentioned in this report are not
officially under our coverage, but the profiles and updates
will provide a more detailed understanding of the key
multi-finance companies that are operating in Indonesia.
Note that most of these companies are largely held by
banks or tightly held by foreign shareholders (e.g. BFIN).
As such, trading liquidity may be low.
Source: Companies, DBS Vickers
www.dbsvickers.com
Refer to important disclosures at the end of this report
ed: SGC / sa: MA
n/a
Simple average
Policy headwinds ahead. The MoF has imposed

minimum 20% downpayment for 2W and 25% for 4W,
effective 15 June 2012 onwards. Current average
downpayment is 12-15% for 2W and 20% for 4W.
Coupled with the impending fuel price hike, AISI and
Gaikindo expect new 2W and 4W unit sales to moderate
in the near term. But we believe 4W sales will remain
robust over the longer term, supported by a growing
middle class, urbanisation, and rising GDP per capita in
Indonesia. Separately, the formation of OJK in 2013 could
see more new regulations and supervisory changes.
In Singapore, this research report or research analyses may only be distributed

to Institutional Investors, Expert Investors or Accredited Investors as defined in the
Securities and Futures Act, Chapter 289 of Singapore.
NA
60.0
52.2
50.0
40.0
30.0
23.2
21.7
20.0
11.9
10.0
7.1
5.5
4.6
Mandiri
Tunas
F inance*
BFIN
CF IN
0.0
ADMF
BCA
Finance*
Astra
Seday a
Finance*
WOMF
*Non-listed companies
Total asset for Astra Sedaya Finance and CFIN are as of 3Q11
New minimum down payment regulation

Vehicles
Banks
Multi-finance
companies
2W
25%
20%
4W Productive (Private Use)
30%
25%
4W Non-productive (Commercial Use)
20%
20%
Source: BI, MoF, DBS Vickers
Recipients of this report, received from DBS Vickers Research (Singapore) Pte Ltd
(DBSVR), are to contact DBSVR at +65 6398 7954 in respect of any matters arising
from or in connection with this report.
Industry Focus
Analysts
Table of Contents
LIM Sue Lin +603 2711 0971

Overview
Indonesian Research Team +6221 3983 2668
Major players in the industry
Industry landscape
Growth drivers
Industry concerns
Page 2
Regulatory environment
11
Industry trends
12
Multi-finance companies A comparison
14
Valuation
15
Stock Profiles
16
Adira Dinamika Multi Finance
17
BFI Finance
24
Clipan Finance
31
WOM Finance
38
Industry Focus
Growth of financing activities
Overview
Finance companies, or typically known in Indonesia as multifinance companies, are licensed to offer a range of services,
including leasing, consumer financing, credit card financing
and factoring. But unlike banks, they are not allowed to
accept deposits, and are governed by Bapepam-LK, the
regulatory arm of the Minister of Finance (MoF). These
companies target the financing needs of the lower income
households.
130.0%
80.0%
Factoring, 70.5%
Leasing, 44.1%
30.0%
Total, 31.6%
Consumer
Financing, 26.7%
-20.0%
-70.0%
2003
2004
Total
There are 195 financing companies in operation as at Dec

2011. Over the past 10 years, several had their licences
revoked due to non-compliance with regulations, the most
common being inadequate capital. Prior to the Asian Financial
Crisis, there were over 212 multi-finance companies
nationwide. They typically provide financing for consumption
needs (vehicle financing), leasing, factoring and credit cards.
Currently, the majority of multi-finance companies focus on
consumer financing (2W and 4W, new and used) and leasing.
2005
2006
Leasing
2007
2008
Factoring
2009
2010
2011
Credit Cards
Consumer Financing
Source: Bapepam-LK, DBS Vickers
Amount of financing per segment (Rp bn)

180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
Multi-finance companies: Financing activities (2011)
20,000
2003
Leasing
31%
Consumer
F inancing
67%
Factoring, 2%
Leasing is main growth driver. Although multi-finance

companies focus on consumer financing, the current industry
growth driver is leasing, which grew 44% y-o-y at end
December 2011. Factoring is growing much faster, but its
base is small. Consumer financing remains the most attractive
in terms of lending yields. Although there is a trade off
between risk and reward, the ticket size is much smaller than
leasing, but the risk of default is higher because of the
customer profile. Credit card business has shrunk significantly
since August 2011 after GE Finance was acquired by Bank
Permata (BNLI). Prior to that, credit cards comprised less than
1% to total financing by multi-finance companies. The credit
card business is largely undertaken by commercial banks.
2005
Leasing
Factoring
2007
Credit Cards
2009
2011
Consumer Financing
Funded mainly by bank borrowings. Financing activities are

mostly funded by bank borrowings, which amount to
Rp186.7tr, or 86% of total funding. Bonds account for only
Rp31.3tr or 14% of total funding as of January 2012. Our
checks indicate that multi-finance companies may take
advantage of the current low interest rate environment to
issue more bonds to fund growth.
Multi-finance companies: Funding composition (Jan-12)
Bonds
14.4%
Subordinated
Loans
0.1%
Borrowing
85.5%
Page 3
Industry Focus
Joint-financing and channelling. Other sources of funding for

multi-finance companies are joint-financing or channelling
agreement with banks. Under joint-financing, both the multi finance company and bank jointly contribute funds to the
arrangement. The proportion of contribution by each party
differs between agreements, and risks and returns are shared
in the same proportion. Under channelling, full funding is
originated from the bank. The bank bears all the risks, while
multi-finance companies receive a fee for managing the
financing contracts for banks. As of January 2012, joint financing agreements reached Rp83.5tr, while channelling
reached Rp15.3tr. It is a win-win situation for both parties;
banks have access to a higher yielding asset, and financing
companies receive funding to grow their asset base. Under
MoF regulations, at least 40% of the assets in the balance
sheet of financing companies have to be allocated for
financing activities.
companies sharing the risk of delinquent loans, banks can

expect better quality credit than if these companies merely
acted as an agent under the channelling scheme.
Joint-finance and channeling (Total) by multi-finance
companies
90
83.5
80
67.2
70
60
49.9
50
40
30
20
12.9
10
7.8
6.5
2006
2007
9.0
9.1
2008
2009
Channeling
Preference for joint-financing option. Joint-financing is more

rampant than channelling, growing at 24.3% y-o-y at end
2011 against 7.0% for the latter. It seems banks prefer jointfinancing to channelling, because with multi-finance
47.1
39.2
14.3
15.3
2010
2011
J oint Financing
Joint Financing activities by multi-finance companies

Financing Company
WOMF
ADMF
BFIN
CFIN
BCA Finance*
Mandiri Tunas Finance*
Astra Sedaya Finance*
Counterpart
BMRI
BBRI
BNII
BDMN
Bank Syariah Mandiri (BSM)
BBRI
BNGA
Bank DKI
Bank Mutiara
BMRI
BTPN
Bank UIB
PNBN
BBCA
BBNI
BBKP
BMRI
BNLI
Sahabat Finansial Bersama
BNGA
BNII
Bank Commonwealth
* Non listed companies

Source: Companies; DBS Vickers
Page 4
Total Facility
Revolving
Recourse
JF Proportion
Rp500bn
Rp500bn
Rp8.0tr
n/a
Rp150bn
Rp150bn
Rp50bn
Rp100bn
Rp100bn
Rp245bn
Rp1.0tr
Rp8.5bn
Rp600bn
<Rp5bn per contract
Rp400bn
Rp75bn
Rp4.5tr
Rp4.45tr
Rp4.0tr
Rp2.0tr
Rp1.0tr
Rp500bn
n/a
n/a
n/a
n/a
N
N
Y
N
N
Y
Y
n/a
n/a
Y
n/a
Y
Y
n/a
n/a
n/a
n/a
n/a
Y
n/a
N
n/a
N
N
N
N
N
N
N
n/a
N
N
n/a
N
N
N
N
N
N
N
5:95
10:90
1:99
1:99
Channeling
Channeling
1:99
5:95
Channeling
5:95
10:90
n/a
Channeling
5:95
n/a
Channeling
5:95
5:95
5:95
5:95
5:95
5:95
Industry Focus
Gearing ratio regulated by MoF. Under the MoF/ Bapepam-LK

regulation, gearing ratio cannot exceed 10x the value of
capital plus subordinated loans. And subordinated loans
cannot be more than 50% of total capital. Big players
gearing ratios are relatively low because they generally opt for
joint-financing or channelling from banks. Industry gearing
ratio was about 8.2x at end 2011, implying there is still room
for multi-finance companies to borrow to finance loan
expansion.
NPL classification Unlike BI, Bapepam and MoF have not set
any guidance for NPL classification. But since most large
finance companies have joint-ventures or channelling
agreements with banks, they have to adhere to BIs NPL
classification guide. Although there are conservative finance
companies, most consider financing overdue by 90 days as
bad debt. Moreover, the write-off policy varies from 180 to
270 days for automatic write-off.
Multi-finance companies: Blended NPL
Multi-finance companies: Gearing ratio FY11
3.0%
9.00
2.7%
Blended NPL
8.25
2.5%
8.00
2.0%
7.00
5.61
6.00
2.1%
1.9%
2.0%
5.85
4.86
5.00
1.4%
1.5%
1.2%
4.00
2.43
3.00
2.00
1.18
1.39
1.0%
1.51
1.00
0.5%
BFIN
CF IN
BCA
F inance
ADMF
MTF
WOMF
ASF
Industry
0.0%
Source: BPS, DBS Vickers, Gaikindo
Write-offs are typical in managing asset quality. The

difference between banks and multi-finance companies is
that it is typical for the latter to write-off bad debts regularly.
Hence, it is normal for a finance company to have very low
NPL ratio. Blended NPL spiked to 2.7% during the crisis in
2008, but has since improved significantly.
2006
3.00%
2008
2009
2010
2011
Major players in the industry

There are several multi-finance companies in Indonesia, but
there are distinguishing factors for each.
Multi-finance companies: Total assets (2011)
20.0
Multi-finance companies: NPL per segment (Jan-12)
2007
18.4
16.9
18.0
16.0
2.81%
14.0
12.0
2.50%
10.0
8.0
2.00%
4.1
4.0
1.50%
1.21%
3.9
3.7
1.5
2.0
-
1.00%
0.50%
5.3
6.0
1.59%
Astra
Seday a
Finance*
0.32%
ADMF
BFIN
CFIN
WOMF
BCA
F inance*
Mandiri
Tunas
F inance*
0.00%
0.00%
Leasing
F actoring
Credit Cards
Consumer
Financing
Blended
Note: Prior to GE Finance acquisition, credit cards NPL was hovering
Total asset for Astra Sedaya Finance and CFIN are as of 3Q11
at 3-4%. Currently, none of the players are focusing on Credit Cards,

hence, there is very low activity and consequently low NPL.
Page 5
Industry Focus
Multi-finance companies: Total gross financing (2011)

60.0
52.2
50.0
International Finance (FIF). ASF, BCA Finance and MTF

concentrate on consumer financing for 4W. FIF concentrates
on financing for 2W, especially Honda, while Tunas also
dabbles in 2W financing.
40.0
30.0
23.2
21.7
20.0
11.9
7.1
10.0
5.5
4.6
BF IN
CF IN
0.0
ADMF
BCA
F inance*
Astra
Sedaya
F inance*
WOMF
Mandiri
Tunas
F inance*
Gross Financing for Astra Sedaya Finance and CFIN are as of 3Q11
Adira Dinamika Finance (ADMF) Funding growth through

joint-financing with parent, Bank Danamon (BDMN). ADMF
focuses on dealer-generated new and used 2W and 4W
financing. Almost 50% of its new loans is generated from
new 2W; although ticket size is smaller at Rp12.2m per unit,
yield is relatively high (c.30%) and less risky than for used
2W.
BFI Finance (BFIN) Largest segment in BFINs portfolio is
dealer generated used 4W (31% of portfolio). In order to
improve asset yield and reduce dealer dependency, BFIN will
improve its network to accommodate a larger proportion of
direct financing. This segment is yielding the highest return
for the company, at 23-25% for 4W and 41-42% for 2W.
However, there is always higher risk attached to the attractive
returns.
Clipan Finance (CFIN) - Unlike its peers, CFIN offers a wider
range of financing products: leasing, consumer financing and
factoring. Its portfolio has equal weightings of consumer
financing and leasing, and only extends factoring products to
customers referred by Panin Bank (PNBN). In consumer
financing, CFIN focuses on used 4W, whereby new 4W only
comprises c.5% of this portfolio.
WOM Finance (WOMF) WOMF focuses on new and used
2W financing. In 2011, due to asset quality issues, WOMF
reined in its used 2W financing business. Now, only 10% of
new bookings are used 2W, compared to about 30% before.
Other players (not listed). There are other big players in the
industry that are not listed, such as Astra Sedaya Finance
(ASF), BCA Finance, Mandiri Tunas Finance (MTF) and Federal
Page 6
FIF and ASF are members of the Astra International Group

(ASII), and contribute c.20% to the Groups total income.
28% of cars produced by ASII is financed through ASF. Tunas
and BCA Finance are subsidiaries of BMRI and BBCA,
respectively. Last year, they contributed 0.5% and c.7% of
the respective banks net income.
On average, 40% of 4W and 25% of 2W are purchased in
cash. ADMF and FIF dominate in new 2W financing, while
ASF and BCA Finance appear to be preferred for 4W
financing. Note that MTF, ASF and BCA Finance focus on
passenger cars in their 4W business, while ADMF
concentrates more on commercial vehicles.
Current 2W vs 4W buyers profile
60%
75%
40%
25%
4W
2W
Cash
Auto financing
Source: AISI, Gaikindo, ASII, IMAS
Multi-finance companies: Market share of new 2W

financing
30.0%
25.0%
ADMF, 23.19%
FIF*, 22.36%
20.0%
15.0%
10.0%
WOMF, 9.60%
5.0%
MTF*, 0.49%
0.0%
2006
2007
ADMF
2008
WOMF
2009
2010
FIF*
MTF*
2011
Market share assumes only 75% new 2W purchased on credit
Source: Companies, AISI, DBS Vickers
Industry Focus
Multi-finance companies: Market share of new 4W

financing
Indonesia: Vehicle penetration
35.0%
BCA Finance*,
28.1%
30.0%
ASF*, 26.9%
25.0%
275.0
40.0%
250.0
35.0%
30.0%
225.0
25.0%
200.0
20.0%
175.0
15.0%
10.0%
20.0%
150.0
15.0%
ADMF, 11.0%
5.0%
125.0
0.0%
1987
10.0%
BFIN, 1.2%
2006
BFIN
2007
ADMF
2008
ASF*
2009
MTF*
2010
BCA Finance*
1997
Indonesia
Population (LHS)
MTF*, 6.8%
5.0%
0.0%
1992
2002
2007
4W Penetration (RHS)
2012F
2W Penetration (RHS)
2011
Auto penetration in developing countries
9,000
Market share assumes only 60% new 4W purchased on credit
Source: Companies, Gaikindo, DBS Vickers
Multi-finance companies: Market share of 4W financing

(2011)
GDP per capita US$
CFIN and ADMF excluded as market share numbers are negligible
Malaysia, 32.17%
8,000
7,000
6,000
5,000
3,000
Indonesia, 4.68%
2,000
India, 2.68%
1,000
BF IN, 1.2%
Thailand, 15.22%
China, 4.52%
4,000
ADMF , 11.0%
0%
5%
10%
15%
20%
25%
30%
35%
Car ownership ratio
BCA F inance*,
28.1%
ASF*, 26.9%
MTF *, 6.8%
Source: Companies, AISI, DBS Vickers
Competition from Kredit Kendaraan Bermotor (KKB). Banks

offer the product called KKB which typically refers to 4W
financing. But the banks focus is different from multi-finance
companies. The latter tend to prefer to finance commercial
vehicle fleets, while banks target the middle/affluent class
who purchase passenger vehicles. Banks do not usually
dabble in 2W financing because of deemed high risks.
A growing middle-class population will spur demand for

vehicles. GDP growth had been strong in the past few years,
driven by private consumption. And consumption power has
risen along with this. According to the World Bank, 13.3% of
Indonesians lived below the poverty line as at 2010, with
53% of the population being categorically poor. But there is
a rapid shift towards middle-income defined as people
whose daily expenditure is between US$2 and US$20. By
2015F, 58% of the population will fall into the middle class
category (vs .46% in 2010). The jump is more apparent in
urban areas than rural areas.
Indonesias GDP growth trends
7.0%
6.3%
6.5%
Industry landscape
6.0%
5.7%
5.5%
Population growing at c.1.5% p.a. The Indonesian population is

estimated at 240.6m people in 2011, growing an average of
1.5% p.a. for the last 20 years. However, vehicle penetration is
still considerably low compared to developed countries. As of
2011, 4W penetration is 4 cars per 100 people, while 2W
penetration is significantly higher at 27 motorcycles per 100
people.
6.5%
6.1%
5.5%
5.0%
5.0%
4.5%
6.1%
6.0%
4.6%
4.1%
4.0%
3.5%
3.0%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012F
Source: CEIC, DBS Vickers,
Page 7
Industry Focus
Indonesia: Population based on average expenditure

100%
90%
80%
70%
60%
50%
40%
Watch out for a switch to 4W from 2W. Our auto analyst

believes that we should watch for a switch to 4W from 2W.
Trends in other emerging markets indicate that private car
purchases start to see explosive growth when GDP per capita
exceeds US$3,000. With Indonesia having reached that
threshold at the end of 2010, we could be seeing double
digit growth ahead.
30%
Auto growth trends after GDP per capita >US$3,000
20%
10%
%
28
0%
Poor
1999
2005
Lower Middle
2009
Middle
2010
Upper Middle
2015F
Affluent
Source: Asian Development Bank; DBS Vickers
12,000,000
2W Sales
10,000,000
12.6% CAGR
6,000,000
4,000,000
2,000,000
0
2006
2007
YR 93-94
YR 92-93
YR 04-05
16
YR 73-74
12
YR 06-07
8
4
China
Korea
Brazil
Malay sia
Russia
J apan
Thailand
Source: CEIC, DBS Vickers, CEIC
Growth Drivers
Indonesia: 2W Sales
2005
YR 87-88
24
20
This shift to middle class category is reflected in 2W sales. It

expanded at 10.4% CAGR from 2006 to 2011, and is
expected to grow by 5% p.a. going forward. Our house
views that the market is already saturated. In 2010, 2W
penetration was 27%; with Indonesias average household
consisting of 4 people, this implies that every household
already owns a motorcycle.
8,000,000
YR 08-09
2008
2009
2010
2011 2012F 2013F 2014F 2015F
Source: AISI, DBS Vickers
Indonesian auto industry still resilient. Our auto analyst

believes that going into 2012, Indonesia is expected to
register another year of solid growth. 4W sales are expected
to reach 974,000 premised on a bullish economy. Coupled
with a low interest rate environment, there is still ample room
for growth, especially with 4W penetration still low in
Indonesia at less than 4.7 vehicles per 100 people. However,
there may be risks: industry growth may be hampered by a
global economic slowdown and slow recovery from the Thai
floods. And given the impending cut in fuel subsidy, demand
will slow down in 2012F before normalising in 2013F.
Indonesia: 4W sales and growth
Indonesia: 4W Sales
1,600,000
4W Sales
1,400,000
12.0% CAGR
1,200,000
1,200,000
80%
1,000,000
60%
40%
800,000
20%
1,000,000
600,000
0%
800,000
400,000
600,000
200,000
-40%
-60%
2006
0
2005
2006
2007
2008
Source: Gaikindo, DBS Vickers
Page 8
-20%
200,000
400,000
2009
2010
2011 2012F 2013F 2014F 2015F
2007
2008
4W Sales
Source: Gaikindo DBS Vickers
2009
2010
2011 2012F 2013F
4W Sales Growth YoY (%)
Industry Focus
2W growth supported by affordable financing. Lack of

investment in public transport, rapidly growing purchasing
power, and record low interest rates are supporting the
growth of the 2W market. Going forward, our auto analyst
remains confident of 7.5% (2W sales) CAGR over 20112013F to 9.2m unit. We expect a slowdown in 2013F as the
market becomes saturated. By then, we expect 2W
penetration to reach 31 per 100 people.
Under-investment in public transport. This is more rampant in

urban area than rural areas. The existing public transport,
although affordable, is not reliable. Routes are not properly
planned, and there are insufficient buses and trains, which
lead them to be crowded most of the time. This makes
owning a car or motorcycle a necessity, to get around the
city. In 2012, the government is committing Rp55.6tr or
5.8% of total government expenditure to improve
infrastructure and public transport.
Indonesia: 2W sales and growth

10,000,000
40%
30%
8,000,000
20%
6,000,000
10%
4,000,000
Record low interest rates. Taking advantage of low inflation

in Indonesia, Bank Indonesia (BI) has been reducing its policy
rate over the years to a record low, after cutting the rate by
75bps last year. BI is keeping its policy rate at 5.75% to
absorb the effect of fuel subsidy cuts. We expect BI rate to
remain flat for the rest of the year.
0%
2,000,000
-10%
-20%
2006
2007
2008
2W Sales
2009
2010
2011 2012F 2013F
2W Sales Growth YoY (%)
Source: AISI, DBS Vickers
Policy rate and lending rate trends

%
18
Rp Lending rate (%)
16
BI rate (%)
14
12
10
The government is offering tax incentives to car

manufacturers involved in the LCGC project, including
exemption of import duties for LCGC components that
cannot be produced locally and lowering luxury tax charges
to 5% from 10% previously. Four Japanese car
manufacturers have pledged US$1.8bn annually to produce
500,000 units of LCGC.
LCGC: Car specifications
<1,000 1,200 cc engine capacity
Minimum fuel consumption 22km/l and 20km/l for

1,000cc and 1,200cc cars respectively
Comply with Euro 2 emission standard
<Rp100m on the road price
>US$50m capex to build manufacturing plants
40% local content on the first year, 60% on the third year
and 80% on the fifth year
Source: Bisnis Indonesia
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Government Low Cost Green Car project. The Indonesian

government is introducing environmental-friendly affordable
cars to the community through its Low Cost Green Car
(LCGC) project. The objective is to strengthen domestic
development of automotive production systems and
components. This is also an initiative to migrate existing 2W
users to affordable 4W.
Source: BI, CEIC, DBS Vickers
Industry Concerns
BI and MoF want to raise down payment to 20%-30%. MoF
and BI jointly proposed to increase minimum down payment
for auto financing to 20%-30%, applicable to banks and
financing companies. The objective of the regulation is to
improve auto loans asset quality and control disbursements to
an industry that has been growing rapidly in the past few
years. This regulation was passed earlier in the month, and is
effective 15 June 2012.
New minimum down payment regulation
Vehicles
Banks
Financing Companies
2W
25%
20%
4W Productive (Private Use)
30%
25%
4W Non-productive
20%
20%
(Commercial Use)
Source: BI, MoF, DBS Vickers
Page 9
Industry Focus
New regulations could hurt industry sales. On average, 75%

of 2W and 60% of 4W are purchased on credit. Our checks
with multi finance companies indicate that the average down
payment currently is 12-15% for 2W and 15-20% for 4W.
On average, only 25% of 2W purchases are settled in cash,
while the rest is bought on credit. This is slightly higher than
for 4W, where 40% of unit sales are cash purchases. Hence,
the industry will be affected significantly if the regulation is
implemented.
Vehicle sales (2008)

700
70
600
60
500
50
400
40
300
30
33% increase
from Rp4,500 to
Rp6,000
200
20
Motorcycles
100
The Indonesian Motorcycles Industry Association (AISI)

projects its 2012 forecast for 2W sales could drop by 30-45%
if down payments are increased to 30%. AISI and the
Indonesian Association of Automotive Industries (Gaikindo)
have recommended to cap minimum down payment at 1020% to ensure that the industry continues to grow.
Impending fuel price hike. Following volatile fuel prices, the
government has finally decided to cut fuel subsidies. The
option would mean a 33% increase in fuel prices from
Rp4,500/litre to Rp6,000. The government had increased
subsidised fuel price significantly previously, by 33% in 1Q05,
88% in 4Q05 and another 33% in 2Q08. Empirical evidence
from 2005 and 2008 suggest that the average consumer can
absorb a 30% increase in fuel price with no impact on vehicle
sales.
Vehicle sales (2005)
600
60
500
50
400
40
30
300
200
33% increase
from Rp1,810 to
Rp2,400
100
20
88% hike from
Rp2,400 to
Rp4,500
Motorcycles
0
Jan-05
May-05
Sep-05
Jan-06
Source: DBS Vickers, Gaikindo, AISI
Page 10
10
Cars
May-06
Sep-06
Cars
10
0
0
Jan-08
May-08
Sep-08
Jan-09
Source: DBS Vickers, Gaikindo, AISI
Softer global economy. Amid the softer global macro

environment, financial institutions are more cautious and
prefer to hold liquid assets to avoid a liquidity crunch. They
are also more likely to slow down loan disbursements or
select prime customers to maintain asset quality. But with 7080% of vehicles in Indonesia being purchased on credit,
slowing down loan disbursements could hamper auto
industry growth.
Concerns over fraud. Consumer financing are small ticket
items and usually involve several employees from origination
to approval and disbursement. And most companies adopt
an automatic write-off policy after a certain period. The
combination of these two practices raises concerns that there
might be room for fraud. Debtors who are unable to repay
their loans might choose to hide the collateral. Another
element of fraud that is not uncommon in 2W, is that spare
parts of the repossessed collateral had been swapped with
inferior or broken parts.
Multi-finance companies try to avoid these situations by
thoroughly screening potential borrowers. It is common for
them to send an employee to visit the residence of a
potential borrower and to interview other members of the
household and neighbours, to satisfy the lenders that the
borrower is a respectable member of the community. On the
same note, it is normally more difficult for those who live in
rental houses or rooms to obtain credit to purchase vehicles.
Industry Focus
Meanwhile, employees of multi-finance companies that deal

with 2W financing are normally trained to thoroughly check
parts. WOMF had encountered this problem when it was
rapidly expanding into the used 2W market, and as a result,
its loan disbursements for 2W purchases were significantly
higher than the market value of the used 2Ws. It has since
slowed down lending for used 2W, and is taking the initiative
to train employees who involved in used 2W financing. Its
asset quality has improved following this effort.
Banks vs Multi-finance companies

Liquidity
CAR
NPL
Funding
Multi-finance companies are susceptible to internal fraud as

well. This can be mitigated by strong internal controls.
However, these companies claim there is low incidence
internal fraud cases.
Regulatory environment
Reporting
Activities
Governed by MoF and Bapepam. The MoF and Bapepam LK

regulate multi-finance companies in Indonesia. The MoF
issues the regulations, while Bapepam-LK is tasked to enforce
them. These are generally less stringent than BI regulations for
banks, because multi-finance companies are non-deposit
taking. The main regulation guiding the establishment of a
finance company is MoF Regulation no.84/PMK.012/2006.
The MoF is currently drafting a revision to this regulation and
expects it to be published within the year. Based on the draft,
we do not expect significant changes to the main points.
Bapepam regulations for multi-finance companies
Regulation
Explanation
No.84/PMK.012/2006
Description of finance companies

activities
Guidelines on establishing a finance
company
Initial capital is Rp100bn minimum for
companies and Rp50bn minimum for
cooperatives
Foreign investors can own up to 85% of
total capital
A legal entity can own up to 50% of total
capital
Maximum gearing ratio is 10x
Finance companies are not allowed to
obtain deposits or issue promissory notes
Subject to monthly reporting to MoF
Finance companies are subject to routine
checks at least once every 5 years.
KYC principals on non-bank financial
institutions
No.166/PMK.010/2008
No 30/PMK.010/2010
Source: Bapepam LK, DBS Vickers
Banks
Banks are obliged to put

a minimum capital
reserve in BI and there is
ceiling and floor for LDR
Minimum capital
adequacy ratio is
specified
Specific provision and
NPL recognition criteria
Deposit taking, can raise
funds from interbank
market and equity
market, and through
bonds. The lender of last
resort is also available for
liquidity
Subject to monthly
reporting to BI
Minimal limitations
Not regulated
Source: Bapepam LK, BI, DBS Vickers
Only maximum gearing

ratio is specified
Not regulated
Can raise funds only
through bank loans,
bond issuance, and
equity market.
Subject to monthly
reporting to MoF
Limited to leasing,
consumer financing,
factoring and credit cards
New regulatory body OJK. The Financial Services Authority

(OJK) will take over the supervision of banks from BI, and
insurance companies, stock market and multi-finance
companies from Bapepam-LK. Under the legislation, OJK will
be led by nine commissioners, two of which will be
representatives of the central bank and the MoF. The
objective of this new regulatory body is to align the views of
BI and Bapepam-LK on the supervision of financial
institutions, both banks and non-banks. Once this supervisory
body is in place, there could be some regulatory changes for
finance companies, to be more in line with banks. Presently,
non-bank financial institutions are subject to more moderate
regulations because they are not deposit-taking institutions.
The main concerns of non-bank financial institutions over this
new supervisory hierarchy are:
Non-performing loans. Currently, finance companies

have different NPL recognition and write-off policies
from banks. Banks under BI guidance have five asset
quality classifications, guided by the banks judgement
of prospect, performance and repayment capacity of
each debtor. There is no NPL guidance for non-bank
financial institutions currently.
Refinancing or shadow banking. BI is also adamant in

regulating non-bank financial institutions that provide
refinancing to customers. A common practice for
finance companies is to provide additional financing to
a customer after the first loan has been paid off, using
Page 11
Industry Focus
the vehicle bought with the first loan as collateral.

Areas that would be regulated include: limiting loanto-value at 60%, and only allow healthy finance
companies to provide refinancing.
Industry trends
Spreading beyond Java. A large share of Indonesias
population live in Java and Bali. But based on the data from
Badan Pusat Statistik (BPS), the population outside Java and
Bali has been growing rapidly. By 2010, 40.9% of the
population resided outside Java and Bali, compared to 39.3%
in 2000. Multi-finance companies have acknowledged this
trend, and are tapping into this market. More than 60% on
BFINs income is generated by branches outside Jakarta and
Bali.
Leveraging off banks. Financing is a high-yield business and
banks want a slice of the pie. Banks channel loans though
finance companies or are involved in a joint-financing scheme.
Banks provide the funds, while finance companies provide the
operational expertise. Risk and rewards are shared according
to agreed terms, usually based on share of contribution of
each party.
BDMN acquired a majority stake in ADMF after exercising its
call option in 2004. ADMF is one of the key growth drivers in
BDMNs mass market segment, contributing Rp41.3tr or
20.4% of its loan portfolio at end December 2011. ADMF
and BDMN have a 1:99 joint-finance agreement, with BDMN
entitled to 10% of late payment penalty.
BFIN has numerous joint-finance and channelling agreements
with several banks, with facilities ranging from Rp150bn to
Rp245bn. The largest facility is a revolving Rp1.0tr facility at
10:90 share with BTPN, a sister company. As at December,
only Rp142.1bn of the facility had been used by BFIN. Going
forward, this facility will be utilised more effectively to help
fund BFINs growth.
BBRI, BMRI and BNII have joint-finance agreements with
WOMF. The largest facility is given by BNII major
shareholder of WOMF -, a Rp8.0tr facility at 1:99 share of risk
and reward. The agreement will expire by the end of the year,
but we expect it to be renewed.
PNBN channels auto loans through CFIN. The total facility is
for Rp600bn with interest rate at 9.25% for loans less than
12 months, 9.75% for loans with 13-24 months tenure, and
Page 12
10.25% for loans with 25-36 months tenure. The agreement

is reviewed annually.
Synergy with insurance companies. Vehicles financed by
finance companies are typically bundled with insurance
products. In return, these finance companies receive rebates
from the insurance companies, normally a percentage of
premium paid by the customer.
Finance companies that are not affiliated to banks normally
fund growth with bonds issuance or bank borrowings. At the
moment, funding is still skewed towards bank borrowings.
Competition eating into yields. Competition is intensifying as
banks and multi-finance companies realise that 2W and 4W
businesses give better yields. BCA Finance recently offered a
promotion rate of 3.99% for new 4W loans with 1 year
tenure, and a special rate for used 4W of 6.5% for 1-3 years
tenure. We note that BCA Finance is a wholly-owned
subsidiary of BBCA, which allows the former access to low
cost funds. And given the current low interest rates, multifinance companies are also issuing corporate bonds to fund
operations at lower financing costs. Multi-finance companies
may see improving NIMs going forward, led by declining cost
of funds and better spreads.
Multi-finance companies: FY11 results
CFIN*
WOMF
Avg Asset Yield

19.8
15.0
9.2
Cost of funds
10.8
8.0
8.0
Spread
9.0
7.0
1.2
NIM
11.1
12.8
7.4
*CFINs numbers refer to 3Q11 result; FY11 is not out yet
BFIN
ADMF
14.0
23.0
(9.0)
3.5
Source: Company, DBS Vickers
Competing in approval process. Multi-finance companies

which cost of funds is higher have limited scope to compete
in pricing. However, borrowers who got to multi-finance
companies are normally more concerned about the
affordability of monthly repayments and a speedy approval
process, rather than pricing. Hence, unlike banks which have
more stringent regulations, multi-finance companies are able
to speed up their approval process. BFINs strategy is to limit
lending to customers within 20-25km radius from its
branches, so that credit checks and approvals can be done
within a day.
No regulation for NPL classification. There is no NPL regulation
for multi-finance companies. But note that under joint
financing, the proportion funded by banks have to comply
Industry Focus
with BI regulation for NPL classification. Different companies

have different regulations depending on how conservative the
management is.
ADMF considers loans where repayments are 90 days past
due as non-performing. They are automatically written off
when repayment is 210 days past due. The company has a
policy to repossess the asset after the repayment is 60 days
past due. The repossessed vehicles are normally auctioned in
batches.
Meanwhile, CFIN sends a warning letter to borrowers whose
repayment is 7 days, 14 days and 30 days past due. Its policy
is to repossess the asset after repayment is 30 days past due,
but in practice, it usually waits until 60 days if the borrower
acts in good faith. Loans where repayments are 90 days past
due are classified as non-performing.
BFIN imposed a stricter write-off policy in 2011. A bad debt is
written-off after repayment is 270 days past due; last year
they were only written off after 360 days. BFIN has written off
Rp30.7bn this year (much higher than Rp15.9bn in 2010 and
Rp2.0bn in 2009) since implementing the stricter policy. BFIN
considers all loans that is 90 days past due as bad debt and
makes 100% provision. Under its policy, BFIN can repossess

the collateral after the repayment is 30 days past due.
However, it normally deals with this a case by case basis. If
the borrower acts in good faith and there is prospect of
repayment, it is usually more lenient.
WOMF classifies loans that are 90 days past due as nonperforming. If they are over 90 days past due, it prefers to
restructure rather than repossess if the customer has the
potential to repay. For loans under joint-finance agreement
with BNII, those over 180 days past due are written-off, but
for its own portion, the policy is automatic write-off after 210
days.
ASF classifies overdue loans into buckets based on days past
due. Each has its own monitoring team. Loans more than 90
days past due are classified as non-performing, and loans over
180 days past due are written-off. BCA Finance is very
conservative in classifying NPLs. Financing over 30 days past
due is considered non-performing. Loans over 150 days past
due is written-off, and under company policy, it will issue
repossession orders for loans over 60 days past due.
Page 13
Industry Focus
Multi-finance companies - A comparison

Name
Ticker
BFI Finance
BFIN

ADMF
Summary
Total Asset
Total Financing (ne
Net Profit
NIM (%)
ROE (%)
ROA (%)
Gearing Ratio (x)
Cost to Income Rat
Business Risk
Operating
Environment
WOM Finance
WOMF
5,305
4,751
425
11.1
18.0
8.0
1.18
55.3
- Business: Consumer Financing and Leasing

- Asset Mix: Consumer
16,889
13,241
1,583
12.8
35.8
9.4
2.43
51.6
- Business: Consumer Financing

- Asset Mix:
Leasing HETO,
13%
Financing Used
Motorcycle Direct, 8%
Consumer
Financing Used
Car - Direct,
22%
Clipan Finance
CFIN
Note: data as of 3Q11, the FY11 result is not out yet
- Business: Consumer Financing

- Asset Mix:
Motorcycle
(used)
14%
Leasing LCV,
7%
3,907
3,261
5
3.5
1.2
0.1
5.61
88.8
Consumer
Financing Used
Car - Dealer,
31%
Ownership
Structure
TPG Nusantara S.a.r.l.
Motorcycle
(new)
90%
Leasing
51%
Franklin Templeton
Investment Funds
9.96%
44.95%
Public
6.20%
Mayban Offshore
Corporate Services
(Labuan) Sdn Bhd
Sorak Financial Holdings

Pte Ltd
42.96%
26.43%
67.37%
Consumer
Financing
36%
Motorcycle
(used)
10%
Motorcycle
(new)
53%
The Northern Trust S/A

AVFC
Trinugraha Capital & Co

SCA
59.68%
- Business: Leasing, Consumer Financing, Factoring

Factoring
- Asset Mix:
13%
Car (new)
22%
Car (used)
11%
Consumer
Financing New
Car - Dealer,
19%
40.32%
99.0%
95.0%
Morgan Stanley & Co

Intl PLC
Mellon Bank NA S/A
54.33%
8.07%
6.56%
Asia Financial (Indonesia)
DBS Nominees Pte Ltd

5.0%
4,056
3,935
204
7.4
12.4
5.0
1.39
42.3
90.0%
2.71%
45.09%
62.00%
Wahana Makmur Sejati
5.00%
31.02%
54.35%
Public
17.24%
1.0%
Public
Public
Willy Suwandi Dharma
Governance
Structure
Approval Policy
Management,
system and
strategy
Financial Risk
Asset Quality
Down Payment
Policy
President Commissioner: Kusmayanto Kadiman

Commissioners: Johanes Sutrisno (Independent);
Alfonso Napitupulu (Independent); Richard Andrew
Deitz; Emmy Yuhassarie (Independent)
President Director: Francis Lay Sioe Ho
Marketing and Credit Director: Yan Peter Wangkar
Financial and Operational Director: Cornellius Henry
Kho
15.76%
10.0%
President Commissioner: Ho Hon Cheong

Independent Commissioner: Djoko Sudyatmiko; Eng Heng
Nee Pholip; Pande Radja Silalahi
Commissioner: Muliadi Rahardja; Vera Eve Lim; Rajeev
Kakar
President Director: Stanley Atmadja
2W Financing Marketing Director: Marwoto Soebiakno
4W Financing Marketing Director: Hafid Hadeli
Risk Management Director: Ho Lioeng Min
Finance Director and Compliance: I Dewa Made Susila
President Commissioner: Stephen Liestyo

VP Commissioner: Robbyanto Budiman
Commissioner: Garibaldi Thohir
Independent Commissioner: I Nyoman Tjager; Myrnie Zachraini
Tamin
President Director: Djaja Suryanto Sutandar
Finance Director: Albertus Alex Hermanto
Marketing Director: Simon Tan Kian Bing
Human Capital Director: Martha Bambang
Risk Management Director: Ir. Purwadi Indra Martono
Operational Director: Ir. C. Guntur Triyudianto
Customer fill in application sheet -> Check if
Segregation of duties between marketing and surveyor
Potential client fill in application sheet -> Dealer Help Desk (DHD)
customer is on blacklist -> Survey house and credit functions.
performs checking if customer is on blacklist by batches ->
checking -> input credit scoring and
Potential customer fill in application form -> Marketing
Surveyor checks to house and performs credit checking -> Credit
recommendation into the system -> Report is
officer enters the data into system -> Credit checking team Analyst (CA) reviews the report and issue a recommendation ->
reviewed by credit analyst and marketing SPV ->
in branch checks if customer is blacklisted -> surveyor
Approved by credit commitee -> WOMF issues purchase order to
Credit approval by branch manager or credit
performs credit checking to the customer house or work
dealer
commitee -> credit agreement signing -> Loan
place -> Credit analyst review the surveyor report and
disbursed
make a recommendation -> Credit analyst or branch
manager approves the credit
Going forward, focusing on increasing portion of
The company expect new bookings achieved Rp35tr
After slowing down used 2W bookings to 10% of total bookings,
direct financing (non-dealer generated) due to
funded by joint financing and bonds issuance. ADMF will WOMF have ramped up their policy and procedure regarding used
higher margin opportunities and less dependency issue bonds amounting Rp3.5tr by 1H12. The company is 2W. Going forward, we will see more aggressive strategy from
on delaers
guiding for a slowdown in expected bookings due to down WOMF to catch up on industry growth.
payment rule and impending fuel price hike although
numerical impact is still on review.
President Commissioner: Mu'min Ali Gunawan

Commissioner: Roosniati Salihin; Suwirho Josowidjojo
Independent Commissioner: Veronika Lindawati; Lukman
Abdullan
President Director: Gita Puspa Kirana Dermawan
Marketing Director: Suhendra, SE
Operational Director: Ir. Parmanto Adhi Tjahjono
All loan past due over 90 days is considered bad

debt and 100% provision is provided for this
category. BFIN had just reviewed their write off
policy and automatically write off loan above 270
days (previously: 360 days). According to their
policy, BFIN can reposses collateral after 30 days
past due.
BFIN is heavy on leasing and commercial vehicle
financing, average dp is 20-30%.
Loan 90 days past due is considered non-performing. The

policy is to send warning letter on 7th, 14th and 30th days
past due. After 30 days, CFIN has the right to reposses asset.
In practice usually repossed after 60 days past due.
NPL (Rp bn)

NPL Ratio (%)
Coverage Ratio
(%)
Financing over 90 days is considered dilinquent whereby

write off is done after the loan is 210 past due,
Av dp for:
- New 2W 15%
- Used W 22%
- New 4W 21%
- Used 4W 26%
66
1.1
92.2
Collection policy includes a phone reminder and visit within 90

days past due. Loan over 90 days past due is considered nonperforming, although WOMF prefers restructure rather than asset
repossession if customer still in good faith and still have prospect.
Loans over 210 days past due are automatically written off. Loans
under joint financing with BNII has a 180 days automatic write off
policy.
Av dp for:
- New 2W 15-17.5%
- Used 2W min 16%
Customer fill in application sheet -> Credit Marketing Officer

(CMO) check if customer is on blacklist -> CMO performs
house survey and credit checking -> Report is reviewed by
credit analyst -> Credit approval by branch manager or credit
commitee -> credit agreement signing -> Loan disbursed
Looking ahead, there will not be a significant change in CFIN's

business model. Funding through borrowing and channeling
agreementi with PNBN. For consumer financing, CFIN prefers
second hand cars rather than new cars because the price is
more stable. Moreover, for new cars, the targeted market
differs from its MFC peers, because it targets the more high
middle/affluent class. This market is usually targeted by banks.
Heavy on leasing and used 4W financing, average dp already

above 20%.
653
1.3
14
0.4
69.9
5.0
Liquidity
Borrowing
27%
Borrowing
35%
Borrowings
83%
Bonds
57%
Borrowing
100%
Bonds
73%
Bonds
17%
MTN
8%
2,000
7,000
3,500
6,000
3,000
5,000
Asset Maturity
Liability Maturity
2,500
1,600
1,400
1,400
1,200
1,200
1,000
2,000
600
1,000
1,000
400
2013
2014
Borrowing
% of Total
Liability
Bonds
% of Total
Liability
>2015
600
400
200
200
No
maturity
< 1 mth
1-3 mths
3-12 mths
1-3 yrs
> 3 yrs
Liability Maturity
800
800
2012
Liability Maturity
1,000
3,000
1,500
Asset Maturity
1,600
1,800
Liability Maturity
2,000
Asset Maturity
Asset Maturity
4,000
500
1,800
< 3 mths
3-12 mths
1-5 yrs
<1 mth
> 5 yrs
1-3 mths
3-12 mths
1-5 yrs
> 5 yrs
2,316
2,957
851
2,285.59
78.8
482
23.7
7,805
24.5
1,596
94.84
-
16.4
62.6
46.0
19.8
15.0
14.0
8.0
10.8
9.0
11.1
1.18
8.0
7.0
12.8
2.43
23.0
(9.0)
3.5
5.61
1.2
7.4
24.9
1.39
1.24
2.82
7.95
1.46
Profitability
Ave Asset Yield

(%)
Av Cost of Funds
(%)\
Spread (%)
NIM (%)
Gearing Ratio
Liability/ Equity
Source: Companies; DBS Vickers
Page 14
Industry Focus
factors justify the valuation discount. On average, multifinance companies are currently trading at 2.1x FY11 P/BV
and 7.1x FY11 PE.
Valuation
Trade at a discount to banks. Multi-finance companies
except for ADMF trade at a significant discount to the
banks. We believe this is partly due to the size of the
companies and also the limited liquidity of the stock. Also,
as stated in the report above, multi-finance companies are
less tightly regulated than the banks, have different NPL
classification and write-off policies and carry higher cost of
funds as they are not allowed to take deposits. All these
High risk, high return. Multi-finance business, especially

consumer financing, generate higher yields than
conventional bank loans. At end Dec11, multi-finance
companies ROE averaged 31.1% with 8.7% NIM, while
NPL ratios were low at 1.2%.
Peer Comparables: Multi finance companies
ADMF
BFIN
CFIN
MFIN
WOMF
Market cap
(US$m)
Price
(Rp/s)
FY11F
1,320
392
209
99
58
12,150
4,750
510
690
265
Weighted average
Simple average
PE (x)
FY12F
FY11F
7.7x
7.2x
6.9x
4.7x
88.3x
NA
5.5x
6.0x
4.0x
NA
7.1x
6.6x
5.4x
5.2x
PBV (x)
FY12F
Net div (%)

FY11F
FY12F
38.5%
19.7%
15.3%
29.0%
1.2%
NA
19.3%
13.4%
27.0%
n/a
0.0%
0.0%
2.2%
0.0%
0.0%
NA
0.0%
2.2%
NA
NA
31.1%
25.6%
18.6%
21.2%
n.m
n.m
n.m.
n.m.
FY12F
FY11F
2.7x
1.3x
0.9x
NA
1.2x
NA
1.0x
0.8x
NA
NA
2.1x
1.5x
0.8x
0.9x
ROE (%)
* Weighted average PE excludes WOMF

Source: Bloomberg; Companies; DBS Vickers
Peer Comparables: Banks

Market
cap
Price
Target
Price
(US$m)
(Rp/s)
(Rp/s)
Bank Central Asia
21,500
8,000
8,500
Buy
23.3x
19.5x
17.5x
13.2
Bank Danamon
4,649
4,450
4,800
Hold
13.2x
12.7x
10.6x
20.8
Bank Mandiri
Bank Negara
Indonesia
Bank Rakyat
Indonesia
Bank Tabungan
Negara
Bank Tabungan
Pensiunan
Nasional
17,168
6,750
7,200
Buy
15.2x
11.4x
10.1x
12.9
8,029
3,950
4,500
Buy
14.7x
12.6x
11.2x
18,151
6,750
8,200
Buy
13.8x
10.5x
1,146
1,190
1,500
Buy
11.3x
2,161
3,500
4,700
Buy
23.7x
Banking Group
Rating
PE (x)
FY10F
FY11F
CAGR
FY12F
^ (%)
P/BV (x)
FY10F
ROE
(%)
Net div
(%)
FY11F
FY12F
FY12F
FY12F
5.8x
4.8x
4.0x
24.9%
1.5%
2.1x
1.7x
1.5x
14.8%
3.3%
3.4x
2.3x
2.0x
20.9%
3.1%
13.6
1.8x
2.0x
1.7x
16.3%
2.4%
9.8x
12.2
4.3x
3.2x
2.6x
29.0%
3.1%
9.3x
8.5x
15.1
1.6x
1.4x
1.3x
15.7%
3.2%
14.2x
12.3x
22.5
4.7x
3.5x
2.7x
25.1%
0.0%
Weighted average
17.3x
13.9x
12.4x
4.1x
3.2x
2.7x
23.3%
2.5%
Simple average
16.5x
12.9x
11.4x
3.4x
2.7x
2.2x
21.0%
2.4%
Weighted average (ex BBCA)
14.7x
11.5x
10.3x
3.4x
2.5x
2.1x
22.6%
2.9%
Simple average (ex BBCA)
15.3x
11.8x
9.6x
3.0x
2.3x
1.8x
20.4%
2.8%
Buy (B), Hold (H), Fully Valued (FV)

Source: Bloomberg; Companies; DBS Vickers
Page 15
Industry Focus
Stock Profiles
Page 16
Industry Focus

Bloomberg: ADMF IJ | Reuters: ADMF.JK
NOT RATED Rp12,250 JCI : 4,079.38
Driven by auto loans
Potential Catalyst: -
Funding supported by major shareholder, BDMN
Analyst
LIM Sue Lin +603 2711 0971
Resilient growth of auto industry is driving

sustainable new bookings
Indonesia Research Team +62 21 3983 2668

But keep an eye on operating costs and thinning

margins
Price Relative
4,500
16,000
4,000
14,000
3,500
12,000
3,000
10,000
2,500
8,000
2,000
6,000
1,500
4,000
1,000
2,000
500
2008
2009
Relative JCI Index (LHS)
2010
2011
2012
Adira Dinamika Multi Finance (RHS)
Financials and Valuation

FY Dec (Rp bn)
Pre-prov. Profit
Net Profit
Net Pft (Pre Ex.)
EPS (Rp)
EPS Pre Ex. (Rp)
EPS Gth (%)
EPS Gth Pre Ex (%)
Diluted EPS (Rp)
PE Pre Ex. (X)
Net DPS (Rp)
Div Yield (%)
ROAE Pre Ex. (%)
ROAE (%)
ROA (%)
BV Per Share (Rp)
P/Book Value (x)
Synergies with BDMN. Bank Danamon (BDMN) is now

major shareholder of Adira Dinamika Multi Finance
(ADMF) after exercising its call options over the years. It
has 95% stake in the company. ADMF specialises in
financing motorcycles and cars, both new and used.
Previously, it also extended loans to the electronics
sector, but that business unit has been taken over by
affiliate PT Adira Quantum Multifinance. There is also
cross-selling of Adira Insurance products.
2008A
2009A
2010A
2011A
1,445
1,020
1,020
1,020
1,020
82.3
82.3
1,020
12.0
280
2.3
25.0
25.0
13.0
1,950
6.3
1,691
1,212
1,212
1,212
1,212
18.8
18.8
1,212
10.1
510
4.2
25.0
25.0
14.2
2,652
4.6
2,125
1,468
1,468
1,468
1,468
21.1
21.1
1,468
8.3
242
2.0
25.0
25.0
7.7
3,795
3.2
2,568
1,583
1,583
1,583
1,583
7.9
7.9
1,583
7.7
954
7.8
25.0
25.0
8.0
4,421
2.8
N/A
B: N/A
N/A
S: N/A
N/A
H: N/A
Consensus EPS (Rp):

Other Broker Recs:
ICB Industry : Finance

ICB Sector: Multifinance
Principal Business: Adira Dinamika Multi Finance (ADMF) is a finance
company that focuses on financing new and used 2W and 4W. It is
95% owned by BDMN.
Source of all data: Company, DBS Vickers, Bloomberg
Page 17
www.dbsvickers.com
ed: SGC / sa: MA
Growth driven by auto loans. BDMN channels

lending through ADMF and cross-sells other products to
ADMFs customers. But growth had been mainly driven
by strong auto sales, with industry growth resilient at
9% for 2W and 17% for 4W in 2011. The largest share
of new financing last year was to new motorcycles,
valued at Rp15.5tr for 1.26m units.
Key risks: rising operating costs and thinning
margins. The largest expense item is staff cost. Costto-income ratio is maintained at 60.2% in 2010. With
195 competitors in the industry in 2011, competition
has heated up and is squeezing margins and causing
asset quality to deteriorate.
At A Glance
Issued Capital (m shrs)
Mkt. Cap (Rpbn/US$m)
Major Shareholders
Bank Danamon (%)
Free Float (%)
Avg. Daily Vol.(000)
1,000
12,250/1,334
95.0
5.0
17,805
Industry Focus
Company Background
Strong synergy with BDMN. Adira Dinamika Multi Finance
(ADMF) was established as a multi-finance company in the
1990 by Raphael Adi Rachmat, Linda Rachmat and Yus
Winata. It was a part of the Triputra Group, a conglomerate
with many businesses, including a motorcycle dealership,
auto parts manufacturing, and auto parts retail. After ADMF
went public, Bank Danamon (BDMN) has since become major
shareholder with 95% stake after exercising its call options
over the years.
Cross-selling opportunities within the group. ADMF
specialises in financing new and used motorcycles and cars. It
also extended loans for electronic appliances, but that
business unit has been taken over by an affiliate company, PT
Adira Quantum Multifinance. ADMF also bundles its finance
products with insurance products by Adira Insurance, in
which BDMN has 90% stake.
Growth Strategies
Access to funding remains a competitive strength. Despite
the large number of multi-finance companies in Indonesia,
ADMF remains one of the strongest. One of the reasons is the
support of major shareholder, BDMN. The bank channels
lending through ADMF and cross-sells other products to
ADMFs customers. But growth has been driven mainly by the
strong auto sales, which growth resilient at 9% for 2W and
17% for 4W respectively in 2011. ADMF has 16% and 7%
market shares of new motorcycles and cars, respectively. The
company is diversified in terms of auto segment and brands,
and geographically.
Business model focuses on financing new and used 2W.
Although the company offers financing for both used and
new motorcycle and cars, it is skewed towards motorcycles.
The largest share of new financing last year was to new
motorcycles, valued at Rp15.5tr for 1.26m units.
Consumer Financing Portfolio
Avg. Ticket
Size (Rp m)
Avg.
Avg.
Tenor
Deposit
(mth)
(%)
Avg. Rate
(%)
4W (new)
141-143
41
21
13-16
4W (used)
91-93
35
26
15-20
2W (new)
11-12
29
15
27-31
2W (used)
7-9
25
22
31-36
Source: Company
Although smaller in ticket size, 2W financing offers higher

yields and larger volumes. And AMDF has been in the
business long enough to be able to manage the related risks,
especially for used 2W. We see this as a balanced trade-off
between risk and satisfactory reward.
No material asset quality issues. ADMF considers an asset nonperforming when repayment is 90 days past due. It writes off
loans that are more than 210 days overdue. NPLs spiked in 2010
and 2011 after a jump in new bookings. Going forward, NPL
ratio should be maintained at below 1.5%. Since 2010, ADMF
has adopted more conservative provisions for loan losses
following the implementation of a new accounting practice.
And we can see coverage ratio has been trending up since
2010. The company tries to maintain asset quality by increasing
intensity of collection, improving its approval process, and
adopting more prudent risk management.
Aggressively expanding network. ADMF has been expanded its
network aggressively, doubling the number of service point over
four years. This is in line with its strategy to penetrate deeper
into several regions nationwide, especially outside Java. As of
2011, ADMF had 653 service points spread out geographically,
with 57% located outside Java. That year, 50% of income was
generated from outside Java. However, the expansion also
resulted in higher headcount; ADMF hired 3,880 new employees
in the year.
Network Expansion
2010
2011
Branch
121
139
Representative Office/Service Point
306
365
Kiosk
103
126
Dealer Outlets
20
23
TOTAL
550
653
24,392
28,272
Employees
Income driven by consumer financing. This is supported by

strong auto sales and ADMFs position as one of the strongest
auto financier in the market. The second larger contribution is
administration income, which is positively correlated with the
numbers on new bookings.
Funding sources. ADMFs financing activities are funded by
borrowing from financial institutions, as well as bond issues.
It recently issued Rp2.5tr worth of bonds with 24-60 months
tenure and priced at 7.75-9.00%. The total amount of bond
issuance approved is Rp6.0tr, with the remaining Rp3.5tr to
Page 18
Industry Focus
be issued within 1H12. The company also has a joint-finance

facility with BDMN at 1:99 share.
Given ADMFs exposure to the 2W market, we may see a

slowdown in new bookings this year.
Gearing ratio is well below the maximum 10x imposed by

Bapepam. This gives ADMF plenty of room to borrow and
issue bonds to fund growth.
Prospect
Key Risks
Operating expenses. The largest expense item is staff cost.
The company employed an additional 3,880 people in 2011
to man its growing network. Consequently, cost-to-income
ratio shot up to 60.2% in 2011.
Strong competition. With 192 competitors by end 2010,
strong competition in the industry had resulted in thinning
margins and dwindling asset quality.
Maximum down payment regulation. MoF recently imposed
a maximum down payment for auto financing effective Jun
2012, to rein in auto sales growth. The 2W market is more
sensitive because buyers have lower purchasing power.
The company expects new bookings to reach Rp35tr in 2012,

funded by joint-finance and bonds. ADMF will issue Rp3.5tr
worth of bonds by 1H12. It is guiding for slower bookings
due to the new down payment rules and impending fuel
price hike, although the impact is still being assessed. ADMF
is expecting a dramatic slowdown, but bookings will recover
in 2013F. We expect cost of funds to trend down in this low
interest rate environment, but margins will be squeezed by
competition.
Valuation
ADMF trades at 7.7x FY11 PE and 2.7x FY11 BV, higher than
its peers given its higher ROE and market positioning within
the industry. There are no consensus estimates for ADMF.
Shareholding Structure
Franklin Templeton
Investment Funds
Public
5.0%
6.20%
26.43%
67.37%
Asia Financial (Indonesia)
99.0%
95.0%
90.0%
1.0%
Willy Suwandi Dharma
Source: Company; DBS Vickers
Page 19
10.0%
Industry Focus
Market Share (4W&2W)
Lending Composition (Dec 2010)
20.0%
Motorcycle
(used)
14%
Car (new)
22%
15.73%
14.66%
16.0%
12.18%
13.58%
13.22%
2.98%
3.43%
2008
2009
15.81%
12.0%
8.0%
Car (used)
11%
8.65%
4.0%
2.66%
2007
0.0%
Motorcycle
(new)
53%
2006
Market Share 4W
2010
4.5%
3.74%
700
4.0%
3.5%
600
3.0%
500
West Java
11%
2.5%
400
300
0.87%
200
0.95%
1.24%
1.25%
Central Java
11%
0.0%
2006
2007
2008
25.0%
20.7%
3,000
66.5%
20.6%
20.0%
17.4%
2,000
2010
2011
NPL (%)
Cost to Income
3,500
14.1%
2009
NPL(Rp bn)
Net Interest Income
2,500
13.9%
12.8%
15.0%
80.0%
67.8%
2,500
58.0%
60.2%
58.0%
2,000
1,500
10.0%
1,000
5.0%
500
-
0.0%
2007
2008
2009
2010
Consumer Financing Income (Rp bn)
50.0%
40.0%
10.0%
0.0%
2006
2007
2008
2009
Operating Expense (Rp bn)
2010
2011
CIR (%)
Net Profit and ROE (%)

3.00
10,000
2.50
2.00
1.57
1,800
1,600
2.43
60.0%
52.3%
51.2%
45.7%
45.7%
1,400
50.0%
38.7%
1,200
1,000
1.50
1.10
4,000
1.00
0.68
0.43
2,000
0.34
0.50
2006
20.0%
500
2011
12,000
6,000
30.0%
1,000
NIM (%)
Gearing Ratio
8,000
70.0%
60.0%
50.4%
1,500
2006
1.5%
0.5%
East Java
12%
3,000
2.0%
1.0%
100
Sumatera
23%
2011
Market Share 2W
4.17%
800
Greater
Jakarta
15%
Kalimantan
12%
6.60%
Asset Quality Measures
Contribution of Income per Segment (Dec-11)

Bali and Nusa
Tenggara
Sulawesi 6%
10%
5.22%
2007
2008
Total Debt (Rp bn)
2009
2010
Gearing Ratio
2011
35.8%
40.0%
30.0%
800
600
20.0%
400
10.0%
200
-
0.0%
2006
2007
2008
2009
Net Profit (Rp bn)
2010
ROE (%)
Source: Company data; DBS Vickers
Page 20
Industry Focus
Key Assumptions
FY Dec
Consumer Financing Gth

Portion Financed by BDMN
Yld. On Earnings Assets
Avg Cost Of Funds
Sensitivity Analysis
2007A
2008A
2009A
2010A
2011A
17.4
64.0
28.4
14.1
26.6
66.9
33.4
13.0
12.3
65.0
33.9
14.2
55.1
60.6
17.3
7.7
32.3
52.8
15.0
8.0
2011
Loan gth +/- 1%

Int Yield +/- 1%
Net Profit +/- 1.9%

Net Profit +/- 11.1%
Portion financed by
BDMN is trending down
Income Statement (Rp bn)

FY Dec
Consumer Financing
I
Other Income
Total Income
Operating Expense
Provision
Pre-Tax Profit
Tax
Extraordinary Income
Minorty Interest
Net Profit
Net Profit bef Except
2007A
2008A
2009A
2010A
2011A
1,727
758
2,485
(1,636)
(47)
801
(241)
560
560
2,331
1,049
3,379
(1,934)
(26)
1,419
(399)
1,020
1,020
2,778
1,167
3,945
(2,254)
(33)
1,658
(446)
1,212
1,212
2,119
1,778
3,897
(1,772)
(193)
1,932
(464)
1,468
1,468
3,008
2,295
5,304
(2,736)
(456)
2,112
(528)
1,583
1,583
Growth (%)
Net Interest Income Gth
22.4
Net Profit Gth
20.6
Margins, Costs & Efficiency (%)
Spread
14.2
Net Interest Margin
13.9
Cost-to-Income Ratio
65.9
Business Mix (%)
Net Int. Inc / Opg Inc.
69.5
Non-Int. Inc / Opg inc.
30.5
Fee Inc / Opg Income
Oth Non-Int Inc/Opg Inc
Profitability (%)
ROAE Pre Ex.
52.5
ROAE
52.5
ROA Pre Ex.
17.0
ROA
17.0
Page 21
Operating expenses to
increase along with
network expansion and
new staff hire.
Margins Trend
3,500
25%
3,000
20%
2,500
2,000
15%
1,500
10%
1,000
35.0
82.3
19.2
18.8
(23.7)
21.1
42.0
7.9
20.4
20.7
57.2
19.7
20.6
57.1
9.6
17.4
45.5
7.0
12.8
51.6
69.0
31.0
-
70.4
29.6
-
54.4
45.6
-
56.7
43.3
-
64.3
64.3
28.4
28.4
52.7
52.7
28.0
28.0
45.5
45.5
19.3
19.3
38.5
38.5
9.4
9.4
5%
500
-
0%
2007
2008
2009
2010
Net Interest Income
2011
NIM
Industry Focus
Quarterly / Interim Income Statement (Rp bn)
FY Dec
Financing Income
Other Income
Total Income
Operating Expense
Provision
Pre-Tax Profit
Tax
Minorty Interest
Net Profit
Growth (%)
Net Profit Gth
4Q10A
1Q11A
Quarterly Net Profit & Growth

2Q11A
3Q11A
4Q11A
579
515
1,094
(483)
(99)
512
(127)
384
384
667
475
1,141
(573)
(51)
517
(129)
388
388
728
527
1,255
(646)
(137)
472
(118)
354
354
830
650
1,480
(733)
(89)
657
(165)
(3)
490
490
784
643
1,427
(783)
(179)
465
(116)
3
352
352
8.5
3.1
15.1
0.8
9.2
(8.8)
14.1
38.5
(5.6)
(28.1)
50.0
40.0
30.0
20.0
10.0
0.0
-10.0
-20.0
-30.0
-40.0
600
500
400
300
200
100
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
Qty Net Profit
Net Profit Gth
4Q11 result is weak on the

back of higher operating
expenses and provision.
Page 22
Industry Focus
Gross Consumer Financing & Gth
Balance Sheet (Rp bn)

FY Dec
2007A
2008A
2009A
2010A
2011A
Cash & Cash Eqv.

Financing (net)
Investment Securities
Prepaid Expenses
Other Receivables
Fixed Assets
Intangible Asset
Other Assets
Total Assets
376
1,905
69
22
151
25
752
3,302
474
1,821
82
19
155
46
995
3,592
487
2,562
1
75
21
145
44
996
4,330
619
6,544
1
136
31
191
35
43
7,600
2,793
13,241
1
234
123
263
29
205
16,889
Fund Borrowing
Bonds
Taxes Payable
Accrued expenses
Other Liabilities
Shareholders' Funds
Total Liab& S/Hs Funds
146
1,200
37
260
435
1,225
3,302
96
749
225
299
273
1,950
3,592
225
677
51
354
370
2,652
4,330
50
2,535
53
618
548
3,795
7,600
2,957
7,805
62
745
899
4,421
16,889
Financial Stability Measures (%)

FY Dec
2007A
2008A
2009A
2010A
2011A
60,000
60%
50,000
50%
40,000
40%
30,000
30%
20,000
20%
10,000
10%
2007
Liabilities Measure
Gearing Ratio
Laibility/Equity
2008
2009
Gross Financing
2010
2011
Gross Financing Gth
ADMF has been aggressively

issuing bonds to reduce
dependence on BDMN to fund
growth.
Total Debt & Gearing Ratio
12,000
3.0
10,000
2.5
8,000
2.0
6,000
1.5
4,000
1.0
2,000
0.5
0.0
Balance Sheet Structure

Financing/ Total Asset
Debt/Total Liability
Borrowings/ Int. Bear. Liab.
Bonds/ Int. Bear. Liab.
Asset Quality
NPL / Total Gross Loans
NPL / Total Assets
Loan Loss Reserve Coverage
Provision Coverage Ratio
0%
57.7
40.8
7.0
57.8
50.7
23.5
5.8
45.6
59.2
20.8
13.4
40.4
86.1
34.0
1.3
66.6
78.4
63.7
23.7
62.6
3.74
20.3
7.1
7.7
0.87
5.5
13.2
5.2
0.95
5.6
13.6
6.0
1.24
6.4
39.6
21.4
1.25
3.9
69.9
38.2
1.10
1.70
0.43
0.84
0.34
0.63
0.68
1.00
2.43
2.82
2007
2008
2009
2010
Total Debt
2011
Gearing Ratio
NPL Ratio has

improved sharply since
2007.
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
2007
2008
2009
2010
NPL (%)
Page 23
2011
Industry Focus
BFI Finance
Bloomberg: ADMF IJ | Reuters: ADMF.JK
Opportunities in direct
financing
NOT RATED Rp4,725 JCI : 4,079.38

Potential Catalyst: Analyst
LIM Sue Lin +603 2711 0971
Price Relative
4,500
8,000
4,000
7,000
3,500
6,000
3,000
Increasing share of high yielding assets, reducing

reliance in dealer-generated bookings
Focus on expanding outside Java and Bali
Competition squeezing NIM in the long run
Venturing into direct financing. BFI Finance (BFIN)s

unique characteristic is its focus on direct financing. This is
an effort to venture into higher yielding assets and reduce
dependence on dealer-generated bookings.
5,000
2,500
4,000
2,000
3,000
1,500
2,000
1,000
1,000
500
2008
2009
2010
2011
2012
BFI Finance (RHS)

FY Dec Rp bn)
2010A
2011A
2012F
2013F
Pre-prov. Profit
Net Profit
Net Pft (Pre Ex.)
EPS (Rp)
EPS Pre Ex. (Rp)
EPS Gth (%)
EPS Gth Pre Ex (%)
Diluted EPS (Rp)
PE Pre Ex. (X)
Net DPS (Rp)
Div Yield (%)
ROAE Pre Ex. (%)
ROAE (%)
ROA (%)
BV Per Share (Rp)
P/Book Value (x)
463
362
362
476
476
20.1
20.1
476
10
78
1.7
20.8
20.8
9.4
2,553
1.85
558
425
425
559
559
17.5
17.5
559
8
19.8
19.8
8.0
3,112
1.52
698
512
512
674
674
20.4
20.4
674
7
56
1.2
19.6
19.6
7.1
3,751
1.26
784
577
577
758
758
12.6
12.6
758
6
67
1.4
18.5
18.5
6.6
4,450
1.06
B: 1
666
S: N/A
866
H: N/A
Consensus EPS (Rp):

Other Broker Recs:
ICB Industry : Finance

ICB Sector: Multifinance
Principal Business: BFIN provides financial services such as leasing,
consumer financing and factoring.
Page 24
www.dbsvickers.com
ed: SGC / sa: MA
Focus on regions outside Java and Bali. Based on data

from BPS, the population outside Java and Bali has been
growing more rapidly, which translate into larger business
potential for BFIN. Currently, more than 60% of BFINs
income is generated from branches outside Java and Bali.
BFIN is committed to expanding its distribution network
outside Java and Bali.
Competition squeezing margins. There are 192 multifinance companies in Indonesia who also have to compete
with banks for a slice of the pie. In order to gain market
share, finance companies have to fork out higher
acquisition costs and have better relationships with the
dealers, which are eating into NIMs. However, BFIN is
mitigating this by increasing the share of direct financing
in its loan portfolio and developing its network and
channels to reduce dependence on dealers.
At A Glance
Major Shareholders
Trinugraha Capital (%)
Northen Trust S/A AVFC (%)
Free Float (%)
760
3,592/391
45.0
10.0
45.0
250,250
Industry Focus
BFI Finance
Company Background
Over 20 years track record. The company started out as a
joint venture with Manufacturer Hanover Leasing Company in
1982. Hanover Leasing subsequently sold its stake to PT Bank
Umum Nasional and Essompark Ltd of Hong Kong in 1986. In
1990, the company was licensed as a multi-finance company
and renamed PT Bunas Finance Indonesia. BFIN then went
public and was listed on the Jakarta and Surabaya Stock
Exchanges in the same year.
Expanding into direct financing will also reduce its

dependence on dependency on dealer-generated financing.
Dealers have the power to dictate rates, and prefer lower
rates to encourage sales. Furthermore, dealers charge high
commission rates, which will squeeze BFINs margins in the
long run. One dealership usually accommodates sales persons
from several finance companies. Dealers prefer either finance
companies that pay high commission rates and offer fast
approvals.
Key Risks
Recently acquired by Trinugraha Capital & Co. A consortium

comprising TPG Capital, Northstar Equity Partners and Boy
Garibaldi Thohir bought a controlling stake (44.95%) in BFIN
in May 2011 for Rp1.44tr. BTPN, which is also owned by TPG
Capital, became a related company. Currently, BFIN has a
Rp1tr joint-finance agreement with BTPN, and we expect this
strategic alliance to improve down the road. We also note
that Boy Garibaldi Thohir is one of the Commissioners of
WOM Finance (WOMF), a finance company that focuses on
2W.
Growth Strategies
Concentrating on higher yielding assets. BFINs business
includes leasing, dealer-generated new and used 4W
financing, as well as direct financing for new and used 4W.
Going forward, BFIN is looking at 20-25% growth in new
bookings with emphasis on higher-yielding segments i.e.
direct financing and leasing of Light Commercial Vehicles
(LCV). The average asset yield generated from this segment is
significantly higher than dealer-generated financing due to
additional risks. Direct financing of used cars can generate
average 23% yield, while used motorcycles can yield 41%.
Dealer generated used cars generate 18% yield after dealer
commissions (part of acquisition costs).
Average financing yield per segment
Leasing
Dealer generated used car financing
Dealer generated new car financing
Direct used car financing
Direct motorcycle financing
Blended
17-18%
18-20%
16-17%
23-25%
41-42%
21-24%
Dependent on bank borrowings. BFINs main source of

funding is still bank borrowings, at rates of 9.48-15.75%. But
it plans to increase the share of bond funding by issuing Rp12tr within the next two years. It also has joint-finance
agreements with several banks, including BTPN, to fund
growth in consumer financing. Going forward, the company
will utilise more of this facility.
Competition squeezing margins. There are 192 multi-finance
companies in Indonesia who also have to compete with banks
for a slice of the pie. In order to gain market share, financing
companies have to fork out higher acquisition costs and have
better relationships with dealers, which will squeeze NIMs.
BFIN is trying to mitigate this by increasing the share of direct
financing in its loan portfolio, and develop a network and
channels to reduce dependence on dealers.
Prospect
Has not utilised financing facility from BTPN. BFIN has a
revolving joint-finance facility from its sister company, BTPN.
The Rp1tr facility is non-recourse with 10:90 share. BFIN has
only used Rp142bn at end 2011. Going forward, we will see
BFIN utilising more of this facility to grow its asset base.
Focusing on growth outside Java and Bali. Despite keen
competition, BFINs growth is sustainable. Its unique
approach to compete is to expand and maintain its market
shares outside Java and Bali. More than 60% of BFINs
income is generated from branches outside Java and Bali. This
trend should continue along with BFINs efforts to expand its
distribution network outside Java and Bali.
Source: Company
Page 25
Industry Focus
BFI Finance
Valuation
Currently trading at below book value. BFIN trades at 1.0x
FY12 P/BV and 5.5x FY12 PE based on consensus estimates.
There is only 1 broker covering the stock with a Buy
recommendation. BFINs shares are tightly held, with free
float at 45%. Trinugraha Capital & Co recently bought 45%
stake in the company. Prior to the acquisition, BFIN was

owned by several shareholders with each owning less than
20%. Stock liquidity is thin, with 250m average daily traded
volume (3-month average).
TPG Nusantara S.a.r.l.
Trinugraha Capital & Co

SCA
44.95%
59.68%
40.32%
Page 26
9.96%
45.09%
Public
Source: Company; DBS Vickers
The Northern Trust S/A

AVFC
Industry Focus
BFI Finance
Avg Earning Asset, Cost of Funds and NIM
Lending Composition (Dec 2010)

Consumer
Financing Used
Motorcycle Direct, 8%
Consumer
Financing Used
Car - Direct,
22%
25.0%
Leasing HETO,
13%
20.0%
Leasing LCV,
7%
15.0%
10.0%
5.0%
Consumer
Financing Used
Car - Dealer,
31%
Consumer
Financing New
Car - Dealer,
19%
0.0%
2006
2007
2008
2009
Yield of earning asset
2010
2011
2012F
Av cost of funds
2013F
NIM
80
Unallocated
14%
(Rp bn)
2.5%
70
Java
33%
2.0%
60
50
Sulawesi
18%
1.5%
40
1.0%
30
20
0.5%
10
Sumatera
21%
Kalimantan
14%
2,000.00
13.4% 13.0%
16.0%
13.4%
11.1% 10.8%
14.0%
10.3% 12.0%
10.0%
1,000.00
2009
2010
2011
2012F
2013F
NPL(%)
1,200.00
1,000.00
50.0%
42.1%
600.00
400.00
40.0%
200.00
35.0%
45.0%
0.0%
30.0%
2006 2007 2008 2009 2010 2011 2012F 2013F
2006 2007 2008 2009 2010 2011 2012F 2013F

Operating Income
60.0%
55.0%
48.7% 49.8%
47.7%
800.00
58.0%
6.0%
2.0%
-
55.3% 55.5%
53.2%
8.0%
4.0%
500.00
NIM
Operating Expense
Gearing Ratio
Cost to Income
6,000.0
1.47
1.47
5,000.0
1.53
1.18
0.99
0.90
3,000.0
2,000.0
2008
Cost to Income
14.8%
1,500.00
4,000.0
2007
NPL (Rp bn)
Net Interest Margin

14.8%
0.0%
2006
0.43
0.28
1,000.0
2006 2007 2008 2009 2010 2011 2012F 2013F
Debt
Gearing Ratio
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
-
700.00
25.0%
600.00
500.00
19.6%
18.7%18.0%18.0%
17.0% 20.0%
16.6%17.1%
15.5%
400.00
15.0%
300.00
10.0%
200.00
5.0%
100.00
-
0.0%
2006 2007 2008 2009 2010
Net Profit
ROE (%)
Page 27
Industry Focus
BFI Finance
Key Assumptions
FY Dec
Gross Consumer Financing Gth
Gross Leasing Gth

Avg Cost Of Funds
2009A
2010A
2011A
2012F
2013F
(19.5)
(41.5)
21.2
9.5
40.3
152.7
21.2
10.4
29.9
120.8
19.8
10.8
20.0
12.0
20.4
10.0
20.0
10.0
20.5
10.0
Leasing has been

growing rapidly.

FY Dec
2009A
2010A
2011A
2012F
2013F
Consumer Financing
I
619
49
242
910
(443)
(75)
392
(91)
301
301
661
70
192
922
(459)
(0)
463
(101)
362
362
850
150
249
1,248
(690)
(29)
529
(104)
425
425
1,097
225
247
1,570
(872)
(15)
683
(171)
512
512
1,317
248
303
1,867
(1,083)
(15)
769
(192)
577
577
Leasing Income
Other Income
Total Income
Operating Expense
Provision
Pre-Tax Profit
Tax
Minorty Interest
Net Profit
Growth (%)
(3.7)
Net Profit Gth
30.0
Spread
11.7
Net Interest Margin
14.8
48.7
Business Mix (%)
73.4
26.6
Profitability (%)
ROAE Pre Ex.
20.8
ROAE
20.8
ROA Pre Ex.
12.6
ROA
12.6
Page 28
Operating Expense
increasing in line with
network expansion and
new staff hire.
Margins Trend
700
16%
600
14%
500
12%
10%
400
8%
300
6%
200
4%
100
2%
9.3
20.1
36.8
17.5
32.3
20.4
18.3
12.6
10.7
13.4
49.8
9.0
11.1
55.3
10.4
10.8
55.5
10.5
10.3
58.0
79.2
20.8
-
80.0
20.0
-
84.2
15.8
-
83.8
16.2
-
20.8
20.8
9.4
9.4
19.8
19.8
8.0
8.0
19.6
19.6
7.1
7.1
18.5
18.5
6.6
6.6
0%
2009
2010
2011
2012F
Net Interest Income
2013F
NIM
Industry Focus
BFI Finance
FY Dec
4Q10
1Q11

2Q11
3Q11
4Q11
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
140
120
Leasing Income
Other Income
Total Income
Operating Expense
Provision
Pre-Tax Profit
Tax
Minorty Interest
Net Profit
182
22
51
255
(127)
(0)
128
(25)
103
103
193
25
56
274
(148)
126
(25)
101
101
205
33
59
297
(166)
(6)
125
(25)
101
101
220
41
61
321
(188)
(9)
125
(24)
100
100
231
51
74
356
(188)
(14)
153
(30)
123
123
Growth (%)
Net Profit Gth
(4.6)
25.5
7.4
(1.5)
8.7
(0.8)
9.6
(0.1)
8.3
22.7
Consumer Financing Income
100
80
60
40
20
2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
Qty Net Profit
Net Profit Gth
4Q is always the strongest

quarter, with high net profit
growth q-o-q.
Page 29
Industry Focus
BFI Finance
Gross Consumer Financing & Gth

FY Dec
2009A
2010A
2011A
2012F
2013F
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
7,000
Cash and Cash

E i l t
Leasing (net)
Consumer Financing
( t)
Fixed Asset
Derivative Receivables
Deferred Tax Asset
Other Assets
Total Assets
166
167
1,916
55
12
27
50
2,393
334
511
2,807
145
6
6
61
3,870
231
1,085
3,666
204
40
4
75
5,305
1,320
1,195
4,345
220
44
5
68
7,197
1,843
1,313
5,208
231
48
5
71
8,720
Fund Borrowing
Bonds
Taxes Payable
Accrued expenses
Other Liabilities
Shareholders' Funds
657
25
75
102
1,534
2,393
1,593
159
21
73
84
1,941
3,870
2,316
482
21
64
56
2,366
5,305
3,127
1,060
22
67
70
2,852
7,197
3,908
1,272
23
71
63
3,384
8,720

FY Dec
2009A
2010A
2011A
2012F
2013F

Consumer Financing/ Total Asset
80.1
7.0
76.5
76.5
Leasing/ Total Asset

Asset Quality
0.8
NPL / Total Assets
0.8
1,059.5
Provision Coverage Ratio
(1,018.3)
Liabilities Measure
Gearing Ratio
0.43
Laibility/Equity
0.56
6,000
5,000
4,000
3,000
2,000
1,000
2009
2010
2011
2012F
Gross Financing
2013F
Gross Financing Gth
Funding still dependent on

borrowings
Gross Leasing & Growth
200%
1,800
1,600
1,400
1,200
1,000
800
600
400
200
-
150%
100%
50%
0%
-50%
-100%
2009
2010
2011
72.5
13.2
90.8
82.5
69.1
20.4
95.2
78.8
60.4
16.6
96.3
72.0
59.7
15.1
97.1
73.2
0.7
0.6
313.5
424.7
1.4
1.2
92.2
103.5
1.1
0.9
115.3
690.5
1.1
0.8
132.7
425.4
Gearing ratio is well

below Bapepams cap.
0.90
0.99
1.18
1.24
1.47
1.52
1.53
1.58
2012F
Gross Leasing
2013F
Gross Financing Gth
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
2009
2010
2011
2012F
NPL (%)
Page 30
2013F
Industry Focus
Clipan Finance
Bloomberg: BBCA IJ | Reuters: BBCA.JK
NOT RATED Rp510 JCI : 4,079.38
Business as usual
Potential Catalyst:
Top revenue contributor is leasing, followed by

consumer financing
Funding growth with bank borrowings, but
seeking to increase bond issuance
Analyst
LIM Sue Lin +603 2711 0971
Expect resilient year despite global economic

headwinds

Price Relative
4,500
900
4,000
800
3,500
700
3,000
600
2,500
500
2,000
400
1,500
300
1,000
200
500
100
2008
2009
2010
2011
2012
Clipan Finance (RHS)

FY Dec (Rp bn)
Pre-prov. Profit
Net Profit
Net Pft (Pre Ex.)
EPS (Rp)
EPS Pre Ex. (Rp)
EPS Gth (%)
EPS Gth Pre Ex (%)
Diluted EPS (Rp)
PE Pre Ex. (X)
Net DPS (Rp)
Div Yield (%)
ROAE Pre Ex. (%)
ROAE (%)
ROA (%)
BV Per Share (Rp)
P/Book Value (x)
2008A
2009A
2010A
2011F*
122
75
75
28
28
(28.5)
(28.5)
28
18.0
9.9
9.9
4.5
402
1.3
193
113
113
43
43
51.1
51.1
43
11.9
10.1
10.1
7.0
445
1.1
224
150
150
57
57
33.1
33.1
57
9.0
5
0.0
12.1
12.1
8.5
497
1.0
269
201
201
76
76
33.6
33.6
76
6.7
15
0.0
14.4
14.4
7.5
561
0.9
Consensus EPS (Rp):

N/A
N/A
409
Other Broker Recs:
B: 1
S: 0
H: 0
*Based on DBSV estimates
ICB Industry : Financials
ICB Sector: Banks
Principal Business: CFIN provides leasing and consumer financing
services.
Page 31
www.dbsvickers.com
ed: SGC / sa: MA
Leasing contributes 50% of revenue. Ticket size is

this segment is significantly larger than in consumer
financing, averaging Rp500m. Yields are similar to
consumer financing.
Funding not an issue yet. The company has several
funding sources: channeling with PNBN, bank
borrowings, and bond issuance. Currently, the largest
source of funding is bank borrowings. However, it
issued Rp1tr worth of bonds at end 2011, and expects
to issue more in 2012.
Expect loan growth to remain resilient. CFINs loan
growth has been robust for the past five years. It is
expecting assets to grow by Rp5tr and net profit by
c.3% in FY11.Moving into 2012, it expects to see the
similar growth, driven by leasing and consumer
financing. It also expects more contribution from
factoring unit in the year.
At A Glance
Major Shareholders
PT Panin Financial (%)
Voltraint No 1103 Pty Ltd(%)
Free Float (%)
2,642
1,925/210
44.68
38.82
45.65
8,681
Industry Focus
Clipan Finance
Company Profile
Network Expansion
Bank Pan Indonesia is major shareholder. PT Clipan Finance
Indonesia Tbk (CFIN) started out in 1982 as a joint-venture
company between Credit Lyonnais of France and PT Bank Pan
Indonesia (PNBN). In 1990, CFIN became a listed company
and in 1997, Credit Lyonnais stake in CFIN was acquired by
PNBN, which has since been its major shareholder.
2010
3Q11
Branch
18
18
Marketing Office
10
14
TOTAL
28
32
Employees
654
843
Source: Company
Growth Strategies
Diverse multi-finance business. In line with its principal
business, CFIN offers the following: consumer financing for
new and used cars, lease financing, and factoring of short
term bills or receivables of companies for domestic trade
transactions. Its focus is consumer financing, mainly to loans
for used cars through dealers, at fixed rates and loan tenures
of 1-4 years.
Consumer financing: focus on Greater Jakarta. In order to
manage credit risk, CFIN tries to diversify its loan portfolio.
Geographically, it focuses on Greater Jakarta, which makes
up 53.4% of its total portfolio. It finances mainly non-sedan
Japanese vehicles (c.85% of total portfolio). Japanese vehicles
have better resale values and see stronger used car demand.
In leasing, its portfolio comprises mainly the following brands:
Hitachi, Komatsu, Caterpillar and Kobelco, which have
excellent resale value in the secondary market.
CFIN has also ventured into the higher-yielding business by
providing direct financing for used cars. Yields are 2 to 3%
higher than for consumer financing, and the average tenure
is 18 months to 2 years. This segment typically sees 20%
repeat business.
Factoring business started in 2007. Most of its factoring
business is derived from referrals from PNBN. CFIN provides
short term financing for corporate clients, charging them
16% annually. The term of financing is more than 91 days
and less than a year. Typically a land or building is used as
collateral.
In expansion mode. New bookings grew in 2011 after it
expanded it added five branches and 144 employees in 2010,
and another four branches and 189 employees in 2011.
Looking ahead, CFIN wants to expand outside Java with plans
to open 5-10 branches this year. Its plan is to open a few
main branches in large cities, and then try to penetrate the
region with smaller branches in smaller cities.
Key Risks
NIM pressure due to competition. Like its peers in the
industry, CFIN is starting to feel slight NIM pressure due to
competition. Moreover, since consumer financing is a dealer
generated business, dealer incentives or acquisition costs are
also eating into margins. But with cost of funds trending
down, CFIN believes it can maintain margins going ahead.
Prospects
Funded by borrowings. Most of its borrowing is from PNBN,
its major shareholder. At end 3Q11, Rp2.3tr of its funds were
from PNBN and Bank Danamon (BDMN), with effective
annual interest rate of 10.74%. In 2011, it raised Rp1.5tr
from bonds and a right issue. Going forward, we expect
equal weighting between bank borrowings and bond
issuance to finance growth. The company plans to issue more
bonds in 2012. Gearing ratio is below 1x, allowing plenty of
room for CFIN to take on more debt.
PNBN channels loans through CFIN. The company has a
channeling agreement with PNBN. CFIN prefers this option
rather than joint-financing to grow its asset base. Currently,
the company has a revolving facility of Rp600bn with PNBN
that charges 9.25% for 12 months, 9.75% for 13-24 months
and 10.25% for 25-36 months. As of 3Q11, CFIN has used
Rp107.9bn of the facility.
Valuation
CFIN currently trades at 0.8x FY12 P/BV and 6.0x FY12 PE
based on consensus estimates. There is only 1 broker that
cover the stock with a Buy recommendation. Trading volume
for CFIN is rather limited with only 8m average daily traded
volume (3-month average)
Page 32
Industry Focus
Clipan Finance
Shareholder Structure
Morgan Stanley & Co

Intl PLC
Mellon Bank NA S/A

8.07%
54.35%
Page 33
6.56%
31.02%
Public
Industry Focus
Clipan Finance
New Bookings Composition (2011)
Asset Yield, Cost of Funds and NIM
Factoring,
15%
16.0%
14.0%
12.0%
10.0%
8.0%
Consumer
Financing,
52%
6.0%
4.0%
2.0%
Leasing, 33%
0.0%
2006
2007
2008
Yield of earning asset
Contribution of Income per Segment (Sep-11)
2009
Av cost of funds
2010
NIM

20.00
Factoring
13%
1.20%
18.00
1.00%
16.00
14.00
0.80%
12.00
10.00
0.60%
8.00
0.40%
6.00
Leasing
51%
4.00
0.20%
2.00
Consumer
Financing
36%
0.00%
2006
2007
2008
NPL (Rp bn)
Net Interest Income

14.0%
11.0%
350.00
9.1%
11.5%
12.0%
10.4%
9.5%
10.0%
250.00
8.0%
200.00
6.0%
150.00
4.0%
100.00
2.0%
50.00
0.0%
2006
2010
NPL (%)
Cost to Incomel
400.00
300.00
2009
2007
2008
Interest Income
2009
2010
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
-
50.0%
44.2%
45.0%
40.5%
40.0%
32.1%
33.1%
2009
2010
2007
2008
Operating Expense
Cost to Income
Gearing Ratio
(Rp bn)
(x)
1,200
0.80
0.70
1,000
250.00
200.00
13.6%
11.5%
11.2%
0.60
800
0.50
600
150.00
0.30
400
0.20
200
8.0%
100.00
6.0%
4.0%
50.00
2007
Total Debt (RHS)
2008
2009
2010
Gearing Ratio (LHS)
14.0%
10.0%
7.0%
2.0%
0.10
16.0%
12.0%
9.6%
0.40
2006
35.0%
30.0%
2006
NIM (%)
55.0%
50.6%
0.0%
2006
2007
2008
Net Profit
2009
2010
ROE (%)
*At the time of this report is published, CFIN has yet to release its FY11 results.
Page 34
Industry Focus
Clipan Finance
Key Assumptions
FY Dec
Gross Consumer Financing Gth
Gross Leasing Gth

Avg Cost Of Funds
2006A
2007A
2008A
2009A
2010A
36.4
(7.7)
15.1
1.0
37.3
116.0
11.5
4.9
(23.0)
2.4
12.9
10.1
72.6
(1.7)
11.0
9.4
123.0
(2.6)
11.3
7.3
Growth of consumer
financing segment has
been resilient.

FY Dec
Consumer Financing Income
Leasing Income
Factroring Income
Other Income
Total Income
Operating Expense
Provision
Pre-Tax Profit
Tax
Minorty Interest
Net Profit
2006A
2007A
2008A
2009A
2010A
49
77
28
154
(78)
(7)
69
(19)
50
50
65
83
2
69
218
(96)
(28)
94
(20)
75
75
76
151
28
68
323
(131)
(34)
158
(45)
113
113
69
145
52
64
329
(106)
(21)
202
(52)
150
150
137
158
44
64
403
(133)
(4)
265
(64)
201
201
Margins Trend
250
1400%
1200%
200
1000%
150
800%
100
600%
400%
50
200%
0%
2007
Growth (%)
(5.7)
Net Profit Gth
(5.9)
Spread
14.1
Net Interest Margin
9.1
50.6
Business Mix (%)
81.9
18.1
Profitability (%)
ROAE Pre Ex.
11.7
ROAE
11.7
ROA Pre Ex.
6.4
ROA
6.4
Page 35
2009
2010
Net Interest Income
18.6
48.8
70.6
51.1
3.9
33.1
27.6
33.6
6.6
9.5
44.2
2.9
11.0
40.5
1.6
11.5
32.1
4.1
10.4
33.1
68.5
31.5
-
78.9
21.1
-
80.5
19.5
-
84.0
16.0
-
9.9
9.9
4.5
4.5
10.1
10.1
7.0
7.0
12.1
12.1
8.5
8.5
14.4
14.4
7.5
7.5
*) FY2011 Financial statement is not yet published

2008
2011
NIM
Industry Focus
Clipan Finance
FY Dec
3Q2010
4Q2010

1Q2011
2Q2011
3Q2011
100
100%
50
Consumer Financing
I
Leasing Income
Factoring Income
Other Income
Total Income
Operating Expense
Provision
Pre-Tax Profit
Tax
Minorty Interest
Net Profit
37
42
8
13
99
(36)
3
66
(16)
50
50
52
38
14
9
113
(41)
(7)
66
(16)
50
50
67
41
24
20
152
77
(6)
222
(22)
200
200
78
38
28
20
164
(72)
(3)
89
(22)
67
67
91
42
28
19
180
(81)
(7)
93
(23)
69
69
Growth (%)
Net Profit Gth
25.7
9.0
21.1
0.4
26.5
297.7
9.0
(66.4)
11.8
3.2
0%
(50)
-100%
2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
-200%
(100)
-300%
(150)
-400%
(200)
-500%
(250)
-600%
Qty Net Profit
Net Profit Gth
Booked strong profit in Q1

Page 36
Industry Focus
Clipan Finance
Gross Consumer Financing& Gth

FY Dec
2006A
2007A
2008A
2009A
2010A
Factoring (net)
Leased Asset
Fixed Asset
Short Term Investment
Deferred Tax Asset
Other Assets
Total Assets
33
427
281
12
11
10
4
779
26
856
377
102
11
11
262
15
16
1,674
117
880
294
259
10
15
18
6
10
1,607
31
866
494
270
9
13
74
2
11
1,771
26
927
1,108
567
11
18
15
2
20
2,694
Fund Borrowing
Bonds
Taxes Payable
Accrued expenses
Other Liabilities
Shareholders' Funds
84
223
7
6
9
449
779
381
149
4
8
71
1,062
1,674
395
6
14
18
1,175
1,607
378
24
15
43
1,312
1,771
1,090
30
12
82
1,481
2,694
Cash and Cash Equivalents
Leasing (net)
Consumer Financing (net)

FY Dec
2006A
2007A
2008A
2009A
2010A
1,600
1,400
1,200
1,000
800
600
400
200
-
150%
100%
50%
0%
-50%
-100%
-150%
2007
2008
Gearing Ratio
Laibility/Equity
36.1
54.8
93.3
25.5
22.5
51.1
6.1
86.5
62.1
18.3
54.7
16.1
91.3
91.3
27.9
48.9
15.3
82.3
82.3
41.1
34.4
21.1
89.8
89.8
0.2
0.2
619.1
7.0
0.3
0.3
801.4
13.9
0.3
0.3
778.9
15.1
0.6
0.7
301.5
10.9
0.4
0.3
209.0
5.0
0.7
73.3
0.5
57.7
0.3
36.8
0.3
35.0
0.7
81.9

2010
Gross Financing
2011
Gross Financing Gth
Gross Leasing & Growth

150%
1,150
1,140
1,130
1,120
1,110
1,100
1,090
1,080
1,070
100%
50%
0%
-50%
-100%
-150%
2007

Consumer Financing/ Total
A t
Leasing/ Total Asset
Factoring/Total Asset
Asset Quality
NPL / Total Assets
Provision Charge-Off Rate
Liability Measures
2009
2008
2009
2010
Gross Leasing
2011
Gross Leasing Gth

0.60
0.50
0.40
0.30
0.20
0.10
2007
2008
2009
NPL (%)
Page 37
2010
2011
Industry Focus
WOM Finance
Bloomberg: BBCA IJ | Reuters: BBCA.JK
No way but up
NOT RATED Rp265 JCI : 4,079.38
Rising cost of funds pressuring NIM
Potential Catalyst:
Asset quality is improving; exposure in books due

to 2010 legacy loans
Analyst
LIM Sue Lin +603 2711 0971
Expect strong growth after slowdown this year

Price Relative
4,500
800
4,000
700
3,500
600
3,000
500
2,500
400
2,000
300
1,500
1,000
200
500
100
0
2008
2009
2010
2011
2012
WOM Finance (RHS)
Forecasts and Valuation

FY Dec (Rp bn)
Pre-prov. Profit
Net Profit
Net Pft (Pre Ex.)
EPS (Rp)
EPS Pre Ex. (Rp)
EPS Gth (%)
EPS Gth Pre Ex (%)
Diluted EPS (Rp)
PE Pre Ex. (X)
Net DPS (Rp)
Div Yield (%)
ROAE Pre Ex. (%)
ROAE (%)
ROA (%)
BV Per Share (Rp)
P/Book Value (x)
2008A
2009A
2010A
2011A
314
21
21
10
10
(107.3)
(107.3)
10
25.6
140
52.8
65.8
65.8
17.7
525
0.5
280
61
61
30
30
192.9
192.9
30
8.7
255
96.2
25.0
25.0
17.6
301
0.9
285
138
138
69
69
127.2
127.2
69
3.8
121
45.8
25.0
25.0
18.4
207
1.3
186
5
5
3
3
(96.1)
(96.1)
3
98.3
477
180.0
25.0
25.0
23.0
(269)
(1.0)
Consensus EPS (Rp):

Other Broker Recs:
n.a
B: 0
n.a
S: 0
n.a
H: 0
ICB Industry : Financials

ICB Sector: Banks
Principal Business: WOMF concentrates in providing financing for
new and secondhand motorcycles.
Page 38
www.dbsvickers.com
ed: SGC / sa: MA
NIM squeezed by higher cost of funds. Cost of funds

is still high and averaging above its asset yields, and is
generating negative spreads. And due to tight
competition, asset yield will be flat. And with its car
financing generated by auto dealers, asset yield is also
squeezed by dealer commissions.
Asset quality might improve. Lack of expertise in
used 2W financing and strong growth of 2W financing
in 2010 caused its asset quality to deteriorate in 2011.
During the year, it wrote of Rp161bn worth of bad debt.
Going forward, WOMF will further improve loan quality
from point of origination, and will continue to train
employees who are involved in used 2W financing.
Expect turnaround. In 2011, WOMF had been
focusing on cleaning up its loan portfolio, and that was
reflected in slower loan growth. And loans for 2W
financing slowed down significantly, from an average of
15k units a month to 4k units. Going forward, WOMF
expects new 2W loans to improve to industry growth
rate. However, there is risk from the implementation of
minimum down payment and impending increase in fuel
price.
At A Glance
Major Shareholders
Bank Internasional Indonesia (%)
PT Wahana Makmur Sejati (%)
DBS Nominees (%)
Free Float (%)
2,000
530,000 /57
62.00
17.24
5.00
21.00
503,851
Industry Focus
WOM Finance
Company Profile
Started out as a financing new Honda motorcycles. PT
Wahana Ottomitra Multiartha Tbn (WOMF) was established
in 1982 as PT Jakarta Tokyo Leasing, and specialised in
providing financing for new Honda motorcycles. In 2001, it
broadened its market by offering financing for new and
used motorcycles, mainly Honda, Yamaha and Suzuki. After
listing in 2004, it was acquired by a consortium comprising
Bank Internasional Indonesia (BNII), International Finance
Corporation (IFC) and DBS Nominees Pte Ltd. The
consortium currently holds 67% stake in the company.
Growth Strategies
Focus on financing new and used motorcycles. In line with its
principal business, WOMF provides financing for new and
used motorcycles through dealers. It does not plan to expand
into car financing to avoid competing directly with its major
shareholder, BNII.
Gearing up after cleaning up books. In 2011, WOMF focused
on cleaning up its loan portfolio, which was reflected in
slower loan growth that year. And loans for 2W financing
slowed down significantly, from an average of 15k units a
month to 4k units. Going forward, WOMF expects new 2W
loans to improve to industry growth rate. It expects negative
impact from the implementation of minimum downpayment
regulation, although the magnitude is still being assessed by
management.
Key Risks
Gearing has always been high. Although gearing is still well
below the 10x maximum set by Bapepam-LK and industry
average of 8.14x, it is trending up. Its funding is mainly from
bond issuance and borrowings. Interest rate on borrowings
has dropped by c.200bps over the last two years to 10.2512.00%.
Corporate Bonds and MTN Issuance

Issue Date
Nominal
value
Coupon
Rate (%)
Tenure
(years)
Maturity
(Rp Bn)
Bonds IA
4-Nov-03
150
13.50
11-Nov-06
Bonds IB
4-Nov-03
150
13.75
11-Nov-07
Bonds IIA
30-May-05
190
12.75
7-Jun-07
Bonds IIB
30-May-05
140
13.25
7-Jun-08
Bonds IIC
30-May-05
170
13.90
7-Jun-09
Bonds IIIA
24-May-06
200
14.85
7-Jun-08
Bonds IIIB
24-May-06
465
15.15
7-Jun-09
Bonds IIIC
24-May-06
160
15.35
7-Jun-10
Bonds IVA
29-May-07
225
11.25
29-May-10
Bonds IVB
29-May-07
185
11.625
29-May-11
Bonds IVC
29-May-07
590
12.00
4.5
29-Nov-11
MTN I
10-Aug-10
200
9.50
1.5
16-Feb-12
MTN II
30-Aug-10
150
9.25
20-Sep-11
Bonds VA
4-Mar-11
294
8.75
9-Mar-12
Bonds VB
4-Mar-11
Bonds VC
4-Mar-11
120
366
9.60
10.30
2
3
Bonds VD
4-Mar-11
620
11.00
9-Mar-14
9-Mar-13
9-Mar-15
Source: Bloomberg, Company
NIM is squeezed. Cost of funds is still high and averaging

above its asset yields, and is generating negative spreads.
And due to tight competition, asset yield will be flat. And
with its car financing generated by auto dealers, asset yield
is also squeezed by dealer commissions.
Asset quality issue due to strong 2010 auto sales.
Indonesias auto industry saw strong growth in 2010, with
new car sales growing 57% and motorcycles sales up 26%,
after recovering from negative growth in 2009. Lack of
expertise in used 2W financing and strong growth of 2W
bookings in 2010 caused its asset quality to deteriorate in
2011. During the year, it wrote off Rp161bn worth of bad
debt, albeit smaller than 2009s Rp221bn following the
global financial crisis. Going forward, WOMF will try to
improve loan quality from the point of origination, and
continue to train employees who are involved in used 2W
financing.
Page 39
Industry Focus
WOM Finance
Prospects
Concerns on new policies. MoF recently issued a regulation
on minimum down payment for 2W and 4W, to be effective
three months form now. 2W market demand will be more
sensitive to this new policy, because buyers have
substantially lower purchasing power, and sales will slow
down. And since WOMF focuses solely on 2W, it will feel
the impact of slower bookings during the year. Its
management is still assessing the impact.
WOMF is less concerned about the increase in fuel price.
Typical 2W fuel consumption is only 25 litres a month, so
the forecast 33% increase in fuel price will not increase
expenditure severely. But it expects some 4W users to shift
to 2W after the fuel price hike.
Expanding outside Java. Currently, 70% of WOMFs loan

portfolio originates from Java and 25% from Sumatera.
Going forward, it expects to increase the share of loans from
outside Java. In terms of car brands, WOMF maintains equal
weightings for Honda and Yamaha in its portfolio. In the
past year, Hondas weighting had increased because the
floods in Thailand disrupted the supply of Yamaha vehicles.
Valuation
WOMF trades at 1.2x FY11 P/BV while its PE is meaningless
after recording significantly depressed profits in FY11 of
only Rp5bn as it was faced with asset quality issues.
WOMFs free float is 21% while its trades at 503m average
daily traded volume (3-month average). There are no
consensus estimates for WOMF.
Mayban Offshore
Corporate Services
(Labuan) Sdn Bhd
Sorak Financial Holdings

Pte Ltd
42.96%
54.33%
DBS Nominees Pte Ltd
2.71%
62.00%
Public
Page 40
5.00%
15.76%
Wahana Makmur Sejati

17.24%
Industry Focus
WOM Finance
New Booking Composition (2011)
Cost of Funds, Asset Yield and NIM
Motorcycle
(new)
90%
Motorcycle
(used)
10%
36.0%
32.0%
28.0%
24.0%
20.0%
16.0%
12.0%
8.0%
4.0%
0.0%
32.0%
23.0%
21.8%
18.0%
14.8%
2006
17.6%
15.2%
14.6%
14.0%
12.3%
6.4%
6.3%
3.5%
5.6%
5.0%
1.6%
2007
2008
Asset Yield
2009
2010
Cost of Funds
NIM
10.0%
700
9.0%
600
Sumatera
17%
8.0%
500
7.0%
400
6.0%
300
4.0%
5.0%
3.0%
200
East Java,
Bali,
Kalimantan
and Sulawesi
21%
7.0%
1,600
6.0%
1,400
1,200
5.0%
700
600
3.5%
NPL (%)
1.6%
200
100
2008
2009
2010
Consumer Financing Income (Rp bn)
132.4%
140.0%
97.2%
88.0%
93.3%
99.0%
80.0%
60.0%
600
2.0%
400
1.0%
200
0.0%
40.0%
20.0%
0.0%
2006
2011
2007
2008
2009
2010
Operating Expense (Rp bn)
NIM (%)
Gearing Ratio
120.0%
100.0%
87.0%
800
3.0%
400
2011
CIR (%)

14.00
12.36
3,000
12.00
8.77
2,500
10.00
2,000
4.72
3.80
5.61
3.86
8.00
6.00
150
(200)
(250)
Total Debt (Rp bn)
2009
2010
2011
Gearing Ratio
2006
2007
2008
2009
2010
-20.0%
-40.0%
-60.0%
(150)
(300)
20.0%
0.0%
(100)
2.00
2008
1.2%
500
2007
7.5%
50
(50)
40.0%
18.0%
14.6%
100
4.00
30.0%
200
1,000
2006
2010
1,000
4.0%
500
1,500
2009
Cost to Income
6.3%
5.0%
2007
2008
NPL (Rp bn)
5.6%
3,500
2007
Jabotabek
32%
6.4%
2006
0.0%
2006
1,000
300
1.0%
Net Interest Income
800
2.0%
100
900
2011
Asset Quality Measures*
West Java
10%
Central Java
20%
18.4%
17.7%
-80.0%
-110.5%
-100.0%
(350)
-120.0%
Net Profit (Rp bn)
ROE (%)
*)NPL Data is only available up to 2010; Source: Company data; DBS Vickers
Page 41
Industry Focus
WOM Finance
Key Assumptions
FY Dec
Consumer Financing Gth

Portion Financed by JF
Avg Cost Of Funds
2007A
2008A
2009A
2010A
2011A
15.7
28.9
14.8
21.8
6.5
47.2
15.2
17.7
(10.7)
55.5
14.6
17.6
31.9
52.4
12.3
18.4
6.8
55.0
14.0
23.0
Majority of financing is
done by joint financing.

FY Dec
Consumer Financing
I
Other Income
Total Income
Operating Expense
Provision
Pre-Tax Profit
Tax
Minorty Interest
Net Profit
2007A
2008A
2009A
2010A
2011A
917
273
1,191
(1,091)
(486)
(386)
104
(282)
(282)
854
483
1,338
(1,023)
(276)
38
(17)
21
21
636
751
1,388
(1,108)
(187)
93
(32)
61
61
554
938
1,492
(1,207)
(91)
194
(56)
138
138
745
908
1,653
(1,467)
(170)
16
(10)
5
5
Growth (%)
3.5
Net Profit Gth
(410.1)
Spread
(7.0)
Net Interest Margin
1.6
91.6
Business Mix (%)
77.0
23.0
Profitability (%)
ROAE Pre Ex.
(64.2)
ROAE
(64.2)
ROA Pre Ex.
(6.0)
ROA
(6.0)
Page 42
Margins Trend
7%
1,000
6%
800
5%
600
4%
400
3%
2%
200
(6.9)
(107.3)
(25.5)
192.9
(12.9)
127.2
34.4
(96.1)
(2.6)
5.6
76.5
(3.0)
6.4
79.8
(6.1)
6.3
80.9
(9.0)
3.5
88.8
63.9
36.1
-
45.9
54.1
-
37.2
62.8
-
45.1
54.9
-
7.8
7.8
0.6
0.6
19.8
19.8
2.4
2.4
34.7
34.7
3.8
3.8
1.2
1.2
0.1
0.1
1%
0%
2007
2008
2009
Net Interest Income
2010
2011
NIM
2011 Result is weak due

to cleaning up of books.
Industry Focus
WOM Finance
FY Dec
Consumer Financing
I
Other Income
Total Income
Operating Expense
Provision
Pre-Tax Profit
Tax
Minorty Interest
Net Profit
Growth (%)
Net Profit Gth
4Q2010
155
221
376
(331)
(29)
16
(6)
10
(0.0)
(77.3)
1Q2011
177
203
381
(338)
(36)
7
(3)
4
14.1
(56.0)

2Q2011
181
221
402
(365)
(39)
(3)
(1)
(4)
1.9
(183.9)
3Q2011
177
239
416
(362)
(50)
5
(3)
1
(2.0)
(138.1)
4Q2011
210
245
455
(403)
(45)
7
(3)
3
18.6
142.2
50
200
150
40
100
30
50
0
20
-50
-100
10
-150
(10)
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11

Qty Net Profit
-200
-250
Net Profit Gth
Contribution from other

income is larger than
consumer financing income
Page 43
Industry Focus
WOM Finance
Gross Loan& Growth

FY Dec
Cash and Cash Equivalents

Consumer Financing (net)
Prepaid Expenses
Other Receivables
Fixed Assets (net)
Deferred Tax Asset
Derivative Receivable
Other Assets
Total Assets
Fund Borrowing
Medium Term Notes
Bonds
Taxes Payable
Accrued expenses
Deferred tax liabilities - net
Other Liabilities
Shareholders' Funds
2007A
2008A
2009A
2010A
2011A
101
4,258
152
59
33
47
1
66
4,716
202
2,925
96
44
47
29
43
47
3,433
243
2,090
80
34
68
3
54
2,573
134
3,163
133
35
95
39
3,599
309
3,261
186
43
93
15
3,907
1,029
2,122
4
60
1,246
255
4,716
629
1,788
1
49
689
276
3,433
431
1,157
1
53
3
592
336
2,573
649
349
774
1
49
59
1,260
459
3,599
851
200
1,397
1
33
69
918
437
3,907

FY Dec
14,000
40%
12,000
30%
10,000
20%
8,000
10%
6,000
0%
4,000
-10%
2,000
-20%
2007
2009
2010
Gross Financing
2011
Gross Financing Gth
Consumer financing is
balance sheet driver.
Total Debt & Gearing Ratio

3,500
14.0
3,000
12.0
2,500
10.0
2,000
8.0
1,500
6.0
1,000
4.0
2.0
500
2009A
2010A
2011F
2012F
0.0
2013F
2007
2008
2009
2010
Total Debt

Financing/ Total Asset
Bonds/ Int. Bear. Liab.
Asset Quality
NPL / Total Assets
Provision Charge-Off Rate
90.3
66.8
23.1
47.6
85.2
70.4
19.9
56.6
81.2
61.7
19.3
51.7
87.9
49.2
20.7
24.7
83.5
62.7
24.5
40.2
9.44
13.96
23.2
14.8
6.01
13.07
18.8
10.2
3.31
8.77
22.4
10.1
4.29
10.48
16.9
7.9
n.a
n.a
n.a
n.a
Liabilities Measure
Gearing Ratio
Laibility/Equity
12.36
17.49
8.77
11.45
4.72
6.65
3.86
6.84
5.61
7.95
2008
2011
Gearing Ratio
Gearing ratio in
average is always high.

10.00
8.00
6.00
4.00
2.00
2007
2008
2009
NPL (%)
Page 44
2010
Industry Focus
DBSV recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends

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Page 45
Industry Focus
COMPANY-SPECIFIC / REGULATORY DISCLOSURES

DBS Vickers Securities (Singapore) Pte Ltd and its subsidiaries do not have a proprietary position in the company mentioned as of
1.
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PT. DBS Vickers Securities Indonesia ("DBSVI") has a proprietary position in BFI Finance recommended in this report as of 28 Mar
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Regional Industry Focus

Peer Comparables: Multi finance companies

Valuations at a fraction of banks, given high ROE,

Closing prices as at 26 Mar 2012

Source: Bloomberg, Companies, DBS Vickers

Multi-finance companies: Total gross financing (2011)

Valuations at discount to banks. Multi-finance

Source: Companies, DBS Vickers

Policy headwinds ahead. The MoF has imposed

In Singapore, this research report or research analyses may only be distributed

New minimum down payment regulation

4W Productive (Private Use)

4W Non-productive (Commercial Use)

Source: BI, MoF, DBS Vickers

LIM Sue Lin +603 2711 0971

Indonesian Research Team +6221 3983 2668

Major players in the industry

Multi-finance companies A comparison

Adira Dinamika Multi Finance

Growth of financing activities

There are 195 financing companies in operation as at Dec

Source: Bapepam-LK, DBS Vickers

Amount of financing per segment (Rp bn)

Multi-finance companies: Financing activities (2011)

Source: Bapepam-LK, DBS Vickers

Leasing is main growth driver. Although multi-finance

Source: Bapepam-LK, DBS Vickers

Funded mainly by bank borrowings. Financing activities are

Source: Bapepam-LK, DBS Vickers

Joint-financing and channelling. Other sources of funding for

companies sharing the risk of delinquent loans, banks can

Preference for joint-financing option. Joint-financing is more

Source: Bapepam-LK, DBS Vickers

Joint Financing activities by multi-finance companies

Astra Sedaya Finance*

* Non listed companies

Gearing ratio regulated by MoF. Under the MoF/ Bapepam-LK

Multi-finance companies: Gearing ratio FY11

Source: BPS, DBS Vickers, Gaikindo

Write-offs are typical in managing asset quality. The

Major players in the industry

Multi-finance companies: NPL per segment (Jan-12)

Source: Bapepam-LK, DBS Vickers

Note: Prior to GE Finance acquisition, credit cards NPL was hovering

Source: Companies, DBS Vickers

at 3-4%. Currently, none of the players are focusing on Credit Cards,

Source: Bapepam-LK, DBS Vickers

Multi-finance companies: Total gross financing (2011)

International Finance (FIF). ASF, BCA Finance and MTF

Source: Companies, DBS Vickers

Adira Dinamika Finance (ADMF) Funding growth through

FIF and ASF are members of the Astra International Group

Source: AISI, Gaikindo, ASII, IMAS

Multi-finance companies: Market share of new 2W

Source: Companies, AISI, DBS Vickers

Multi-finance companies: Market share of new 4W

Indonesia: Vehicle penetration

Source: BPS, DBS Vickers, Gaikindo

Auto penetration in developing countries

Market share assumes only 60% new 4W purchased on credit

Source: Companies, Gaikindo, DBS Vickers

Multi-finance companies: Market share of 4W financing

GDP per capita US$

CFIN and ADMF excluded as market share numbers are negligible