Astra International (ASII IJ)

Finetuning FY25F est.: Flattish Earnings Due to Lower 4W Growth Expectation

• We cut our 4W sales expectation by 5%, resulting in FY25F 4W sales of 900k (+4% yoy), with ASII market share expected to remain at ~56%.
• We cut EBIT est. for financial segment due to slower financing growth and higher CoF, yet expect agri and HE segments to remain strong.
• We cut our FY25F/ FY26F revenue by -2.2%/ -1.7% and net profit by -0.8%/- 0.7% for. Reiterate Buy rating with a lower TP of Rp5,800.

Tuning down our 4W expectation due to soft purchasing power

Media reports indicated IIMS 2025 sales of 22.3k units (+16% yoy), a slower growth rate compared to IIMS 2024’s 28% yoy growth. Media reports also indicated Toyota’s weaker sales growth of only +7% yoy, vs. IIMS 2024’s +30% yoy growth. Additionally, during ASII’s analyst meeting, management expects 0-4% growth for 4W at the industry level, similar to Gaikindo’s target. Despite management’s indication that 4W sales in Feb25 were better than Jan25, we trimmed our industry 4W sales expectation from 945k to 900k, implying 4% yoy vol. growth. We also downgraded our auto segment operating margin assumption from 1.6%/1.7% in FY25F/FY26F to 1.2%/1.4%, as we expect more marketing exp. or discounts to push sales. However, we expect ASII’s market share to remain at ~56%, which it has sustained for the past 2 years despite the entrance of China cars. This implies 504k/564k unit sales in FY24F/FY25F for ASII. On 2W, we reiterate our 0% vol. growth at the industry level. Contrary to our earlier belief that ASII’s 2W MS might drop, it was sustained at ~78% in FY24, and we expect this to continue in FY25F.

Slower financial segment, while HE and agri segment remain strong

We cut our operating profit for the financial segment by 1.2%/2.7% in FY25F/FY26F, though it still implies 0.9%/1.8% growth (vs. 10% growth in FY24), due to: 1) slower new 4W financing growth; 2) higher funding costs, as Astra Financial indicated that its CoF in 2H24 was higher vs. 1H24; 3) higher competition from Mandala Finance , which led to a lower margin. However, we expect the HE segments to remain strong with 5.4%/7.1% EBIT growth in FY24F/FY25F. Furthermore, we expect 20%/28% growth in EBIT for the agri segment, as CPO price is sustained at MYR 4.6k/MT in 2M25 (~11% higher than the FY24 average).

Reiterate BUY, yet with lower TP and earnings

We trimmed our FY25F/FY26F revenue est. by -2.2%/-1.7%, EBIT by -1.8%/-1.9%. However, we cut our net profit est. by -0.8%/-0.7%, as we slightly raised equity income by 0.8%/1.8% due to a higher AHM margin assumption. Our latest forecast implies -1%/+8% growth for FY25F/FY26F consolidated ASII earnings. We reiterate BUY rating on ASII with a lower SOTP-based TP of Rp5,800. ASII currently trades at 5.6x forward PE, -1.5 std dev of its 5-year mean. Downside risks: 1) Further deceleration of 4W growth; 2) Rising NPF in the financial segment; 3) Declining CPO prices.

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