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Fundamental View
AS OF 26 Jun 2025Macquarie was tested during the global financial crisis, but managed to steer through the crisis without reporting losses. A strong balance sheet mitigated liquidity problems, but its banking unit had to turn to Australia’s central bank at that time for support.
The group has an impressive track record of managing risks and achieving good returns, and has built capabilities in a number of areas. Divestments are controlled based on market conditions. It was a beneficiary of market volatility in the commodity space in F23-24. Its Australian mortgage book has also shown strong but sensible growth.
Business Description
AS OF 26 Jun 2025- Macquarie grew out of the Australian business of Hill Samuel Australia, commencing operations in 1969. Macquarie Group Ltd (MGL) is the holding company and listed entity, under which there is the banking group Macquarie Bank Ltd (MBL) which consists of the Banking & Financial Services (BFS) and Commodities & Global Markets (CGM) businesses, and a non-banking group which consists of the Macquarie Asset Management (MAM) and Macquarie Capital (MC) businesses.
- From the 1990s, the group has been associated with the "Macquarie Model" which focused on identifying cash-generating infrastructure assets & packaging them into funds that could be sold, with Macquarie taking fees as banker, arranger and asset manager.
- It acquired asset managers including Delaware Investments in the US and Blackmont Capital in Canada, boutique investment bank Fox-Pitt Kelton and specialists such as Tristone Energy (Canada). It acquired US asset manager, Waddell & Reed in April 2021, which added around US$76 bn of assets under management. It has announced the sale of its public AM business in the US and Europe to Nomura.
- MAM has AUM of ~A$941 bn as of FY25, mostly in "traditional" funds management but also including its specialist infrastructure and real assets funds.
Risk & Catalysts
AS OF 26 Jun 2025Macquarie has sizable exposures to credit and equity risk, and so could be adversely impacted by falls in asset prices. In addition, volatile/weak markets could and has impeded its ability to exit some of its investments. Its earnings profile partially depends on exits and therefore is lumpy in nature. So far it has managed this risk well.
As a relatively small group operating mainly in wholesale markets, it is vulnerable to a liquidity freeze, but it mitigates this through running a well-matched and liquid balance sheet.
It is a global leader in infrastructure investments and is well positioned for the green transition. It has been a strong beneficiary of volatility in commodity markets, a testament to its risk management capabilities.
Its banking unit, MBL, has been subject to enforcement action in Apr-21 by APRA over the incorrect treatment of some intra-group funding arrangements resulting in a A$500 mn operational risk overlay being applied as well as LCR and NSFR add-ons.
Key Metric
AS OF 26 Jun 2025| AUD mn | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Operating Income | 13,298 | 17,833 | 19,576 | 17,071 | 18,130 |
| Cost/Income | 66.7% | 60.5% | 62.0% | 71.4% | 70.5% |
| Net Profit | 3,015 | 4,706 | 5,182 | 3,522 | 3,715 |
| Return on Equity | 14.3% | 18.7% | 16.9% | 10.8% | 11.2% |
| Total Impairments/Op Profit | 11.8% | 7.2% | 6.1% | (7.4%) | 6.0% |
| Annuity Business Profit Contribution | 46.7% | 42.6% | 34.2% | 36.5% | 43.6% |
| MBL CET1 Ratio (APRA) | 12.6% | 11.5% | 13.7% | 13.6% | 12.8% |
| MBL Liquidity Coverage Ratio | 174% | 175% | 214% | 191% | 175% |
| MBL Net Stable Funding Ratio | 115% | 121% | 124% | 115% | 113% |
CreditSight View Comment
AS OF 04 Aug 2025Macquarie has a strong record of profitability since its inception. Its AM business focused on infrastructure, including green assets, is a global leader. It manages risks and returns effectively, and in FY22+23 was a large beneficiary of O&G and power price volatility. The Aus banking business has steadily gained mortgage marketshare. Large investment disposals from AM and Macquarie Capital led to a record year in FY22; strong commodities outperformance led to another record in FY23. FY24 income was affected by asset realisations and gas & power income. FY25 was helped by asset sales, but 1Q net income was lower YoY. Capital is adequate, ALM conservative, and being APRA regulated (at bank) is a plus. However, senior spreads at both bank and group are tight. Fines from ASIC are imminent.
Recommendation Reviewed: August 04, 2025
Recommendation Changed: August 04, 2025
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Search topics about wealth insights and investments.Pertamina
- Sector: Energy
- Sub Sector: Oil and Gas
- Region: Indonesia
- Bond: PERTIJ 3.1 30
- Indicative Yield-to-Maturity (YTM): 5.339%
- Credit Rating : -/BBB/-
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Fundamental View
AS OF 18 Jun 2025Pertamina enjoys very strong linkages with the Government of Indonesia (GoI) and is assured of extraordinary support in times of distress.
Lower expected Brent crude prices YoY could weigh on its upstream margins and overall EBITDA (given the upstream business accounts for >65% of consolidated EBITDA).
Although leverage typically remains low, Pertamina incurs large capex spending that could pressure its free cash flow generation.
High persisting dividend outflows could restrain free cash flow improvements.
Business Description
AS OF 18 Jun 2025- Pertamina is involved in a broad range of upstream and downstream oil, gas, geothermal and petrochemical operations.
- In the upstream sector, it engages in the exploration, development and production and supply of crude oil, natural gas and geothermal energy.
- As for the downstream sector, the company carries out refining, marketing and distribution of oil, gas, fuel products and petrochemical and other non-fuel products.
- As of 31 December 2024, its total proved oil reserves stood at ~1,394 mmbbl (mn barrels of oil) and gas reserves stood at ~1,058 mmboe (mn barrels of oil equivalent). Its average daily oil and gas production was ~1,045,000 boe per day in FY24. The company owns and operates 6 refineries in Indonesia.
- Under the Public Service Obligation (PSO) mandate, Pertamina is responsible for providing certain grades of motor gasoline, automotive diesel oil, kerosene and LPG at subsidized prices. The subsidized retail price is often times lower than the cost of production, creating a shortfall, for which it receives reimbursements from the GoI.
Risk & Catalysts
AS OF 18 Jun 2025Pertamina’s profitability is materially affected by volatility in oil & gas prices. Prolonged periods of low oil prices could hurt upstream earnings that form the bulk of overall EBITDA (>65%).
As retail prices of certain fuel products are regulated, realized prices may be below its cost of sales.
Pertamina has to initially absorb the shortfall between the regulated retail price and the cost of producing and distributing certain fuel products. If the price of crude oil exceeds the price ceiling set by the GoI, the company may receive insufficient subsidy reimbursements.
Capex typically remains elevated and which pressurizes its free cash flow generation.
Key Metric
AS OF 18 Jun 2025| $ mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 38.5% | 41.2% | 42.1% | 37.6% | 34.9% |
| Net Debt to Book Cap | 18.9% | 21.9% | 12.5% | 8.5% | 12.3% |
| Debt/Total Equity | 62.5% | 70.0% | 72.7% | 60.4% | 53.6% |
| Debt/Total Assets | 28.3% | 29.9% | 30.8% | 27.4% | 26.3% |
| Gross Leverage | 2.4x | 2.5x | 1.9x | 1.9x | 2.2x |
| Net Leverage | 1.2x | 1.3x | 0.6x | 0.4x | 0.8x |
| Interest Coverage | 7.8x | 8.7x | 11.2x | 8.9x | 7.5x |
| EBITDA Margin | 19.9% | 16.0% | 16.7% | 17.7% | 14.3% |
CreditSight View Comment
AS OF 18 Jun 2025We maintain our Market perform recommendation on Pertamina at the issuer level and remove our preference for Pertamina’s 2041-2048 as our preference has played out, with the bonds tightening 19-24 bp since we expressed our preference for these bonds. We think current spread levels are fair given the downside risk of the O&G sector’s cyclicality and persisting policy uncertainty from Indonesia’s new sovereign wealth fund Danantara. That said, we continue to view Pertamina as a safe-haven pick and remain comfortable with Pertamina’s full state-ownership, timely fuel subsidy and compensation from the Indonesian government, positive free cash flow generation, robust credit metrics and our expectation for Pertamina’s strategic policy role to sustain even amidst macro headwinds and Danantara.
Recommendation Reviewed: June 18, 2025
Recommendation Changed: May 16, 2023
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Fundamental View
AS OF 17 Jun 2025Bank Mandiri (Mandiri) is the largest state-owned bank in Indonesia with 60% government ownership. We therefore expect a very high likelihood of government support in times of need.
Mandiri’s strength had been its large corporate loan portfolio, which has allowed the bank to book lower credit costs compared to its peers over the pandemic. Mandiri is well capitalised in line with the other Indonesian banks that have relatively high CET1 ratios in the region, though we expect this to be reduced by higher dividend payouts over time.
Business Description
AS OF 17 Jun 2025- Bank Mandiri was established as a result of the mergers of four state-owned banks, Bank Bumi Daya, Bank Dagang Negara, Bank Ekspor Impor Indonesia, and Bank Pembangunan Indonesia, in the late 1990s. The bank was first listed in Indonesia Stock Exchange in 2003.
- The Indonesian government holds a 60% stake in the bank. Foreign investors have a 32% shareholding while domestic investors have another 8%.
- Corporates accounted for 36% of total loans, consumer for 7%, micro & payroll for 12%, SME for 5%, commercial for 18% and subsidiaries 22% at March 2025.
Risk & Catalysts
AS OF 17 Jun 2025Funding cost pressure from the tight liquidity environment remains a headwind, so NIM and loan growth will hence be a challenge this year.
While Indonesia’s growth is projected at a reasonable ~5% in 2025 and could pickup over the medium term under the Prabowo administration, shifting macro sentiment towards Indonesia over growth slowdown, weak state finances and policy uncertainty under the Prabowo administration could weigh on spreads.
We see governance risks as increased with the move of SOE banks including Mandiri to Danantara; we expect the payout of higher dividends to fund policies of the current administration. However, we are comfortable with the CET1 ratio dropping over time to the 14-16% range of other APAC banks.
Asset quality has trended better than peers due to its loan book and growth focus being predominantly on large corporates. We see the probability of more state directed lending to projects that may not be the most commercially viable, but the effects would take a few years to play out.
Key Metric
AS OF 17 Jun 2025| IDR bn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| PPP ROA | 3.5% | 3.9% | 4.1% | 3.8% | 3.6% |
| ROA | 1.7% | 2.2% | 2.6% | 2.4% | 2.2% |
| ROE | 14.2% | 19.0% | 22.4% | 20.5% | 19.6% |
| Equity/Assets | 11.9% | 11.5% | 12.0% | 11.7% | 10.3% |
| CET1 Ratio | 18.4% | 18.6% | 20.8% | 19.6% | 17.3% |
| NPL Ratio | 2.72% | 1.92% | 1.19% | 1.12% | 1.17% |
| Provisions/Average Loans | 1.98% | 1.41% | 0.79% | 0.77% | 0.87% |
| LDR | 81% | 81% | 89% | 98% | 96% |
CreditSight View Comment
AS OF 24 Sep 2025Mandiri is the biggest bank in Indonesia by assets and 60% government owned. It weathered the pandemic well given fairly resilient asset quality as large corporates are more than 1/3 of its loan book. It is however turning to more balanced growth across segments in FY25, and a recent board and management reshuffling could prompt changes to strategy. Funding cost pressure from the tight liquidity environment remains a challenge for margins and loan growth this year. Soft economic momentum and higher governance risks are also headwinds. Fundamentals though remain sound with strong capital and healthy profitability to buffer. We expect higher dividend payouts to gradually reduce capital ratios but are comfortable with a 14-16% CET1 ratio. We have Mandiri on U/P due to tight spreads.
Recommendation Reviewed: September 24, 2025
Recommendation Changed: September 02, 2025
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Search topics about wealth insights and investments.Bank Negara Indonesia
- Bond: BBNIIJ 5.28 29
- Indicative Yield-to-Maturity (YTM): 5.385%
- Credit Rating : -/BBB/-
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Fundamental View
AS OF 17 Jun 2025Bank Negara Indonesia (BNI) is the fourth largest commercial bank in Indonesia by assets.
The bank is majority-owned by the Indonesian government (60%) and receives strong state support in the form of well-established relationships with SOEs, an area that the bank heavily loans to.
BNI’s asset quality has shown a steady improvement after COVID headwinds in Indonesia, mainly driven by its corporate loan book. It has de-risked its loan portfolio by focusing growth on top tier private corporates.
Business Description
AS OF 17 Jun 2025- Bank Negara Indonesia was founded in 1946, initially as a central bank, before becoming a commercial bank in 1968. It is now the 4th largest commercial bank in Indonesia by assets.
- The bank is majority-owned by the state (60%) and focuses its lending toward SOEs and domestic corporates.
- BNI's loan book is split 57% corporates, 22% small and medium enterprises and 19% retail, with the remaining coming from its subsidiaries at March 2025.
Risk & Catalysts
AS OF 17 Jun 2025Funding cost pressure from the tight liquidity environment remains a headwind, so NIM and loan growth will hence be a challenge this year.
While Indonesia’s growth is projected at a reasonable ~5% in 2025 and could pickup over the medium term under the Prabowo administration, shifting macro sentiment towards Indonesia over growth slowdown, weak state finances and policy uncertainty under the Prabowo administration could weigh on spreads.
We see governance risks as increased with the move of SOE banks including BNI to Danantara; we expect the payout of higher dividends to fund policies of the current administration. However, we are comfortable with the CET1 ratio dropping over time to the 14-16% range of other APAC banks.
Asset quality has trended better than peers due to its loan book and growth focus being predominantly on large corporates and safer retail. We see the probability of more state directed lending to projects that may not be the most commercially viable, but the effects would take a few years to play out.
Key Metric
AS OF 17 Jun 2025| IDR bn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| PPP ROA | 3.35% | 3.42% | 3.32% | 3.10% | 2.86% |
| ROA | 1.2% | 1.8% | 2.0% | 1.9% | 1.9% |
| ROE | 9.9% | 15.0% | 15.2% | 13.9% | 13.2% |
| Equity/Assets | 12.07% | 12.32% | 13.61% | 14.18% | 14.48% |
| CET1 Ratio | 17.4% | 17.5% | 20.2% | 18.9% | 19.7% |
| NPL Ratio | 3.70% | 2.81% | 2.14% | 1.97% | 1.96% |
| Provisions/Average Loans | 3.23% | 1.83% | 1.41% | 1.08% | 0.84% |
| LDR | 79.9% | 84.0% | 85.7% | 96.3% | 93.4% |
CreditSight View Comment
AS OF 04 Aug 2025BNI is the 4th largest bank in Indonesia by assets and is 60% government owned. It thus has well-established relationships with SOEs. Asset quality was weaker than Mandiri with a higher NPL ratio and credit costs, but has improved on its pivot to better quality segments since 2021. However, funding cost pressure from the tight liquidity environment remains a headwind and loan growth is a challenge, and so it is now also looking at the riskier segments for growth. Asset quality is showing strains in retail and medium commercials, reflecting the economic slowdown. Fundamentals remain sound with strong capital and decent profitability to buffer. We expect capital ratios to decline, but would be fine with a 14-16% CET1 ratio. We currently have BNI on U/P due to tight spreads.
Recommendation Reviewed: August 04, 2025
Recommendation Changed: August 04, 2025
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Fundamental View
AS OF 17 Jun 2025Rural Electrification Corp Ltd (REC) is an important public sector enterprise as it is the government’s key strategic partner for driving reforms and developments in the power sector, and providing financing to weaker players (particularly distribution companies or “discoms”) to prevent liquidity disruptions to the sector, similar to its parent Power Finance Corp’s (PFC) mandate.
We view REC’s credit profile as underpinned by strong state support due to its majority 52.63% ownership by PFC, which is in turn 55.99% owned by the government of India (GoI), as well as the key role that it plays in an essential sector of the country.
REC is rated in line with both its parent, PFC, and the Indian sovereign at the international credit rating agencies.
Business Description
AS OF 17 Jun 2025- Established in 1969, Rural Electrification Corp Ltd (REC) is an important public sector enterprise of the Government of India (GoI) due to its mandate of helping to support the country's power sector initiatives. It has been designated as a systematically important NBFC by the Reserve Bank of India (RBI).
- REC went public on the Indian stock exchanges in 2008 but continued to be majority owned by the GoI until March 2019, where the GoI sold its 52.63% shareholding in REC to Power Finance Corp (PFC) for INR 145 bn as part of the GoI's efforts to monetise its shareholding in different public sector enterprises; PFC is in turn 56% owned by the GoI. REC’s non-PFC shareholding is broadly similar to that of its parent, with a 20% share of foreign portfolio investors, 12% individuals, 9% mutual funds, and 6% others.
- REC has continued to be run as a standalone institution despite PFC's majority ownership in the entity.
- Similar to its parent, REC primarily provides funding to the public sector (~88% of its loan book) while the private sector is ~12%. By segment, Transmission & Distribution (T&D) is the largest part of the loan asset mix at 47%, followed by conventional and renewable energy generation at 28% and 10% respectively, while Infrastructure (12%) and Others (3%) round up the rest.
Risk & Catalysts
AS OF 17 Jun 2025Given its mandate, REC has concentrated loan exposure to the power sector which is also chunky in nature; power generation projects typically involve large upfront borrowing and have long gestation periods before the projects become operational. Resolutions of stressed exposures have been with delays due to India’s slow moving Insolvency & Bankruptcy Code (IBC) regime despite the ongoing NCLT reforms. REC has a conservative reserving policy; lumpy provisioning and reversals is the result.
Asset quality risk is also mitigated by a majority public sector exposure; while many state government discoms are in poor health, REC can get funds meant for the states through the GoI/RBI if payments are overdue.
Like most NBFCs, REC is reliant on the confidence sensitive wholesale market for funding. However, its quasi-government status enables it to have diversified funding sources (onshore and offshore) at costs that are close to the sovereign.
Key Metric
AS OF 17 Jun 2025| INR mn | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| NIM | 3.72% | 4.07% | 3.38% | 3.57% | 3.63% |
| PPP ROAA | 3.27% | 3.91% | 3.17% | 3.24% | 3.60% |
| ROAA | 2.08% | 2.47% | 2.53% | 2.77% | 2.71% |
| ROE (Reported) | 21.3% | 21.3% | 20.4% | 22.2% | 21.5% |
| Total Equity/Total Assets | 10.78% | 12.42% | 12.41% | 12.56% | 12.65% |
| Tier 1 Ratio | 16.3% | 19.6% | 22.8% | 23.3% | 23.8% |
| Total Capital Ratio | 19.7% | 23.6% | 25.8% | 25.8% | 26.0% |
| Gross NPA Ratio | 4.84% | 4.45% | 3.42% | 2.71% | 1.35% |
| Provisions/Avg Loans | 0.64% | 0.91% | 0.03% | (0.29%) | 0.19% |
CreditSight View Comment
AS OF 17 Jun 2025REC is 52.63% owned by PFC and along with its parent is one of two policy NBFIs that provides funding for power generation and T&D projects, lending largely to state government utilities (88% of loans) vs. the private sector (12%). After a few years of improving profitability and margins, FY23 saw a reversal, with net income increasing YoY only due to a substantial decline in credit costs; FY24 was better on higher NIMs and provision releases, and FY25 has gone well. Asset quality has improved materially over the years. The CAR ratio is ~26%. Although a number of state government utilities are in poor health, the NBFIs can get funds meant for the states through the GoI/RBI if they don’t get paid in time. Spreads have widened back to fair levels so have RECLIN on Market perform.
Recommendation Reviewed: June 17, 2025
Recommendation Changed: May 22, 2025
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Search topics about wealth insights and investments.State Bank of India
- Sector: Financial Services
- Sub Sector: Banks
- Country: India
- Bond: SBIIN 4.875 28
- Indicative Yield-to-Maturity (YTM): 5.23%
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Fundamental View
AS OF 16 Jun 2025State Bank of India (SBI) is the largest state-owned bank in India and is in some respects the country’s flagship bank. Given the bank’s ~57% government ownership and systemic importance, government support for SBI is very strong.
The bank’s capital buffers are relatively low, but we take comfort in the strong government support.
Business Description
AS OF 16 Jun 2025- State Bank of India is the largest commercial bank in India. Its predecessor banks date back to the 19th century. In the early 20th century, they merged to form the Imperial Bank of India, which became the State Bank of India after India gained independence in 1947.
- The Government of India remains the largest shareholder with a 56.92% stake. Per the SBI Act, the government's shareholding cannot fall below 55%.
- SBI's merged with its 5 associate banks and Bharatiya Mahila Bank in 2018. The merger catapulted SBI into one of the world's 50 largest banks.
- The bank has 85% of its loans in the domestic market, and has steadily increased its international business too over the past few years with offices across all international business centres. The domestic book is split 42% retail, 34% corporates, ~14% SMEs and ~10% to the agri segment as of end-March 2025.
- It has diversified its operations with well regarded subsidiaries in the areas of fund management, credit cards, insurance, and capital markets.
Risk & Catalysts
AS OF 16 Jun 2025SBI does not have a strong buffer vs. the regulatory minimum of 8%, but its size, systemic importance and majority government shareholding confer particularly strong government support. But consequentially, any deterioration in the sovereign ratings will also affect the bank’s credit.
Rate cuts will feed through to the NIM in FY26, but improved system liquidity will provide some support for the NIM and loan growth.
Asset quality is trending well despite a stretched urban middle and lower-middle class consumer class, as SBI’s personal unsecured loans book is ~95% to salaried employees of top tier corporates and the government.
Management announced plans for an INR 250 bn equity fundraise in FY26, which would provide an around 0.6 ppt boost to capital ratios at the consolidated level on a pro-forma basis.
Key Metric
AS OF 16 Jun 2025| INR mn | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| NIM | 3.04% | 3.12% | 3.37% | 3.28% | 3.09% |
| ROAA | 0.48% | 0.67% | 0.96% | 1.04% | 1.10% |
| ROAE | 8.4% | 11.9% | 16.5% | 17.3% | 17.3% |
| Equity to Assets | 5.6% | 5.6% | 5.9% | 6.1% | 6.6% |
| CET1 Ratio | 10.3% | 10.3% | 10.6% | 10.6% | 11.1% |
| Gross NPA Ratio | 4.98% | 3.97% | 2.78% | 2.24% | 1.82% |
| Provisions/Loans | 1.77% | 0.91% | 0.54% | 0.14% | 0.38% |
| PPP ROA | 1.65% | 1.58% | 1.59% | 1.60% | 1.72% |
CreditSight View Comment
AS OF 02 Sep 2025SBI is India’s largest bank and a well-run franchise. Government support underpins SBI’s relative positioning, while fundamentally, it has good operating metrics and business plans, a comfortable LDR, sufficient CET1 ratio (recently boosted by an equity raise in Jul-25), and the best management among the public sector banks. India’s macro backdrop remains relatively robust and SBI’s lower risk personal unsecured loans clientele is supporting asset quality well. Lower rates should keep asset quality well-supported. Rate cuts will feed through to the NIM in FY26, but treasury gains provide some offset. Loan growth has been off to a slow start for the sector, but comfortable system liquidity should provide some support. We like the name, but have it on M/P as it trades fair.
Recommendation Reviewed: September 02, 2025
Recommendation Changed: April 25, 2025
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Fundamental View
AS OF 11 Jun 2025We expect PT Mineral Industri Indonesia’s (MIND ID) strategic importance and policy role to the Government of Indonesia (GoI) to strengthen in line with the GoI’s downstream push and green energy transition efforts.
We expect MIND ID’s credit metrics to improve modestly in FY26 as healthy commodity prices (barring coal and nickel), capacity additions, and healthy dividend income from key joint venture PT Freeport Indonesia (PTFI) could offset high capex.
Mining regulatory risk remains a concern, though MIND ID’s large diversified scale of operations could partly limit such risks.
We are watchful of dividend upstreaming risks to Indonesia’s new sovereign wealth fund Danantara.
Business Description
AS OF 11 Jun 2025- MIND ID is an unlisted Indonesian state-owned holding company of various Indonesian mining operators.
- Key subsidiaries include: 1) Bukit Asam: Coal mining, processing, and sale of coal; 2) Timah: Tin mining, processing, and sale of downstream products; 3) Aneka Tambang (Antam): Mining, processing, and sale of gold products, nickel, ferronickel, bauxite and chemical grade alumina; 4) Inalum: Production of aluminium.
- Key unconsolidated joint ventures and associates include: 1) PT Freeport Indonesia (PTFI): Mining, processing and sale of copper, gold and silver. MIND ID aims to raise its stake in PTFI to 71% from a current 51% in the medium-to-long term; 2) PT Vale Indonesia (PTVI): Mining and processing of nickel. MIND ID has a current 34% stake in PTVI.
Risk & Catalysts
AS OF 11 Jun 2025MIND ID is subjected to unanticipated changes in mining policies that raise operational and regulatory uncertainties.
MIND ID is exposed to commodity price fluctuations that could hurt sales price realizations and profitability.
Capex typically remains elevated, pressurizing its free cash flow generation and leverage.
MIND ID faces material asset concentration risk for its coal, gold and tin segments.
We are watchful of dividend upstreaming risks to Indonesia’s new sovereign wealth fund Danantara.
Key Metric
AS OF 11 Jun 2025| IDR bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Debt to Book Cap | 55.9% | 52.0% | 44.6% | 41.6% | 35.7% |
| Net Debt to Book Cap | 39.0% | 29.6% | 27.1% | 24.5% | 21.8% |
| Debt/Total Equity | 127.0% | 108.3% | 80.5% | 71.2% | 55.5% |
| Debt/Total Assets | 51.0% | 46.1% | 38.7% | 35.6% | 30.4% |
| Gross Leverage | 10.8x | 4.7x | 3.5x | 7.0x | 5.7x |
| Net Leverage | 7.5x | 2.7x | 2.1x | 4.1x | 3.5x |
| Interest Coverage | 1.1x | 3.2x | 3.9x | 2.2x | 2.3x |
| EBITDA Margin | 12.9% | 21.5% | 19.9% | 12.3% | 10.8% |
CreditSight View Comment
AS OF 28 Aug 2025We upgrade our rec on MIND ID to M/P from U/P, and prefer the 2048 within its bond complex. Since our U/P rec in Mar-2025, IDASAL’s bond spread differentials with Pertamina and PLN have widened close to where we see fair value. We see a modestly improving credit outlook over the next 12 months as strong gold and aluminium prices, new project contributions, and sturdy dividend income from jv PT Freeport Indonesia (PTFI) could offset rising downstream capex. We also view state support for IDASAL as gradually strengthening, given Danantara’s focus on mining as a priority industry. Key risks we are watchful of include overly aggressive capex and dividend payouts to Danantara, unanticipated unfavorable mining regulatory changes, and reduced dividends from PTFI.
Recommendation Reviewed: August 28, 2025
Recommendation Changed: August 28, 2025
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Search topics about wealth insights and investments.Tencent
- Sector: Technology Media and Telecommunications
- Sub Sector: Technology
- Country: China
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Fundamental View
AS OF 10 Jun 2025We maintain our Outperform recommendation on Tencent post its decent 1Q25 results; topline accelerated, EBITDA margin expanded, free operating cash flow remained robust, and debt metrics remained modest. We expect Tencent’s topline growth to marginally accelerate in FY25, supported by its advertising, domestic/international gaming, fintech and cloud segments; we expect EBITDA margin to marginally improve as its better revenue mix offset the increased R&D spending for AI development; we expect FOCF to expand, and debt metrics to improve from 1Q25. We continue viewing Tencent as a core holding in China and Asia IG credits. We prefer its 2029/2041 notes for spread pick up against Chinese SOEs. We think Tencent is more attractive compared to BIDU/JD and more defensive that BBB China tech.
Business Description
AS OF 10 Jun 2025- Founded in November 1998, Tencent is a leading provider of Internet value added services in China. Since its establishment, Tencent has ventured into instant messaging, social networking, online payments, digital entertainment, and PC and smartphone gaming. Most recently, it has also forayed into high-tech areas such as artificial intelligence, and cloud computing.
- Tencent's leading Internet platforms in China include Weixin/WeChat (online messaging), QQ Instant Messenger (online messaging), Tencent Games (gaming), Tencent Video/Weixin Video Accounts (video platforms), WeChat Pay (payments), and Tencent Cloud. The combined monthly average users (MAU) of Weixin and Wechat reached 1.40 bn as of 31 March 2025.
- In 4Q24, 46% of revenues came from Value Added Services (which consist of Domestic Games, International Games, and Social Networks), 33% came from FinTech and Business Services (e.g. commercial payments and cloud), 19% from Online Advertising and 2% from Others.
- Tencent is currently primarily listed on the Hong Kong Stock Exchange, with a market capitalization of HKD 4.7 tn as of 10 June 2025.
Risk & Catalysts
AS OF 10 Jun 2025While Chinese regulators have adopted a more friendly stance towards tech companies, any regulatory clampdowns abroad and domestically (e.g. antitrust rules, data security, personal information protection laws) may affect Tencent’s business. Tencent’s gaming, music streaming, and online payment units are among those that have come under regulatory scrutiny in the past.
Tencent uses variable interest entities (VIEs) to circumvent China’s restrictions on foreign ownership of Internet Content Providers, which poses regulatory risks. Specifically, VIE transactions involving “change in control” will be subject to antitrust regulatory processes.
US-China tension may escalate under the new Trump Administration, including additional chip sanctions, which may result in higher volatility. Failing to secure a stable supply of advanced AI chips and/(or) find domestic alternatives could weigh on the long-term AI development of Tencent against international peers.
Key Metric
AS OF 10 Jun 2025| RMB bn | FY21 | FY22 | FY23 | FY24 | LTM 1Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 27.0% | 31.4% | 29.8% | 25.4% | 26.5% |
| Net Debt to Book Cap | 6.0% | 8.5% | 1.0% | 2.3% | 4.4% |
| Debt/Total Equity | 36.9% | 45.9% | 42.5% | 34.0% | 36.0% |
| Debt/Total Assets | 20.1% | 22.8% | 23.5% | 20.1% | 21.1% |
| Gross Leverage | 1.7x | 1.9x | 1.6x | 1.3x | 1.4x |
| Net Leverage | 0.4x | 0.5x | 0.1x | 0.1x | 0.2x |
| Interest Coverage | 24.7x | 19.0x | 19.9x | 22.5x | 23.0x |
| EBITDA Margin | 34.9% | 34.3% | 38.9% | 42.4% | 43.2% |
CreditSight View Comment
AS OF 16 Sep 2025We maintain our O/P recommendation on Tencent post its strong 2Q25 results. Topline growth accelerated and beat expectations; EBITDA margin expanded; FOCF grew, and debt metrics improved. We expect its credit outlook to improve over the next 12 months. We view Tencent as a core holding in China and Asia IG credits, and it is our preferred duration play. Its longer duration bonds trade ~30 bp wider than Chinese SOEs of similar tenors. In particular, we like TENCNT 2041. Within China tech credits, we prefer Tencent over Baidu/JD, which are rated 1-3 notches lower but trade only marginally wider. We also view Tencent to be more defensive compared to high beta BBB China tech credits while offering value.
Recommendation Reviewed: September 16, 2025
Recommendation Changed: August 18, 2022
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Fundamental View
AS OF 05 Jun 2025We expect the credit profile of Sinopec, which is one of the three Chinese national oil companies (NOCs) to continue to be underpinned by its strategic role in China’s energy security and the resulting strong government support.
We expect Sinopec’s standalone credit profile to remain supported in FY24 by resilient refined oil demand and improving demand for chemical products as industrial activities pick up and the destocking trend ends.
To note, we use the financials of HKEx listed Sinopec Corp (386.HK) as a proxy for the credit profile of its parent, the obligor of the outstanding $ bonds (BBG: SINOPE).
Business Description
AS OF 05 Jun 2025- Sinopec Group is a Chinese integrated oil and gas (O&G) company and is one of the largest globally & domestically. In 3Q24, 56.4% of Sinopec Corp' external revenues came from marketing and distribution (i.e. retail and direct sales of refined oil), 13.9% from chemicals, 5.1% from refining, and 5.0% from E&P. Corporate and others segment accounted for the remaining 19.6% of sales revenue, consisting of import and export business, R&D and managerial activities.
- The refining segment purchases crude oil from third parties as well as the E&P segment of the company, and processes crude oil into refined petroleum product. Most of the gasoline, diesel and kerosene are sold internally to the marketing and distribution segment of the company; part of the chemical feedstock is sold internally to the chemical segment, and the other refined petroleum products are sold externally to both domestic and overseas customers. The marketing and distribution segment purchases refined oil products from the refining segment and third parties, and mainly distributes to domestic customers via its wholesale and retail networks.
- In 9M24, Sinopec's total oil and gas output was 386.06 mn barrels of oil equivalent, up 2.6% YoY; this included 190.42/20.87 mmbbls (+1.2%/-6.6%) of domestically produced/overseas crude oil, as well as 1,084 bcf of natural gas (+5.6% YoY). The average realized price of its crude oil and natural gas was $76.6/bbl (+1.1% YoY)and $7.48/thousand cubit feet (+5.4% YoY)respectively.
Risk & Catalysts
AS OF 05 Jun 2025Risks: Lower-than-expected domestic sales of refined oil and chemical products due to a severe economic downturn, higher-than-expected crude oil and gas feedstock costs resulted from geopolitical tensions, elevated inventory losses due to tumbling oil & gas prices, and large capex overrun result in a weaker standalone credit profile. However, we expect the strong government support to offset these downside risks. US sanction related headline risks due to US-China tension and other geopolitical risks.
Catalysts: inflow into China $ bonds as a result of improving China macro outlook and US-China relationship; stronger-than-expected recovery in chemical product demand.
Key Metric
AS OF 05 Jun 2025| RMB bn | FY20 | FY21 | FY22 | FY23 | 3Q24 |
|---|---|---|---|---|---|
| Total Debt/Capitalization | 25.3% | 25.6% | 27.5% | 31.5% | 33.1% |
| Net Debt/Capitalization | 9.4% | 7.6% | 16.3% | 19.8% | 21.4% |
| Total Debt/Total Equity | 33.8% | 34.5% | 38.0% | 46.1% | 49.4% |
| Total Debt/Total Assets | 17.2% | 16.7% | 18.3% | 21.7% | 22.9% |
| Total Debt/EBITDA | 1.5x | 1.2x | 1.5x | 2.0x | 2.3x |
| Net Debt/EBITDA | 0.6x | 0.4x | 0.9x | 1.3x | 1.5x |
| EBITDA/Gross Interest | 16.8x | 20.1x | 16.1x | 14.5x | 14.2x |
| EBITDA Margin | 9.5% | 9.4% | 7.0% | 6.8% | 5.9% |
CreditSight View Comment
AS OF 05 Jun 2025We affirm our Market perform recommendation on Sinopec. A-rated Chinese state-owned enterprises (SOEs), including Sinopec are trading tight due to a lack of new supply and as investors fly to quality amid macro uncertainties in China. We continue to prefer AA-rated Korean quasi-sovereign names for safe carry (like KOROIL, KORGAS, KEPCO) and higher-beta Chinese SOEs for spread pickup.
Recommendation Reviewed: June 05, 2025
Recommendation Changed: May 03, 2021
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Search topics about wealth insights and investments.Republic of Indonesia
- Bond: INDON 1.17 29
- Indicative Yield-to-Maturity (YTM): 1.569%
- Credit Rating : Baa2/BBB/BBB
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Country Overview
AS OF 28 May 2025- Indonesia is the world’s fourth-most populous nation and the largest economy in Southeast Asia
- The economy is diverse, with key sectors including manufacturing, agriculture, mining, and services.
- Indonesia is a significant producer of commodities like coal, palm oil, and natural gas.
Business Description
AS OF 28 May 2025Risk & Catalysts
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