Astra International (ASII) - 1Q24 preview: possible decent headline figures, as strong expected UNTR earnings to offset weak auto

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Astra International (ASII)

1Q24 preview: possible decent headline figures, as strong expected UNTR earnings to offset weak auto

We expect consolidated 1Q24E revenue and NP of ~Rp76-77t/~Rp8.5-8.6t, hence possible inline revenue but earnings ahead vs seasonality.
Despite this, the 1Q24E performance may see more support from UNTR to possibly offset weak auto segment performance.
We maintain our FY24-25F forecasts pending the 1Q24 earnings but see a challenging outlook for auto sales as a key risk for FY24F estimates.

Weak 4W, steady 2W with a challenging outlook

Industry 4W wholesale sales were weak in 1Q24, reaching only 215k units (-24% yoy, 19% of our estimate, behind the FY21-23 seasonality of 25%-28%). ASII’s 4W sales were also weak at only 120k (-20% yoy, 20% of our target vs historical seasonality of 25%-27%). Amid the uncertainty in the interest rate outlook, we now see risk for sales to remain weak in 2H24. On a more positive note, 2W sales were steadier at 1.7m units in 1Q24 (-5% yoy, 28%/27% of our estimate/AISI’s target, vs seasonality of 24%-29% in March). However, given the risk in the middle-lower segment’s purchasing power, we have started to see tighter lending from financing companies, which if it continues may drive weaker 2W sales from 2Q24F onwards.

Strong 1Q24 operating performance may drive an earnings surprise from UNTR

UNTR delivered strong 1Q24 operating performance, with Pama’s 1Q24 volume up +17% yoy, accounting for 24% of the FY24F (slightly above vs. the 1Q historical rate of 22-23%). Meanwhile, Komatsu 1Q24 sales volume reached 1,126 units (-37% yoy, but ahead of our forecast at 30% of FY24F). UNTR also delivered gold sales volume of 49k oz in Mar24, following no sales in Jan-Feb 24 due to RKAB delay. On the coal segment, 1Q24 total coal sales volume reached 4.0Mt or +33% yoy (37% of our FY24F est). We estimate that UNTR will post 1Q24E operating profit of Rp6.3-6.4tr, -12% yoy, at 28%-29% of FY24F.

Maintain Hold; possible decent 1Q24E headline figures, but risk from Auto

We estimate that ASII will potentially post 1Q24E consolidated revenue of Rp 76-77t (-7% yoy, 25%/24% of our/ cons. est., vs 24% historical seasonality) and consolidated net profit of Rp 8.5-8.6t (-1% yoy, 27%/28% of consensus estimates, above the historical average of 24%). However, we estimate that the possible decent performance may be supported more by UNTR (better than 1Q seasonality, supported by strong volumes), while the auto segment is expected to perform below seasonality. We maintain our FY24-25F estimates and TP for ASII pending the release of 1Q24 earnings (on April 29).

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