Astra Internasional (ASII)

Not yet time to turn positive

 

  • Recent findings and recalls from Toyota and Daihatsu Japan, and also ASII, create persisting negative ST sentiment on ASII’s share price.
  • Nonetheless, we estimate that the new progressive tax rate will have a minimal impact on ASII.
  • Despite an exciting EV line-up, infrastructure remains an issue for EV to gain more adoption. We maintain Hold rating on ASII and TP of Rp5,700.

Multiple Findings and Recalls: Negative ST Sentiment

Daihatsu Japan, Toyota Japan, and Hino Japan were found to have manipulated their safety tests and cheated on their engine certification, based on CNBC Indonesia article. ASII stated that other than Toyota Fortuner (4% of total ASII sales) and BZ4X (<1% of total sales), the vehicles that are sold in Indonesia remain unaffected, although it should be noted that the investigation is ongoing. ASII stated that if there was a recall, then the principal would bear the cost. Due to the scale of the current scandal, we see risk that ASII’s brand image may be damaged, hence ST negative sentiment on the share price may potentially linger.

 

New Progressive Tax Regulations: minimal Impact on ASII

The Jakarta Provincial Government has announced hike in progressive vehicle tax by 2025. We believe the impact for progressive tax on ASII 4W sales is minimum, given that its sales were relatively unaffected during the first-time implementation in multiple provinces of Java back in 2011-2013 (still growing at double digits, except 2W in 2012 due to falling CPO prices).

 

BYD/MG/Cherry: Good Products, but EV is Still Too Early for Indonesia

Several investors fear that the entry of BYD (and other brands) could dilute ASII’s market share. However, based on the experience in Thailand market, Toyota could defend ~34% market share despite BYD gaining 3.9% market share in 2023. Furthermore, BYD and other players are targeting Indonesia’s >Rp300mn segment, which we don’t think will lead to massive EV adoption as majority (~70%) of car sales are below that level.

 

Maintain Hold rating with a TP of Rp5,700

ASII is currently traded at 5.9x PER (21x PER if we measure its auto division EPS only), below -1 standard deviation of its 8-year average P/E. It is attractive from a valuation perspective, but we continue to think more catalysts are needed for share price recovery.

 

… Read More 20240206 ASII