Astra International (ASII)

Inline FY23 earnings, seasonal weaker auto segment in 4Q23

 

  • ASII’s FY23 earnings inline with consensus (below ours), albeit with weaker 4Q23 qoq on auto
  • We think weaker auto segment’s in 4Q23 revenue may indicate higher discounting, yet we think it was a seasonal trend
  • ASII proposes dividends of Rp421/share (8% yield), which is historical high, ex-FY22. Maintain Hold rating and TP of Rp 5,700

FY23 results inline with consensus. Weaker 4Q23 should be seasonal

ASII posted FY23 NP of Rp 33.8t (+17% YoY and 92%/104% of our estimate/the consensus, i.e., below our estimate but inline with the consensus). Despite a solid yoy NP growth for FY23, 4Q23 qoq reveal decline in auto segment albeit we think it should be seasonal. In other segments, we see good earnings on heavy equipment & mining (+27% QoQ, which our UNTR analyst largely attributed to the rebound in coking coal price), while financial segment decline by small amount (-2% QoQ)

 

Auto: seasonal weaker 4Q23 trend

ASII’s auto business revenue fell 13% qoq, despite the flattish qoq on 2W and 4W sales volume in 4Q23. Operating profit/NP in the auto segment declined by 75%/35% qoq. We suspect this could be due to discounts that were booked at the end of the year, despite our data shown dealer inventory level in 2H23 was not as high as 2H21 level. Nevertheless, we think it is seasonal thing and it is too early to be over-skeptical for FY24F earnings.

 

Finally, short-term positive signal from higher dividend

ASII announced a plan to propose final dividend of Rp 421/share (8% dividend yield), on top of the interim dividend of Rp 98 per share distributed in Oct 23. This would bring the total DPR to 62%, the highest in ASII’s history (excluding FY22). We think it is a good move for ASII, given their underutilized cash balance. Yet, we do not think it is going to be long-term dividend payout ratio

 

Maintain Hold rating with a TP of Rp 5,700

We maintain FY24-25F forecast and SOTP-based TP of Rp5,700, pending more clarity from earnings call on 8th Mar23. Possible positive ST catalysts for the stock are: 1) possible stronger Feb24 sales following preliminary report of Toyota recording 30% yoy sales in IIMS 2024 auto show; 2) Continuation on 4W hybrid demand (Innova Zenix, Yaris Cross) given such trend reflected on IIMS 2024.

 

… Read More 20240301 ASII