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Astra International (ASII IJ. IDR. 4,740 BUY TP: IDR. 6,700) - 16 Oktober 2020
October 16, 2020 10:24

Astra International (ASII IJ)  

Solid quarterly improvement on the cards 


Domestic car sales volume (wholesales) jumped 30.2% mom to 48,554 units in Sep20 amid the re-imposition of one-month large-scale social distancing restrictions (PSBB) in Jakarta. Astra International (ASII) saw its car sales volume surge 53.8% mom boosting its market share to 53.1% in Sep20. In 9M20, the domestic car sales volume was down by 50.7% yoy to 372,046 units, slightly below expectations. Our TP of IDR6,700 is based on the SOTP. 

Slightly surprising wholesales number amid reinstatement of PSBB.  Surprisingly, domestic car sales volume (wholesales) continued its recovery by 30.2% mom to 48,554 units in Sep20 with retail car sales volume up by 15.2% mom to 43,362 units amid reinstatement of one-month large-scale social distancing restrictions (PSBB) in Jakarta. In 9M20, cumulative domestic car sales volume declined 46.4% yoy to 372,046 units. The wholesales number is slightly below expectations at 62% of our forecast. 

Car tax incentive overhang to impact car sales volume in Oct20. The lower car retail sales volume than wholesales volume in Sep20 reflected the tendency of consumers to withhold making car purchases given the proposal by the Ministry of Industry to give tax incentives for the purchase of new cars. We believe that with consumers awaiting tax incentives for new cars, wholesales volume will likely be impacted in Oct20. 

Solid sales volume improved Astra’s market share.  Astra reported strong car sales volume (+53.8% mom in Sep20), which translated into higher market share of 53.0% in Sep20. Although Astra reported a slight decline in its market share to 51.7% in 9M20 (9M19: 52.5%), the company still managed to maintain solid market share above 50%. Yesterday, Astra launched a minor facelift for the popular Toyota Kijang Innova in the MPV segment and Fortuner in the SUV market with IDR11.6-19.5mn higher selling prices compared to the previous models. Coupled with previously newly-launched models, we expect Astra’s market share to reach around 53% in 2020. 

3Q20 earnings preview: in recuperation mode. We foresee a quarterly earnings improvement for Astra in 3Q20 given: a) Astra’s strong car sales volume (+440% qoq to 52,712 units in 3Q20) to improve automotive earnings, b) the spillover impact from strong car sales volume on its auto-related finance business, and c) a recovery in Komatsu sales volume. 

Maintain BUY with a TP of IDR6,700 (based on SOTP valuation). While short-term domestic car sales will be adversely impacted by the overhang from the tax incentive for new cars, we continue to like Astra 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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