Bank Jago

Rp12,300 - BUY

Sarina Lesmina, CFA First digibank taking off

sarina.lesmina@clsa.com Ready for high growth phase; initiate coverage with BUY
+62 21 5088 7820
Bank Jago (Jago), the first digital bank in Indonesia, has exciting milestones ahead
post the launch of the first phase of its app in April 2021. In the near future, the
bank will enter a hyper-growth phase, especially with Gojek as a key ecosystem
partner. Strong capital base post the rights issue would help reduce funding risk.
More importantly, management has a strong track record, which would ensure a
smoother path to profitability. We initiate coverage with BUY recommendation
and target price of Rp17,100 (based on 1.5x PE/G multiple).

7 June 2021 Exciting milestones ahead

Jago launched the first version of its digital banking app in Apr-21 for basic banking
Indonesia products. It has more products to be launched in the pipeline, including a
Financial services collaboration with its key ecosystem partner, Gojek, which will accelerate customer
acquisition at lower costs. The merger of Gojek and Tokopedia will propel this
Reuters ARTO.JK further given the enlarged user base. We foresee 175% Cagr in outstanding loans
Bloomberg ARTO IJ
in 21-23CL, through ecosystem and lending partners, supported by strong capital.
Priced on 7 June 2021
Jakarta Comp @ 6,069.9 Targeting sustainable high-single-digit margin
12M hi/lo Rp12,475/813 The large capital base reduces funding cost risk, at least in the next three years,
12M price target Rp17,100 while Jago builds its retail funding franchise. Fee-based income would be minimal
±% potential +39% given its growth phase, but should be more than offset by the margin. On 3.5-4.5%
Shares in issue 13,856.3m cost of funds and 13-14% lending yield (as target market is mass market and Micro-
Free float (est.) 27.6% SME), we forecast NIM of ~7.9-8.8% in 21-23CL. As pricing gets more competitive
Market cap US$11.9bn with more players in the space, key is for Jago to effectively manage cost of funds.
3M ADV US$10.2m
Building good risk management
Foreign s'holding 80.0%
Post-acquisition by controlling shareholders, Jago has cleaned up legacy loans. It
Major shareholders understands that lending is a key testing ground for the digital bank and is devising
Metamorfosis Ekosistem Indonesia a robust credit scoring model which will leverage on its partners and ecosystem.
29.8%
Wealth Track Technology 11.7% The bank aims to find a balance between convenience and security for users, while
being prudent in provisioning. It prefers low risk portfolio with NPL within 3%.

Blended ESG Score (%)*

Initiate coverage with BUY rating
Overall 66.4 Capex would be relatively high in initial years, but cloud-based infra supports easy
Country average 54.1 scalability and fast turnaround time for new products. Good management with
GEM sector average 69.5 strong capital base and ecosystem should support Jago to be profitable soon.
*Click to visit company page on clsa.com for details
Currently, it also has a one year head-start against competitors. We initiate with a
Stock performance (%) BUY (Rp17,100 target price) based on 1.5x PE/G multiple on mid-22-23CL EPS.
1M 3M 12M
Absolute 21.8 29.5 1,383.7 Financials
Relative 137.9 167.0 2,318.8 Year to 31 December 19A 20A 21CL 22CL 23CL
Abs (US$) 22.0 29.0 1,338.0 Operating profit (Rpbn) (92) (186) (95) 338 922
Net profit (Rpbn) (122) (189) (95) 270 738
EPS (Rp) (101.26) (17.46) (6.87) 19.51 53.23
CL/consensus (4) (EPS%) - - (436) 60 71
EPS growth (% YoY) nm nm nm nm 172.8
PE (x) nm nm nm 630.3 231.1
Adjusted EPS (Rp) (101.26) (17.46) (6.87) 19.51 53.23
Adjusted PE (x) nm nm nm 630.3 231.1
Dividend yield (%) 0.0 0.0 0.0 0.0 0.0
PB (x) 21.8 108.3 20.8 20.2 18.5
ROE (%) (30.7) (19.8) (2.0) 3.2 8.4
Source: Bloomberg Source: www.clsa.com

CLSA and CL Securities Taiwan Co., Ltd. (“CLST”) do and seek to do business with companies covered in its research reports. As such,
investors should be aware that there may be conflicts of interest which could affect the objectivity of the report. Investors should consider
this report as only a single factor in making their investment decisions. For important disclosures please refer to page 24.
 First digibank taking off Bank Jago - BUY

Financials at a glance
Year to 31 December 2019A 2020A 2021CL (% YoY) 2022CL 2023CL

Profit & Loss (Rpbn)

Interest income 53 90 309 243.5 1,020 2,561
Interest expense (41) (25) (55) (213) (559)
Net interest income 11 65 254 292.7 807 2,002
Trading income 0 0 0 0 0
Fee income 1 2 6 293.9 18 50
Other operating income 5 24 20 (13.5) 65 200
Non-interest income 5 25 26 4.9 83 250
Total op income 17 90 280 212.2 890 2,252
Staff & related costs (27) (158) (191) (220) (373)
Other operating expenses (16) (80) (150) (210) (524)
Total operating expenses (42) (237) (340) (430) (898)
Preprovision OP (26) (148) (60) 460 1,354
Loan-loss provisions (66) (38) (35) (122) (432)
Operating profit (92) (186) (95) 338 922
Other income/expenses (27) (4) - 0 -
Profit before tax (119) (189) (95) 338 922
Taxation (3) - - (68) (184)
Preference dividends - - - - -
Profit for period (122) (189) (95) 270 738
Minority interest 0 0 0 0 0
Net profit (122) (189) (95) 270 738
Adjusted profit (122) (189) (95) 270 738
Balance sheet (Rpbn) 2019A 2020A 2021CL (% YoY) 2022CL 2023CL
Net loans 252 826 3,974 381 11,920 30,469
Cash & equivalents 26 12 31 168.2 1,695 233
Placements with other banks 241 310 162 (47.8) 194 108
Other interest earning assets 657 459 279 (39.3) 1,357 178
Total interest earning assets 1,175 1,607 4,445 176.7 15,167 30,987
Net fixed assets 69 138 395 187 652 910
Intangible assets 0 0 0 0 0
Other assets 77 436 5,672 1,202 591 641
Total non-interest earning assets 146 573 6,067 958.3 1,243 1,551
Total assets 1,321 2,180 10,512 382.2 16,410 32,538
Customer deposits 599 804 2,181 171.3 7,808 18,963
Deposits from banks 28 2 2 10 2 2
Other int-bearing liabs - - - - -
Total int-bearing liabs 627 806 2,183 171 7,810 18,965
Other non-int-bearing liabs 13 142 142 0 142 4,378
Shareholder funds 681 1,232 8,187 564.3 8,458 9,195
Other equity capital 0 0 0 0 0
Total liabs & equity 1,321 2,180 10,512 382.2 16,410 32,538
Total tier 1 capital 662 1,070 7,461 597.3 7,545 8,030
Total capital 665 1,080 7,495 594 7,650 8,248
Risk weighted assets 448 1,182 3,229 173.3 9,977 20,685
Average Risk weighted assets 519 815 2,205 170.6 6,603 15,331
Ratio analysis 2019A 2020A 2021CL (% YoY) 2022CL 2023CL
Net int inc growth (%) (59.5) 471.6 292.7 217.7 148.1
Non-int inc growth (%) 43.3 369.2 4.9 215.3 200.9
Operating inc growth (%) (47.3) 438.7 212.2 217.4 153.0
Net profit growth (%) nm nm nm nm 172.8
Net interest margin (%) 1.4 4.5 7.9 8.7 8.8
Cost/income (%) 254.8 264.3 121.4 48.3 39.9
Loans/deposits (%) 45.4 112.7 188.6 155.8 163.8
Gross NPLs/total loans (%) 2.3 0.0 0.5 1.3 1.6
Loan provisions/NPLs (%) 0.0 0.0 0.0 0.0 0.0
ROA (%) (9.5) (10.6) (1.5) 2.0 3.0
ROE (%) (30.7) (19.8) (2.0) 3.2 8.4
Tier 1 CAR (%) 147.7 90.5 231.1 75.6 38.8
CAR (%) 148.3 91.4 232.1 76.7 39.9
Source: www.clsa.com

Find CLSA research on Bloomberg, Thomson Reuters, FactSet and CapitalIQ - and profit from our evalu@tor proprietary database at clsa.com

7 June 2021 sarina.lesmina@clsa.com 2


Transforming into a digital
bank
First phase app launched in
April 2021
Figure 1
Jago’s journey
Source: Company
For Life Finance Solution
Some interesting and
unique features
7 June 2021
First digibank taking off Bank Jago - BUY
Exciting milestones ahead
The current controlling shareholders (PT Metamorfosis Ekosistem Indonesia and
Wealth Track Technology Ltd) acquired the previously-named Bank Arto in
December 2019 from founders (Arto Hardy and family). Subsequently, the name
(and logo) changed to Bank Jago in June 2020. Thus, began the transformation of
the bank into a pure digital bank.
Post the second rights issue as of the end of March 2021 (that raised Rp7tn), Jago
launched its first digital (mobile-based) app on 15 April 2021, followed by additional
features since then. Jago targets 2m customers in the first year of operation.
Number of account on-boarded through the app is undisclosed. Jago said it is still
very small given the app was just recently launched.
Currently, the so-called Life Finance Solution (LFS) key features are savings (and
deposits), transaction (transfer, bill payments, e-wallet top-up, payment in
ecommerce), group-based transactions (ie, share ‘pockets’, etc), bill payment
reminder, and digital debit card (Visa and GPN (national payment gateway)-
enabled).
The pocket sharing (with spending or viewing only access) is unique, and so is the
“Lock pocket” feature (explained later). We also found the bill payment reminder
feature easy to use and reliable, albeit this is not unique to Jago.
sarina.lesmina@clsa.com 3

Figure 2
Sharing Spending Pocket
Source: Company
More products for LFS
Integration to Gojek
platform
To accelerate customer
acquisition at lower cost
Digital lending through app
– to be launched in stages
7 June 2021
First digibank taking off Bank Jago - BUY
Figure 3
Bill payment reminder
Source: Company
In the pipeline
q More products/services for LFS, such as auto-save feature (note: perhaps
similar to “Dream Saver” of Jenius app from BTPN), QRIS (standardised QR
payment), split bill, budget setting and tracking, investment-related products,
cash withdrawal from ATMs worldwide, etc.
q Integration/collaboration with Gojek is targeted to be in early 3Q21, pending
regulator’s approval. While the agreement between Jago and Gojek is not
exclusive, we agree with Jago that it will also be a strong partnership, beyond
just collaboration in operation as Gojek is a shareholder with 21.4% stake and
sees Jago as an opportunity to have a long-term strategic partnership with a
bank.
Obviously, the big upside for Jago will be from this collaboration. Gojek has 20-
21m monthly active users (MAU) and GoPay e-wallet at 11m. Jago would also
likely benefit from the merging of Gojek and Tokopedia, given the much larger
user base and merchants, albeit there are of course overlaps between Gojek and
Tokopedia customers.
There is synergy in various financial services (savings, transactions, lending, etc)
to Gojek’ users, merchants, and drivers. This also means lower user acquisition
cost. It will not be a revenue-sharing scheme as Jago also owns part of the bank.
Figure 4
Gojek and Tokopedia user base
MAU (monthly active users) Merchants Note
Gojek 20-21m, with GoPay at ~11m 1.5m Merchants grew strongly from
500-600k pre-pandemic
Tokopedia 100m+ (from 90m pre- ~10m As of Jan2021, from 7.2m in
pandemic) Jan2020
Source: Companies
q Jago will also launch a digital lending feature through the app for consumers and
Micro-SME loans towards the end of the year or 1Q22 – directly through its
sarina.lesmina@clsa.com 4
 First digibank taking off Bank Jago - BUY

ecosystem, eg, Gojek. For the Micro-SME loans, Jago thinks average loan is
ideally Rp1-2bn and will mostly be supply chain financing. This product is called
Business Finance Solution (BFS) by Jago.

Wealth management, etc q On investment-related products, Jago is open to potential expansion to asset
management and life insurance, but will do things in stages.

Lending partners boost near-term loan growth

Engines of growth Jago mentioned that lending through these lending partners will be a growth driver
for the initial two years. The next driver is lending through the ecosystem (ie, Gojek)
– for mid-to-longer term.

Disbursed loans through While the “digital lending through app” is not ready yet, Jago has disbursed some
lending partners since last loans since 2020 through ~10 lending partners (under a B2B2C model, ie, Jago
year becomes an institutional lender for these fintech platforms. These include
Investree, Kredit Pintar, GoFin (of Gojek), AkuLaku, and AdaKami.

Strong growth in new loans Loan accounts grew to 600k+ in March 2021 from <1k in 2019, with O/S loan
growing 54% YTD (to March 2021) to Rp1.1tn under this B2B2C model.

Winding down legacy loan The bank has also cleaned up legacy (SME) loans (ie, existing loans pre-acquisition
of Bank Arto by Jago). As a result, the balance has more than halved since 2018.

Figure 5 Figure 6

Number of loan accounts New loans vs legacy loans

700 '000 1,400 Rpbn Legacy New
600
600 1,200

500 1,000
400
400 800
1114
600
300
400
200
200
100
178
1 0
0 2017 2018 2019 2020 Mar-21
Dec-19 Dec2020 Mar2021

Source: Company Source: Company

Strong loan growth pa in
medium term
Jago expects Rp600-700bn increase in total O/S loans QoQ in 2Q21. Hence, it
guided for Rp3-4tn loan disbursement this year (assuming Covid-19 situation is
stable). For the first 2-3 years, it foresees O/S loans can at least double every year
(supported by ecosystem and partnership, and also strong capital), and to grow 20-
30% after 5 years. We forecast 175% Cagr in 21-23CL, with Rp4tn for 21CL.

To balance between Micro-
SME and mass consumer
loans
Jago stated that it wants to strike a balance between SME and Consumer in its
portfolio, but reckons that Consumer loan may grow bigger, because of the sizeable
market. That said, there is also a large addressable market in Micro-SME. BRI’s data
shows >60m potential ultra-Micro segment, while government data shows up to
two-third of the 63m Micro-SMEs or 42m do not have access to formal financing.

Fee income to be minimal in As a “start-up”, fee-income will be minimal given the need to attract users:
first 2-3 years

7 June 2021 sarina.lesmina@clsa.com 5

 First digibank taking off Bank Jago - BUY

q Zero monthly admin fee for Savings account. Zero fee if account is dormant.
Minimal account balance can be zero (typical conventional banks require at least
Rp50k). Three digital and physical debit cards for free.

q 25 monthly quota for free interbank transfer and top-up e-wallet (Dana, GoPay,
Ovo, ShopeePay, and LinkAja). If exceeded, a Rp3k/transaction charge applies.
Based on our channel checks, this quota is more than enough for most people.

q Five monthly quota for free cash withdrawal in other banks’ ATM. If exceeded,
charge is Rp7,500/transaction (“ATM Bersama”).

Digital banks will have
similar strategy
Other digital banks generally also waive a lot of fees. For instance, the newly
launched “Motion Banking” by MNC Group also waives monthly admin fee (Note:
usually ~Rp11-17k in conventional banks). “Jenius” from BTPN waived admin fee,
but imposed Rp10k starting January 2021. There is also free quota for interbank
transfer.

We forecast fee-based to be ~2% of operating income in medium term. Sources will

be from “Pay bills” (at Rp1k/transaction), API (application programming interface),
loan admin fee (if charged), and legacy loans. Jago expects increase in transactions
and wealth management products can push more growth. Note that typical large
banks under our coverage have ~15-18% fee as % of operating income.

Figure 7 Figure 8

O/S loan trend Fee-based income trend

35 Rptn O/S loan YoY 400% 20 Rpbn Fee-based income As % of operating income 6.0%

350% 18
30 5.0%
16
300%
25 14
250% 4.0%
12
20 200%
10 3.0%
15 150% 8
2.0%
100% 6
10
50% 4
1.0%
5 2
0%
0 0.0%
0 -50%
2018 2019 2020 21CL 22CL
2018 2019 2020 21CL 22CL 23CL

Source: CLSA, Company Source: CLSA, Company

“Subsidy” needed in near Our assumption is the current promotions on fees would remain in the medium term
term given more competitors are entering the playing field. It remains to be seen if the
new admin fee for “Jenius” will have an impact on CASA growth. This is because
digital banks’ target segment is mostly young people and mass market – which can
be more price sensitive.

Monetisation through Jago gives no limit for online intra-bank transaction to induce “stickiness” of users.
transaction and lending Lending is also a key monetisation way. Coupled with good credit scoring and risk
management, sustainable margin and low opex would more than compensate the
minimal fee-based income.

7 June 2021 sarina.lesmina@clsa.com 6

 First digibank taking off Bank Jago - BUY

Figure 9 Figure 10

Bill payment menu e-Wallet top-up feature

Source: CLSA Source: Company

Figure 11

Supports credit card Credit card payment feature

payment for 13 banks - for
now

Source: Company

7 June 2021 sarina.lesmina@clsa.com 7

 First digibank taking off Bank Jago - BUY

Targeting sustainable high-single-digit margin

Large capital base reduces Given its large capital base, Jago does not really need retail funding to support its
funding cost risk growth in the next three years. This reduces funding cost risk given competition for
funding among new digital banks will intensify.

But, to eventually build However, Jago does want to build a funding franchise eventually. Obviously, it
retail funding franchise cannot compete with conventional banks where the large ones generally have <=1%
CASA cost. Jago offers 3.5% Savings rate. Additionally, for “Spending” Pocket, it
offers 0.5% rate. Some competitors such as Neo Commerce promise up to 6%
savings rate and 8% deposit rate.

Figure 12

Savings account interest rate (pa) of conventional vs digital banks

Key conventional banks Jenius (of Bank Jago Motion Banking (of MNC Neo
BTPN) Group) Commerce
Average ~30bps 2.50% 3.50% Follows MNC Bank , but Up to 6%
some cashback during
promotional period
Source: Companies. Note: for conventional banks, we take average of 5 banks (and for Rp1-500m balance)

Unique deposit-like feature Jago’s “Lock Pocket” feature offers 3.5-4.25% interest rate, with duration and
amount (or target) as variables. For minimum Rp100k and 1 month tenor, rate is
3.5%. Users can specify lock duration based on date or months. Unlike conventional
deposit, users can add money within the lock period and get the same interest rate.

Figure 13 Figure 14

Lock Pocket feature (1) Lock Pocket feature (2)

Source: Company Source: Company. Note: “Move Money” is allowed when lock period ends

Large incumbents banks currently offer <3% time deposit rate, with smaller banks
at 3-4.5%. Jago said it will still launch a full-time deposit feature in the future.

Targeting 3.5-4.5% CASA ratio is 26% as of 1Q21. As Jago builds its transaction franchise, we believe
sustainable cost of funds CASA ratio can rise, albeit likely it will take years before it can reach 50%. Most
importantly is overall cost of funds (1Q21: 3.5%), where Jago aims for a sustainable
3.5-4.5%. Our forecast is 3.7-4.3% over 21/23CL.

A BUKU III (Book III) bank Its status as BUKU III bank post the latest rights issue should give more confidence
to depositors.

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 First digibank taking off Bank Jago - BUY

13-14% lending yield Given the target segment is mass market and SME, Jago believes lending rates
should be higher than Corporate/Commercial. Current loan obtained via lending
partners yields 14% for Jago (while the partners typically charge the borrowers at
~30%).

Aspire for sustainable high- We believe pricing in this segment will be very competitive as more players (be it
single-digit NIM incumbent banks or pure digital banks) enter. Hence, the key is for Jago to manage
liquidity and funding cost. This includes setting a strong track record in lending.
Key is managing cost of
fund amidst competition
On liquidity, given large capital, more than 100% LDR should not be an issue. But,
as a bank, Jago thinks 150-160% will still be a level tolerated by the regulator as
long as there is capital buffer and good operational metrics. All in all, taking into
account pricing competition and our cost of funds assumption, we believe NIM to
be 7.9/8.6/8.8% in 21/22/23CL. The YoY increase in 22CL is also driven by
continuing wind down of legacy loans.

Figure 15

NIM and cost of funds

10.0% Cost of fund NIM
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2019 2020 1Q21 21CL 22CL 23CL

Source: CLSA, Company

7 June 2021 sarina.lesmina@clsa.com 9

 First digibank taking off Bank Jago - BUY

Building good risk management

Cleaning the slate Cleaning up legacy loans was relatively fast. When Jago acquired Bank Artos in
December 2019, total loan was Rp285bn, but lots of portfolio is NPL. Then, with
~10% write-off ratio in 2019, NPL declined to 2% from 6.2% before.

Keeping some legacy loans Because of the clean-up, restructured loan fell to 6.2% of loan in 1Q21 from 9.3%
that are good in 2020. Jago mentioned some of these are back to normal along with the economic
recovery, but some will need another restructuring, while the rest maybe written-
off. Basically, good legacy loans (SME, property, etc) will be kept.

Monitoring performance Current NPL is 0% (as of 2020), because of asset clean up, but mostly because of
new loans. Obviously, it is not realistic to assume 0% NPL to be sustainable as
lending comes at a risk. For the loans already in the book, the key is close monitoring
to prevent slippage. This is because 93% of the book is loans having <12 months
remaining maturity, with 41% of loans with <3 months maturity.

Will not be rosy, but We believe lending is the key testing ground for digital banks, be it for a hybrid bank
preparing a robust credit or a pure digital bank like Jago. The company itself believes it will not rosy, but is
scoring model building what it hopes to be a good credit scoring model.

Through partners, but q It will be leveraging on transaction data of partners and ecosystem, with
setting own parameters parameters set by Jago and adjusted over time. For instance, Gojek’s drivers and
merchants’ transaction data would see average cashflow in past 15 months to
approximate “capacity to pay” a loan. For drivers, working experience can also
be one of the parameters.

“Direct-debit” approach q For Consumer loan, that is generally unsecured, Jago said it may also apply a
‘direct debit’ approach such as asking ecosystem partners (Gojek, Tokopedia) to
take a % cut of a merchant or driver income before passing to them. This cut
can be used for loan instalment.

Some collaterals for Micro- q Micro-SME loans will be generally secured by deposits/savings or registered
SME loan mortgages or other guarantees acceptable to the bank.

Find a balance between
convenience and security
q We think balancing between convenience for consumers and protection is
important. Jago said preventive measures include using hackers to do system
security checks (as was done in BTPN’ Jenius). There is also a fraud detection
team. Jago mentioned that cloud-based infra means it is also in the interest of
cloud providers to protect their data. This saves costs on firewalls.

Based on our channel checks, account opening approval was very fast and easier
(less input fields) than some of the other banks. However, biometric technology
helps, and identity verification needs users to enter ID numbers as well.

Prefers low risk portfolio,
even though lower yield
q The bank reckons 3% NPL in the long run is within risk appetite. Jago does not
want to aim for high risk loan that yields 20%+ but with 5% NPL. Hence, the
bank aims for 1.5-2.5% credit cost (Note: 1Q21 2.2%). In 2019-20, to build
coverage, the bank booked one-off elevated credit costs. It raised NPL coverage
to 572% in 2019. In 2020, NPL was booked at 0%. Provision balance rose 2.5x
to Rp81bn, and to Rp125bn in 1Q21.

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 First digibank taking off Bank Jago - BUY

In the next few years, because of the hyper growth phase, we foresee NPL ratio
should be below 2%, and NPL coverage to be >100%. Our credit cost is 1.4-2%
for 21/23CL.

Figure 16 Figure 17

NPL ratio trend Cost of credit

7.00% 25.0%

6.00%
20.0%
5.00%
15.0%
4.00%

3.00% 10.0%

2.00%
5.0%
1.00%

0.00% 0.0%
2018 2019 2020 21CL 22CL 23CL 2018 2019 2020 21CL 22CL 23CL

Source: Company Source: Company

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 First digibank taking off Bank Jago - BUY

Initiate with a BUY rating

Spending upfront capex Jago foresees IT capex this year to be US$20m, higher than US$15m in 2020. For
next 3-5 years, annual capex is estimated at US$15-20m. When it first set up the
business, Jago spent US$75m in the first nine months.

Easy to scale up Unlike in traditional banks, upfront IT investment with cloud-based infra is not big
and easily scalable. Taking lessons learned from Jenius (Note: some of Jago’s
management were ex-BTPN), Jago did not buy its tech off-the-shelf in the
beginning – which it deems as limiting fast roll-out time and customisation (Jenius
now has 3m customers but after 4 years).

Separately, regulators’ audit ability will not be compromised as long as they can look
at the service level agreements.

To have low opex and
steady-state CIR at 30-35%
Being a pure digital bank will also give opex advantage vs traditional banks.
However, as the company is adding personnel and G&A costs, a targeted steady
state 30-35% cost to income ratio (CIR) will only be achieved in year 5-6. Our CIR
forecast is a 120/48% for 21/22CL. Jago expects 60-70% YoY opex growth this year
– mostly because some of new employees only joined in 4Q20.

Minimal physical presence
As of 1Q21, Jago has 2 branches, 3 sub-branches, and 1 cash office. Some branches
will still be needed to show presence, maybe at most 10 in the next 5 years. But,
overall cost to serve customers will be very small as >95% of customers will be
digital-banking’ customers. Large incumbent conventional banks currently run at
~42-47% CIR.

Jago previously mentioned that it will monitor ratio between capex investments
against revenue. It should gradually fall with revenue growth.

Can leverage on Gojek’s While building up its brand, Jago believes that it can also leverage on Gojek’s brand
brand to reach users. Hence, it can suppress promotional cost. The bank will also use more
social media for advertising and promotional activities as it is much more affordable
vs traditional channels (ie, Rp80bn per year for billboard).

Minimal promotion at the Given large capital, Jago said it will not be too aggressive in doing promotional
moment activities at the moment. There was a ‘wheels of fortune’ cash handout a few
months ago, and some cashback programs.

Latest promotion was a cashback up to Rp100k for debit card usage for minimum
Rp100k transaction value (with minimum balance of Rp1m in user account). We
estimated that the cashback budget for this was Rp300m (as only 3,000 eligible
transactions/day can get cashback of maximum Rp20k during 28 May 2021 – 1
June 2021).

7 June 2021 sarina.lesmina@clsa.com 12

 First digibank taking off Bank Jago - BUY

Figure 18 Figure 19

Jago’s Visa debit card promotion Cost-to-income ratio

300%

250%

200%

150%

100%

50%

0%
2018 2019 2020 21CL 22CL 23CL

Source: Company Source: CLSA, Company

Good management with strong capital base

Core team has good track Jago’s new core team includes Jerry Ng and Arief Tandjung (ex-Danamon, BTPN,
record etc), and Peterjan van Nieuwenhuizen (who was in charge of BTPN Jenius product).
Ng and Tandjung are seasoned bankers with good record. Kharim Siregar who is
President Director was also from BTPN as ex-IT Director.

Figure 20

Latest BOD and BOC

Board of Directors Title
Kharim Indra Gupta Siregar President Director
Arief Harris Tandjung Deputy President Director
Tjit Siat Fun Compliance Director
Peterjan van Nieuwenhuizen Director
Sonny Christian Joseph Business Director
Umakanth Rama Pai Risk Director

Board of Commissioners Title

Jerry Ng Chairman
Anika Faisal Commissioner
Arief Tarunakarya Surowidjojo Independent Commissioner
Teguh Dartanto Independent Commissioner
Source: Company

In terms of shareholding structure, controlling shareholders (41.5% stake) are: PT

Metamorfosis Ekosistem Indonesia, and Wealth Track Technology Ltd. Gojek
(through PT Dompet Karya Anak Bangsa) owns 21.4%, with GIC (of Singapore)
buying 9.12% stake during the latest rights issue.

Capital to support hyper Post the second rights issue in March 2021 (Note: first rights issue in March 2020),
growth phase tier 1 capital rose to ~Rp8tn from Rp1tn in December 2020. CAR rose to 538%
from 91%. With the asset growth that we projected, CAR will fall, but still to ~40%
in 23CL which is ample. In line with Jago’s forecast, we believe the bank does not
need another rights issue in the next three years.

A head-start vs peers Jago has about a one year head-start vs other aspiring digital banks, and with Gojek
as an ecosystem partner. Based on our channel checks, most of these banks will
have to raise funds to raise capital to comply with the regulator’s requirement. In
2020, OJK (Financial Services Authority) raised the minimum capital requirement of

7 June 2021 sarina.lesmina@clsa.com 13

 First digibank taking off Bank Jago - BUY

commercial banks (except for bank that is subsidiary of a bank) from Rp1tn to Rp2tn
by the end of 2021, and Rp3tn by the end of 2022.

At the same time, it is likely that most of these banks are in process of cleaning up
legacy loans.

Figure 21 Figure 22

Tier 1 capital of Jago vs some digibanks Current shareholding structure

9 Rptn PT Wealth Track
MetamorfosisTechnology
8
Ekosistem Ltd
7 Indonesia (controlling)
(controlling) 12%
6
Public (each 30%
5 <5%)
4 28%

3
GIC
2 9%
PT Dompet
1 Arief Harris Karya Anak
Tandjung Bangsa
0
(Director) ("Gojek")
Bank Neo Bank Bank MNC Seabank Bank Bank Bumi Bank Jago
0% 21%
Commerce Aladin Intl Indo Capital Arta
(Bank Net) Indo
Source: Companies Source: Company

Aim to be profitable within two years

Narrowing loss We believe Jago is on the path to breakeven by the end of 22CL. 1Q21 net loss was
Rp38bn. We forecast FY earnings loss to narrow from Rp189bn in 2020 to Rp95bn
in 21CL.

The bank itself wants to be able to breakeven as soon as possible. The reason is
while a separate licence for pure digital bank is not needed (ie, a commercial bank
licence of at least BUKU II bank is enough), it likely also means the regulator will
monitor digital banks similarly as commercial banks – hence it will be subjected to
similar prudent measures.

Shorter time to breakeven In Asian Bankers Research, the years for digital banks to be profitable has become
for newer digibanks shorter to around 2 years compared to over 4 years for first generation ones (mostly
in Japan such as Sony, Japan Net, and Rakuten Bank). This may be due to technology
advancement as well as growing demands.

By comparison, digital banks in Australia are not expected to become profitable

within two years such as Judo Bank and Volt.

Good for Jago, if it can do It will be encouraging if Jago can reach breakeven within the time frame of the
this successful digital banks in the world, while attracting more and more customers.

As comparison, founded in 2013, Nubank, a super successful Brazil-based digital

bank (with US$25bn valuation) is yet to reach breakeven. However, it did record a
26% lower net loss in FY20 (US$61m) vs 2019. The company expanded to Mexico
in March 2020, and Colombia in October 2020, and Argentina is next target. This
maybe the reason that the focus is still on rapid expansion.

7 June 2021 sarina.lesmina@clsa.com 14


Figure 23
Digital banks with 5 years or less in operation
Source: Asian Banker Research
WeBank and MyBank are
top 2 in China
Both are integral part of
ecosystem
Jago’s ROE to grow strong
No dividend until 2024
7 June 2021
First digibank taking off Bank Jago - BUY
Figure 24
Digital banks with over 6 years in operation
Source: Asian Banker Research
Chinese-backed digibanks WeBank, MYBank, and XWBank reportedly have become
profitable in ~2 years. According to Hans Fan, CLSA Head of China Financials
Research in his report China fintech (WeBank vs MyBank), there are ~20 digibanks
in China, but the top 2 are WeBank (30% owned by Tencent) and MyBank (30%
owned by Ant Group). WeBank is China’s first digital bank, established in December
2014 and turned profitable in 2016. MyBank was established in May 2015.
WeBank and MyBank booked 88% and 42% earnings Cagr over 2016-2020
respectively. ROE was 26.7% for WeBank and 11.7% for MyBank in 2020.
Hans Fan noted that part of the success is because WeBank and MyBank are an
integral part of the fintech ecosystem of Tencent and Ant Group.
Separately, Kakao Bank reported US$102m profit in 2020 (up 8x YoY) after 2 years
in operation.
Supported by asset and earnings growth, we forecast Jago’s ROE to gradually rise
from -2% in 21CL to 8.4% in 23CL. Jago aims for sustainable ROE at 22-25% with
18% tier 1 capital.
Jago stated that it will not pay dividend until 2024 (as stated in the deal prospectus).
sarina.lesmina@clsa.com 15
 First digibank taking off Bank Jago - BUY

Figure 25 Figure 26

Jago’s earnings trend CLSA earnings forecast vs consensus

800 Rpbn 120% CLSA vs Cons

600 100%

400 80%

200 60%

0
40%

(200)
20%

(400)
0%
2019 2020 21CL 22CL 23CL
2021 2022 2023

Source: CLSA, Company Source: CLSA, Bloomberg

Risks
Start-up risk In the current condition, other than macro-related risk (ie, Covid-19 situation,
economy recovery, etc), the main risk for Bank Jago is on ensuring that operation
and collaboration with key partners and ecosystem (ie, Gojek as main one) is
growing strong and is healthy (ie, minimal asset quality issue).

Competition risk While Jago has a first-mover advantage, there is rising competition from other
digital banks in the making as well as digital products/services of large established
incumbents. Hence, competition will intensify. Recently, we wrote about a non-
bank newcomer in the digibank space, LINE (the messaging app) - Indonesian banks
(LINE enters digital bank race). Our view is not all aspiring digital banks will be
successful. Those that have that backing of large financiers, or ecosystem have a
higher chance to succeed.

Regulatory risk As of now, a separate licence for a pure digital bank is not needed (ie, only a
commercial bank licence in BUKU II capital category). However, a digital bank will
need OJK approval (as bank’s supervisory body) on product offerings, and also from
Bank Indonesia (as governing body for payment system). Delay in approvals from
the regulators will push back new products launching.

On the capital side, OJK is reviewing potential change again to minimum capital
requirement for banks. It may include regulations pertaining to digital banks, on
data management, tech management, risk management, cyber security, and
collaboration with platforms.

BUY with Rp17,100 target price

c.40% upside We value Jago based on 1.5x PE/G multiple, at a discount to 1.64x market-cap
weighted PE/G of banks under our coverage.

The benchmark PE/G is derived from:

q Aggregate marketcap weighted forward PE of banks under our coverage of

16.2x.

q Marketcap weighted EPS Cagr of banks under our coverage of 9.9% over
2019-23CL. We used 2019-23CL period for the EPS cagr to ensure the
earnings volatility due to Covid-19 pandemic is normalised.

7 June 2021 sarina.lesmina@clsa.com 16

 First digibank taking off Bank Jago - BUY

This discount in PE/G multiple for valuing Jago vs the benchmark reflects our view
of Jago’s nascent stage as a full digital bank, while also taking into account Covid-
19 uncertainty.

The PE/G derived target Our Rp17,100 target price is based on mid-22-23CL EPS given we are already in
price is based on mid-22- mid-2021. Our TP implies 28x 22CL PB. Jago currently trades at ~20x 22CL PB.
23CL EPS
Figure 27

Jago's valuation
EPS Cagr 312.9%
PE/G ratio 1.5
EPS (mid 22-23CL) – Rp/share 36.4
PE 469

Theoretical target price 17,071

Final target price (Note: rounding up theoretical target price) - Rp 17,100
Source: CLSA

Figure 28

Aggregate PE band of CLSA banks coverage

30.0 (X)

28.0

26.0

24.0

22.0
+1sd 20.59x
20.0

18.0
avg 16.52x
16.0

14.0
-1sd 12.45x
12.0

10.0
Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 Dec 20

Source: CLSA

Peer valuation is not that relevant at this point given: 1) equity will change
dramatically post rights issue, and so will the loan book, and 2) no consensus
forecasts.

Sustaining high valuation For the longer term, when growth reaches a sustainable normal level, valuation will
depend on sustainable ROE of Jago. Using banks under our coverage as reference,
those with higher ROE generally command higher valuation.

7 June 2021 sarina.lesmina@clsa.com 17

 First digibank taking off Bank Jago - BUY

Figure 29 Figure 30
B

Jago’s PB band Banks ROE (21CL) vs PB (21CL)

(X) 4.5 PB
25.0
4.0
BCA
20.0 3.5

3.0
BTPN Syariah
15.0
2.5 BRI

10.0 +1sd 10.83x 2.0

1.5 Mandiri
5.0 avg 4.95x
1.0 BTN
BNI
0.0 0.5 ROE
Jun 16Dec 16Jun 17Dec 17Jun 18Dec 18Jun 19Dec 19Jun 20Dec 20
0.0
0.0 5.0 10.0 15.0 20.0 25.0
Source: CLSA Source: CLSA

Figure 31

Key assumptions
2018 2019 2020 21CL 22CL 23CL
Loan growth #DIV/0! (27.5%) 218.9% 353.6% 195.4% 155.4%
Loan-to-deposit ratio (LDR) 73.3% 45.4% 112.7% 188.6% 155.8% 163.8%
CASA ratio 18.0% 18.5% 27.2% 19.5% 21.3% 35.2%
Yield on earning assets 12.3% 6.5% 6.3% 9.7% 11.0% 11.3%
Cost of funds 6.5% 7.1% 3.5% 3.7% 5.5% 5.9%
Net interest margin (NIM) 6.1% 2.1% 4.70% 7.93% 8.69% 8.85%
*Gross NPLs to Net Loans 6.3% 2.3% 0.0% 0.5% 1.3% 1.6%
*Cost of credit 1.5% 26.3% 4.6% 0.9% 1.1% 1.4%
Loan-loss provision coverage 38% 572% N/A 703% 155% 120%
Cost to income 139.5% 254.8% 264.3% 121.4% 48.3% 39.9%
ROAA (3.5%) (9.5%) (10.6%) (1.5%) 2.0% 3.0%
ROAE (18.1%) (30.7%) (19.8%) (2.0%) 3.2% 8.4%
Book value growth #DIV/0! 489.5% 80.9% 564.3% 3.3% 8.7%
Source: CLSA, company. *Note: Net loans is “Gross loan – loan loss reserve”

There is no comparable in other markets for valuation, as they, notably the key ones
are not listed (yet). Below are some of the valuation and user base information that
we can get on these companies.

Figure 32

Regional comparables
Country Valuation (US$bn) Customers Implied Value/Cust (US$)
NuBank Brazil 25 35m 714
Judo Bank Australia 0.65 N/A N/A
WeBank China N/A 270m Retail and 1.8m SME N/A
MyBank China N/A 35m SME N/A
XWBank China N/A 31m Retail and 11.3k SME N/A
Kakao Bank South Korea 18 13.6m 1,324
Line Bank Thailand N/A ~2m N/A
Source: Companies

7 June 2021 sarina.lesmina@clsa.com 18

 First digibank taking off Bank Jago - BUY

Valuation details
We value Bank Jago based on 1.5x PE/G multiple, at a discount to 1.64x market-
cap weighted PE/G of banks under our coverage. The discount is to reflect the
nascent stage of Jago in operating as a full digital bank. We also take into account
Covid-19 uncertainty.

Investment risks
In the current condition, main risk for Bank Jago is on ensuring that operation and
collaboration with key partners and ecosystem (i.e. Gojek as main one) runs
smoothly. That the hypergrowth phase in medium term will not result in bad asset
quality down the line. While Jago has a first-mover advantage, there is rising
competition from other digital banks in the making as well as digital
products/services of large established incumbents. Aside from that, an investment
in Bank Jago entails risks primarily linked to macro factors (growth, inflation,
interest rate) and political (stability, legal) for Indonesia that are likely to affect both
the earnings generated and multiples paid for its shares.

7 June 2021 sarina.lesmina@clsa.com 19

 First digibank taking off Bank Jago - BUY

Detailed financials
Profit & Loss (Rpbn)
Year to 31 December 2018A 2019A 2020A 2021CL 2022CL 2023CL
Interest income 67 53 90 309 1,020 2,561
Interest expense (40) (41) (25) (55) (213) (559)
Net interest income 28 11 65 254 807 2,002
Trading income 0 0 0 0 0 0
FX gains/(losses) 2 4 23 20 65 200
Fee/Commission income 2 1 2 6 18 50
Other operating income - 0 0 0 0 -
Non-interest income 4 5 25 26 83 250
Total op income 32 17 90 280 890 2,252
Staff related expenses (27) (27) (158) (191) (220) (373)
Property related expenses (17) (15) (75) (150) (210) (524)
Other operating expenses 0 0 (5) 0 0 0
Total operating expenses (44) (42) (237) (340) (430) (898)
Preprovision OP (13) (26) (148) (60) 460 1,354
Specific provision for loans - - - - - -
General provision for loans (6) (66) (38) (35) (122) (432)
Other provisions 0 0 0 0 0 0
Loan-loss provisions (6) (66) (38) (35) (122) (432)
Operating profit (18) (92) (186) (95) 338 922
Associate income - - - - - -
Other exceptional items - - - - - -
Other income/expense 0 (27) (4) 0 0 0
Profit before tax (18) (119) (189) (95) 338 922
Taxation (5) (3) - - (68) (184)
Profit after tax (before preference (23) (122) (189) (95) 270 738
dividends)
Preference dividends - - - - - -
Profit for period (23) (122) (189) (95) 270 738
Minority interest 0 0 0 0 0 0
Net profit (23) (122) (189) (95) 270 738
Adjusted profit (23) (122) (189) (95) 270 738
EPS (Rp) (19.1) (101.3) (17.5) (6.9) 19.5 53.2
Adjusted EPS (Rp) (19.1) (101.3) (17.5) (6.9) 19.5 53.2
DPS (Rp) 0.0 0.0 0.0 0.0 0.0 0.0

Profit & loss ratios

Year to 31 December 2018A 2019A 2020A 2021CL 2022CL 2023CL
Growth (%)
Net int inc growth (%) - (59.5) 471.6 292.7 217.7 148.1
Non-int inc growth (%) - 43.3 369.2 4.9 215.3 200.9
Operating inc growth (%) - (47.3) 438.7 212.2 217.4 153.0
Operating exp growth (%) - (3.8) 458.6 43.4 26.3 108.8
Loan provision expense growth - 1,072.9 (42.3) (7.7) 247.1 254.0
Net profit growth (%) - nm nm nm nm 172.8
EPS growth (% YoY) - nm nm nm nm 172.8
Adj EPS growth (% YoY) nm nm nm nm nm 172.8
DPS growth (% YoY) - - - - - -
Margins (%)
Spread (%) 5.9 (0.6) 2.8 5.9 5.5 5.4
Net interest margin (%) 5.1 1.4 4.5 7.9 8.7 8.8
Returns (%)
ROA (%) (3.5) (9.5) (10.6) (1.5) 2.0 3.0
ROE (%) (18.1) (30.7) (19.8) (2.0) 3.2 8.4
Other key ratios (%)
Non-interest inc/op inc (x) 11.8 32.1 28.0 9.4 9.3 11.1
Cost/income (%) 139.5 254.8 264.3 121.4 48.3 39.9
Staff costs/op costs (%) 60.4 63.2 66.5 56.0 51.2 41.6
Provision exp/loans (%) 1.5 26.3 4.6 0.9 1.0 1.4
Earnings payout ratio (%) - - - - 0.0 0.0
Source: www.clsa.com

7 June 2021 sarina.lesmina@clsa.com 20

 First digibank taking off Bank Jago - BUY

Balance sheet (Rpbn)

Year to 31 December 2018A 2019A 2020A 2021CL 2022CL 2023CL
Gross loans 393 285 908 4,119 12,165 31,067
Loan loss reserve (9) (33) (82) (145) (245) (598)
Net loans 384 252 826 3,974 11,920 30,469
Cash & equivalents 20 26 12 31 1,695 233
Placements with other banks 3 241 310 162 194 108
Other interest earning assets 32 657 459 279 1,357 178
Total interest earning assets 439 1,175 1,607 4,445 15,167 30,987
Net fixed assets 66 69 138 395 652 910
Intangible assets 0 0 0 0 0 0
Other assets 160 77 436 5,672 591 641
Total non-interest earning assets 226 146 573 6,067 1,243 1,551
Total assets 665 1,321 2,180 10,512 16,410 32,538
Current deposits 33 25 183 210 242 278
Savings deposits 59 86 36 215 1,421 6,394
Other deposits 420 489 585 1,756 6,145 12,291
Customer deposits 512 599 804 2,181 7,808 18,963
Deposits from banks 24 28 2 2 2 2
Other int-bearing liabs - - - - - -
Total int-bearing liabs 536 627 806 2,183 7,810 18,965
Other non-int-bearing liabs 13 13 142 142 142 4,378
Total liabilities 549 640 948 2,325 7,952 23,343
Share capital 121 121 1,086 8,136 8,136 8,136
Retained earnings (67) (177) (341) (436) (165) 572
Reserves 62 738 487 487 487 487
Treasury stock - - - - - -
Shareholder funds 116 681 1,232 8,187 8,458 9,195
Minorities/other equity 0 0 0 0 0 0
Total equity 116 681 1,232 8,187 8,458 9,195
Total liabs & equity 665 1,321 2,180 10,512 16,410 32,538
Non-performing loans 24 6 0 21 158 497
Credit risk 0 0 0 0 0 0
Operational risk 0 0 0 0 0 0
Market risk 0 0 0 0 0 0
Risk weighted assets 589 448 1,182 3,229 9,977 20,685
Average Risk weighted assets 626 519 815 2,205 6,603 15,331
Total tier 1 capital 106 662 1,070 7,461 7,545 8,030
Total capital 110 665 1,080 7,495 7,650 8,248
BVPS (Rp) 95.8 564.7 113.5 590.9 610.4 663.6

Balance sheet ratios

Year to 31 December 2018A 2019A 2020A 2021CL 2022CL 2023CL
Growth (%)
Loan growth (%) - (34.5) 228.4 381.0 200.0 155.6
Deposits growth (%) - 17.0 34.2 171.3 257.9 142.9
Loans/deposits (%) 73.3 45.4 112.7 188.6 155.8 163.8
Growth in total assets (% YoY) - 98.8 65.0 382.2 56.1 98.3
Risk-wtd assets growth (%) - (23.9) 163.6 173.3 209.0 107.3
Asset quality
Provision expense/loans (%) 1.5 26.3 4.6 0.9 1.0 1.4
Gross NPLs/total loans (%) 6.3 2.3 0.0 0.5 1.3 1.6
Loan provisions/NPLs (%) 0.0 0.0 0.0 0.0 0.0 0.0
NPL growth/loan growth - 220.8 (43.7) 54,020.5 334.0 137.7
Loan provision growth/loan provision - nm nm nm nm nm
expense growth
Capital Adequacy
Tier 1 CAR (%) 18.1 147.7 90.5 231.1 75.6 38.8
CAR (%) 18.6 148.3 91.4 232.1 76.7 39.9
RWA/total assets (%) 88.6 33.9 54.2 30.7 60.8 63.6
Equity/total assets (%) 17.4 51.6 56.5 77.9 51.5 28.3
Source: www.clsa.com

7 June 2021 sarina.lesmina@clsa.com 21

 First digibank taking off Bank Jago - BUY

DuPont analysis
Year to 31 December 2018A 2019A 2020A 2021CL 2022CL 2023CL
Net int income/assets (%) 4.2 1.1 3.7 4.0 6.0 8.2
Non-int income/assets (%) 0.6 0.5 1.4 0.4 0.6 1.0
Total op income/assets (%) 4.8 1.7 5.1 4.4 6.6 9.2
Op expenses/assets (%) 6.6 4.3 13.6 5.4 3.2 3.7
Op profit/assets (%) 11.4 6.0 18.7 9.8 9.8 12.9
Provision expenses/assets (%) (0.8) (6.7) (2.2) (0.6) (0.9) (1.8)
Other items/assets (%) 0.0 (2.7) (0.2) 0.0 0.0 0.0
Tax expense/assets (%) 2.9 (0.1) 0.0 0.0 (1.8) (2.2)
ROA (%) (3.5) (9.5) (10.6) (1.5) 2.0 3.0
ROA incl other items/assets (%) 13.4 (3.5) 16.3 9.2 7.1 8.9
Leverage (x) 5.8 2.5 1.8 1.3 1.6 2.8
ROE (%) (18.1) (30.7) (19.8) (2.0) 3.2 8.4
Source: www.clsa.com

7 June 2021 sarina.lesmina@clsa.com 22

 Important disclosures Bank Jago - BUY

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Companies mentioned
Bank Jago (ARTO IJ - RP12,300 - BUY)
AdaKami (N-R)
aiBank (N-R)
AkuLaku (N-R)
Ant (N-R)
Bank Aladin (N-R)
Bank Arto (N-R)
Bank Bumi (N-R)
Bank Capital Indonesia (N-R)
Bank Central Asia (BBCA IJ - RP32,650 - O-PF)
Bank KB Bukopin (N-R)
Bank Mandiri (BMRI IJ - RP6,125 - BUY)
Bank Mega (N-R)
Bank Negara (BBNI IJ - RP5,525 - BUY)
Bank Neo Commerce (N-R)
Bank NISP (N-R)
Bank Rakyat (BBRI IJ - RP4,250 - O-PF)
BTN (BBTN IJ - RP1,605 - O-PF)
BTPS (BTPS IJ - RP2,920 - BUY)
CIMB Niaga (N-R)
Citibank (N-R)
Daiwa Next Bank (N-R)
Dana (N-R)
GIC (N-R)
GoFin (N-R)
Gojek (N-R)
HSBC (N-R)
ICBC (1398 HK - HK$4.99 - BUY)
ING Bank (N-R)
Investree (N-R)
Japan Net (N-R)
JIbun Bank (N-R)
Judo Bank (N-R)
Kakao Bank (N-R)
Kredit Pintar (N-R)
Line Bank (N-R)
LinkAja (N-R)
Maybank (MAY MK - RM8.17 - BUY)
MNC Bank (N-R)
MNC Group (N-R)
MYbank (N-R)
Nubank (N-R)
Ovo (N-R)
Panin Bank (N-R)
Paytm Payments Bank (N-R)
Permata Bank (N-R)
PT Dompet Karya Anak Bangsa (N-R)
PT Metamorfosis Ekosistem Indonesia (N-R)

7 June 2021 sarina.lesmina@clsa.com 23

 Important disclosures
Rakuten Bank (N-R)
SBI Sumishin Net Bank (N-R)
Sea Limited (SE US - US$256.82 - BUY)
Seabank Indonesia (N-R)
Sony (N-R)
Standard Chartered (N-R)
Tencent (700 HK - HK$600.50 - BUY)
Tokopedia (N-R)
UOB (UOB SP - S$26.27 - O-PF)
Visa (N-R)
Volt (N-R)
Wealth Track Technology Ltd (N-R)
Webank (N-R)
XWBank (N-R)
Analyst certification
The analyst(s) of this report hereby certify that the views expressed in this research report accurately reflect my/our
own personal views about the securities and/or the issuers and that no part of my/our compensation was, is, or will
be directly or indirectly related to the specific recommendation or views contained in this research report.
Important disclosures
The policy of CLSA, CLSA Americas, LLC ("CLSA Americas") and CL
Securities Taiwan Co., Ltd. (“CLST”) is to only publish research that is
impartial, independent, clear, fair, and not misleading. Regulations or
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disclosures to be made for certain actual, potential or perceived
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research disclosure should be read in conjunction with the research
disclaimer as set out at www.clsa.com/disclaimer.html and the
applicable regulation of the concerned market where the analyst is
stationed and hence subject to. Investors are strongly encouraged to
review this disclaimer before investing.
Neither analysts nor their household members/associates/may
have a financial interest in, or be an officer, director or advisory board
member of companies covered by the analyst unless disclosed herein.
In circumstances where an analyst has a pre-existing holding in any
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(For full disclosure of interest for all companies mention on this
report, please refer to
http://www.clsa.com/member/research_disclosures/ for details.)
The analysts included herein hereby confirm that they have not
been placed under any undue influence, intervention or pressure by
any person/s in compiling this research report. In addition, the
analysts attest that they were not in possession of any material, non-
public information regarding the subject company at the time of
publication of the report. Save from the disclosure below (if any), the
analyst(s) is/are not aware of any material conflict of interest.
As analyst(s) of this report, I/we hereby certify that the views
expressed in this research report accurately reflect my/our own
personal views about the securities and/or the issuers and that no
part of my/our compensation was, is, or will be directly or indirectly
related to the specific recommendation or views contained in this
report or to any investment banking relationship with the subject
company covered in this report (for the past one year) or otherwise
any other relationship with such company which leads to receipt of
fees from the company except in ordinary course of business of the
company. The analyst/s also state/s and confirm/s that he/she/they
has/have not been placed under any undue influence, intervention or
pressure by any person/s in compiling this research report. In
7 June 2021 sarina.lesmina@clsa.com
Bank Jago - BUY
addition, the analysts included herein attest that they were not in
possession of any material, nonpublic information regarding the
subject company at the time of publication of the report. The analysts
further confirm that none of the information used in this report was
received from CLSA's Corporate Finance department or CLSA's Sales
and Trading business. Save from the disclosure below (if any), the
analyst(s) is/are not aware of any material conflict of interest.
Key to CLSA/CLSA Americas/CLST investment rankings: BUY:
Total stock return (including dividends) expected to exceed 20%; O-
PF: Total expected return below 20% but exceeding market return; U-
PF: Total expected return positive but below market return; SELL:
Total return expected to be negative. For relative performance, we
benchmark the 12-month total forecast return (including dividends)
for the stock against the 12-month forecast return (including
dividends) for the market on which the stock trades.
"High Conviction" Ideas are not necessarily stocks with the most
upside/downside, but those where the Research Head/Strategist
believes there is the highest likelihood of positive/negative returns.
The list for each market is monitored weekly.
Overall rating distribution for CLSA (exclude CLST) only Universe:
Overall rating distribution: BUY / Outperform - CLSA: 75.04%,
Underperform / SELL - CLSA: 24.96%, Restricted - CLSA: 0.60%; Data
as of 31 Mar 2021. Investment banking clients as a % of rating
category: BUY / Outperform - CLSA: 11.40%, Underperform / SELL -
CLSA: 2.16%; Restricted - CLSA: 0.60%. Data for 12-month period
ending 31 Mar 2021.
Overall rating distribution for CLST only Universe: Overall rating
distribution: BUY / Outperform - CLST: 91.18%, Underperform / SELL
- CLST: 8.82%, Restricted - CLST: 0.00%. Data as of 31 Mar 2021.
Investment banking clients as a % of rating category: BUY /
Outperform - CLST: 0.00%, Underperform / SELL - CLST: 0.00%,
Restricted - CLST: 0.00%. Data for 12-month period ending 31 Mar
2021.
There are no numbers for Hold/Neutral as CLSA/CLST do not
have such investment rankings. For a history of the recommendation,
price targets and disclosure information for companies mentioned in
this report please write to: CLSA Group Compliance, 18/F, One Pacific
Place, 88 Queensway, Hong Kong and/or; (c) CLST Compliance (27/F,
95, Section 2 Dun Hua South Road, Taipei 10682, Taiwan, telephone
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 Important disclosures
(886) 2 2326 8188). EVA® is a registered trademark of Stern, Stewart
& Co. "CL" in charts and tables stands for CLSA estimates, “CT” stands
for CLST estimates, "CRR" stands for CRR Research estimates and
“CS” for Citic Securities estimates unless otherwise noted in the
source.
Charts and tables sourced to CLSA in this report may include data
extracted from CLSA’s automated databases, which derive their
original data from a range of sources. These can include: companies;
analyst estimates/calculations; local exchanges and/or third-party
data or market pricing providers such as Bloomberg, FactSet or IBES.
Additional information on data sources for specific charts or tables
can be obtained by contacting the publishing analysts.
This publication/communication is subject to and incorporates
the terms and conditions of use set out on the www.clsa.com website
(https://www.clsa.com/disclaimer.html). Neither the
publication/communication nor any portion hereof may be reprinted,
sold, resold, copied, reproduced, distributed, redistributed, published,
republished, displayed, posted or transmitted in any form or media or
by any means without the written consent of CLSA, CLSA Americas
and/or CLST. CLSA, CLSA Americas and/or CLST has/have produced
this publication/communication for private circulation to
professional, institutional and/or wholesale clients only, and may not
be distributed to retail investors. The information, opinions and
estimates herein are not directed at, or intended for distribution to or
use by, any person or entity in any jurisdiction where doing so would
be contrary to law or regulation or which would subject CLSA, CLSA
Americas, and/or CLST to any additional registration or licensing
requirement within such jurisdiction. The information and statistical
data herein have been obtained from sources we believe to be
reliable. Such information has not been independently verified and we
make no representation or warranty as to its accuracy, completeness
or correctness. Any opinions or estimates herein reflect the judgment
of CLSA, CLSA Americas, and/or CLST at the date of this
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without notice. Where any part of the information, opinions or
estimates contained herein reflects the views and opinions of a sales
person or a non-analyst, such views and opinions may not correspond
to the published view of CLSA, CLSA Americas, and/or CLST. Any
price target given in the report may be projected from one or more
valuation models and hence any price target may be subject to the
inherent risk of the selected model as well as other external risk
factors. Where the publication does not contain ratings, the material
should not be construed as research but is offered as factual
commentary. It is not intended to, nor should it be used to form an
investment opinion about the non-rated companies.
This publication/communication is for information purposes only
and it does not constitute or contain, and should not be considered as
an offer or invitation to sell, or any solicitation or invitation of any
offer to subscribe for or purchase any securities in any jurisdiction
and recipient of this publication/communication must make its own
independent decisions regarding any securities or financial
instruments mentioned herein. This is not intended to provide
professional, investment or any other type of advice or
recommendation and does not take into account the particular
investment objectives, financial situation or needs of individual
recipients. Before acting on any information in this
publication/communication, you should consider whether it is
suitable for your particular circumstances and, if appropriate, seek
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and investors should exercise prudence and their own judgment in
making their investment decisions. The value of any investment or
income my go down as well as up, and investors may not get back the
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To maintain the independence and integrity of our research, our
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7 June 2021 sarina.lesmina@clsa.com
Bank Jago - BUY
Corporate Finance department or CLSA’s Sales and Trading business.
Accordingly, neither the Corporate Finance nor the Sales and Trading
department supervises or controls the activities of CLSA’s research
analysts. CLSA’s research analysts report to the management of the
Research department, who in turn report to CLSA’s senior
management. CLSA has put in place a number of internal controls
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designed to ensure that confidential information is only shared on a
“need to know” basis and in compliance with CLSA’s Chinese Wall
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interactions that may occur among CLSA’s Research personnel,
Corporate Finance, Asset Management, and Sales and Trading
personnel, CLSA’s financial product issuers and CLSA’s research
analysts do not compromise the integrity and independence of CLSA’s
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Subject to any applicable laws and regulations at any given time,
CLSA, CLSA Americas, CLST, their respective affiliates, officers,
directors or employees may have used the information contained
herein before publication and may have positions in, or may from time
to time purchase or sell or have a material interest in any of the
securities mentioned or related securities, or may currently or in
future have or have had a business or financial relationship with, or
may provide or have provided corporate finance/capital markets
and/or other services to, the entities referred to herein, their advisors
and/or any other connected parties. As a result, you should be aware
that CLSA, CLSA Americas, and/or CLST and/or their respective
affiliates, officers, directors or employees may have one or more
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Unless specified otherwise, CLSA did not receive any compensation
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This publication/communication is distributed for and on behalf
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CLSA Americas, and/or CLST (for research compiled by Taiwan
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331/AFSL License No: 350159); in Hong Kong by CLSA Limited
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and United Kingdom by CLSA Europe BV or CLSA (UK).
Australia: CLSA Australia Pty Ltd (“CAPL”) (ABN 53 139 992
331/AFS License No: 350159) is regulated by ASIC and is a Market
Participant of ASX Limited and CHI-X. This material is issued and
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material does not take into account the specific investment
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recipient of this material must not distribute it to any third party
without the prior written consent of CAPL. For the purposes of this
paragraph the term "wholesale client" has the meaning given in
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 Important disclosures
section 761G of the Corporations Act 2001. CAPL’s research
coverage universe spans listed securities across the ASX All
Ordinaries index, securities listed on offshore markets, unlisted
issuers and investment products which Research management deem
to be relevant to the investor base from time to time. CAPL seeks to
cover companies of relevance to its domestic and international
investor base across a variety of sectors.
India: CLSA India Private Limited, incorporated in November 1994
provides equity brokerage services (SEBI Registration No:
INZ000001735), research services (SEBI Registration No:
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please contact Compliance-India@clsa.com.
Singapore: This report is distributed in Singapore by CLSA
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Singapore Pte Ltd, 80 Raffles Place, #18-01, UOB Plaza 1, Singapore
048624, Tel: +65 6416 7888, in respect of any matters arising from,
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CLSA Singapore Pte Ltd is exempted from complying with certain
requirements under the Financial Advisers Act (Chapter 110), the
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Dealing Services – Singapore Annex of the CLSA terms of business),
in respect of any financial advisory services that CLSA Singapore Pte
Ltd may provide to you. MCI (P) 024/12/2020
United States of America: Where any section of the research is
compiled by US analyst(s), it is distributed by CLSA Americas. Where
any section is compiled by non-US analyst(s), it is distributed into the
7 June 2021 sarina.lesmina@clsa.com
Bank Jago - BUY
United States by CLSA solely to persons who qualify as "Major US
Institutional Investors" as defined in Rule 15a-6 under the Securities
and Exchange Act of 1934 and who deal with CLSA Americas.
However, the delivery of this research report to any person in the
United States shall not be deemed a recommendation to effect any
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United States wishing to effect a transaction in any security
mentioned herein should do so by contacting CLSA Americas.
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by either CLSA (UK) or CLSA Europe BV. CLSA (UK) is authorised and
regulated by the Financial Conduct Authority. CLSA Europe BV is
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this research is prepared and intended as substantive research
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jurisdictions.© 2021 CLSA and/or CL Securities Taiwan Co., Ltd.
(“CLST”).
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