Astra International (ASII IJ)
Lowering FY24-25F est. and TP amid weaker auto sales outlook; maintain Hold on lacking catalysts
- 4M24 2W sales reached 2.1m units (-1% yoy; inline), while 4W wholesales remained weak at 263k units (-23% yoy, below our f’cast)
- We trim our consolidated FY24/25F NP estimates by 6%/7% to factor in 18%/16% cuts in automotive revenue, and thus NP growth of -13%/-1%.
- We maintain our Hold rating but with a lower TP of Rp5,100, as we see a more challenging growth outlook despite the stock’s cheap valuation
Auto sales downside risk amid more challenging macro conditions
We see risk in auto sales from the potentially weaker macro conditions in 2Q24, while the recent 25bps hike in benchmark BI rate (vs our prev. expectation of a rate cut) may also lead to tighter requirements for 2W new financing. We think the weaker macro condition have started to transpire in Apr24 sales volume, with 2W sales reached 2.1m units ytd (-1% yoy) and 4W wholesales remained weak at 263k units ytd in Apr-24 (-23% yoy). Average 4W discount also increased from average ~Rp 20m in Mar-24 to ~Rp 30m in Apr-24.
Lowering our FY24-25F forecasts
Given the weaker macro conditions, we expect 2W sales to fall from May24 onwards, and expect 4W sales to weaken further. We lower our FY24F forecasts for ASII’s 2W/4W sales volume to 4.5m/473k units (6%/21% below our previous assumptions). Our new sales volume estimates imply yoy sales declines of 7%/16% in 2024F. We also trim our 2024F forecast revenue/NP by 18%/21% for the auto segment, translating into revenue/NP declines of 12%/22% yoy. For 2025F, we cut our auto revenue/NP estimates by 16%/17%. However, we see potential upside in coal production (Pama) and gold prices (+17% ytd), which lead us to upgrade our 2024F/25F UNTR estimates by 3%/5% for revenue and by 7%/11% for NP. On a consolidated basis, we cut our revenue/NP estimates by 7%/6% for 2024F, and by 6%/7% for 2025F. Thus, our revenue/NP FY24F growth forecast now stands at -8%/-13%, and +6%/-1% in FY25F.
Maintain Hold with lower TP; consensus downside and a lack of auto growth
While ASII’s FY24F ROE of 14% is now similar to FY15 level, we believe the current valuation of 0.8x PBV (lower than FY15) reflects expectation that ROE will fall to ~13% in FY25-26, as ROE expansion in the past 3 years has been partly driven by the cyclical HE/mining sector. Furthermore, we see risk for the share price from the possible downgrade in consensus estimates (consensus has only trimmed FY24F earnings by 1%). We maintain our Hold rating but with 9% lower TP to Rp 5,100, still based on SOTP.
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