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Astra International (ASII IJ. IDR4,820 BUY. TP: IDR6,700) - 16 September 2020
September 16, 2020 10:40

Astra International (ASII IJ)  

Sharp sales increase in August – as expected

As expected, domestic car sales volume (wholesales) jumped by 47.4% mom to 37,277 units in Aug 2020. In 8M20, car sales volume was 323,492 units (-51.4% yoy). While the Government of Jakarta opted for emergency brake measures, reverting to full mobility restrictions from 14 Sept 2020 which will flatten recovery of domestic car sales, we continue to like Astra International given expectations of a further recovery in domestic car sales volume in 2021. Our TP of IDR6,700 is based on SOTP valuation. 


As expected – another increase in the wholesales domestic car sales volume.  Domestic car sales volume (wholesales) continued its recovery, increasing by 47.4% mom to 37,277 units in Aug 2020 with several car manufacturers accelerating car delivery to dealers post relaxation of PSBB. Retail car sales continued to increase mildly by only 5.2% mom to 37,655 units in Aug 2020. The stronger wholesales volume than retail car sales volume reflects recuperation of inventory depletion at the dealer level. In 8M20 domestic cumulative car sales volume declined 51.4% yoy to 323,492 units. The wholesales number is slightly below expectations at 54% of our forecast. 


Solid market share for Astra.  Astra recorded stronger car sales volume of 65.4% mom in Aug 2020 than the industry of 47.4% mom with Daihatsu reporting the strongest monthly wholesales volume (up by more than fourfold). Hence, the company managed to further improve its monthly domestic market share (wholesales) to 45.0% in Aug 2020 (Jul 2020: 40.1%). With solid market share in 1Q20, the company managed to maintain high market share at above 50% (8M20: 51.4%). We maintain our market share assumption for Astra at around 53% for 2020.  


A recovery in domestic car sales volume in 2021.  We expect mild short-term hiccups in domestic car sales due to emergency brake measures imposed by the Government of Jakarta, reverting to full mobility restriction measures starting on 14 Sept 2020 as car dealers are allowed to open, but at low capacity. Going into 2021, we foresee recuperation in the domestic car sales volume by around 30% yoy backed by a recovery in economic growth. 


Maintain BUY with a TP of IDR6,700 (based on SOTP valuation). While short-term domestic car sales will be under pressure, we continue to like the company given expectations of a further recovery in domestic car sales volume in 2021. The stock is currently trading at -2.0SD. Our TP implies 15.5x 2021F PE.  

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