Astra International (ASII IJ)
Sharper Return Focus, Preserving Diversification
- ASII aims to focus on Auto, Financial Services and HEMCE, although healthcare and infrastructure remain part of the wider growth portfolio.
- We see near-term growth expansion on auto parts/ components, and UNTR’s diversification toward metallurgical coal.
- ASII targets low-teens TSR, supported by 45–50% DPR and next 12 months Rp8tr buyback. We maintain our Buy rating and TP of Rp6,850.
Refocusing on three growth engines
We see the key message from ASII’s Strategic Review as a shift from a broadly diversified holding-company mindset toward a more focused, return-driven portfolio approach. Management highlighted three core engines, namely Automotive, Financial Services and HEMCE, which together account for c.90% of group profit. We view this as a sensible direction, as it reinforces ASII’s core strengths while still preserving the benefit of diversification, particularly in the current uncertain macro and commodity environment.
Potential near-term growth investments into auto parts and coking coal
That said, we do not see the Strategic Review as a major departure from ASII’s previous direction, as the more relevant near-term growth focus remains in businesses where ASII already has clear advantages. In Automotive, the target is to grow beyond new vehicle sales, including aftersales, parts, used cars and trade-in platforms. Management highlighted potential bolt-on acquisitions in parts/components, which we think could be positive for Astra Otoparts (AUTO – Not Rated). In HEMCE, mgmt. highlighted diversification aims toward metallurgical coal and gold.
Portfolio discipline beyond core assets
ASII also aims to maintain growth investment in its wider portfolio, including healthcare and infrastructure. Separately, management indicated plans to accelerate replanting at AALI to 8k ha, from 4k ha in FY25, while also looking to monetize underperforming areas. We view this as broadly consistent with ASII’s more active portfolio management framework.
Maintain Buy rating and TP of Rp6,850 on higher TSR ambition
ASII’s low-teens TSR ambition is a positive signal for shareholders (vs. past 10-year annualized return of c.6%). However, we note that the key levers remain familiar, namely dividend payout 45–50%, more balanced capital deployment and a Rp8tr buyback over the next 12 months. Overall, the Strategic Review does not change our FY26–28F EPS growth forecast of 28.4%, as key initiatives remain medium-term in nature. We maintain Buy rating and our SOTP-based TP of Rp6,850, amid attractive 7.2x forward PE and diversified earnings. Key risks are weaker IDR and purchasing power.
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