Company update:
Astra International (ASII IJ, BUY, TP: IDR8,500),
Better Car Sales Outlook In 2H16
Astra International (ASII IJ, BUY, TP: IDR8,500),
Better Car Sales Outlook In 2H16
Astra’s 4W wholesale
is likely to further increase in 2H16, driven by:
1.
The new budget-MPV Toyota Calya launch;
2.
LTV relaxation for vehicle financing, likely to be effective in 3Q16;
3.
Lower financing cost.
Astra
booked a strong 2Q16 vehicle wholesale with a higher market share. Following a
rolling-over valuation to FY17F’s cashflow, we maintain BUY and raise our
SOP-based TP to IDR8,500 (from IDR7,350, 15% upside) implying 19x FY17F P/E.
¨
New
budget-MPV launch.
This month, Astra International (Astra) began marketing the new budget-MPV
7-seater model, Toyota Calya, which has a 1.2-litre engine with price
range of IDR130m-150m/unit. For the Calya basic type, the
estimated monthly instalment for a 5-year financing scheme is IDR2.8m, which is
very affordable for the majority middle income segment Indonesians. In
comparison, Toyota Avanza is priced at IDR184m-215m, while the
low-cost-green car (LCGC) Toyota Agya costs IDR114m. We believe that
Toyota Calya should boost Astra’s sales since this model is the answer
to customers, who want to buy an MPV, but at the LCGC price.
¨
LTV
relaxation and lower financing costs. After lowering mortgage loan-to-value (LTV),
the Central Bank is currently discussing LTV relaxation for vehicle financing.
Notably, we see that the current LTV for passenger cars – which is 25% – is too
high, hence not many customers can afford vehicle financing. A lower vehicle
financing LTV, if approved, will likely to be effective in the third quarter
this year. Another catalyst to boost car sales is the lowering of financing
cost. We expect vehicle financing interest rate to be lowered, in line with the
lower Central Bank’s benchmark rate, which has declined by 100 bps YTD (to 6.5%
in June, from 7.5% in Dec 2015).
¨
Astra’s
strong 2Q16 vehicle sales. Astra’s 2Q16 car wholesale increased a robust 14.9% QoQ
as its market share rose to 55.2% in 2Q16 (vs 47.6% in 1Q16). Astra’s 4W sales
growth was driven by the LCGC segment. For 2W, Astra’s motorcycle wholesale was
flat while its 2W market share increased to 73.2% in 2Q16 from 72.5% in 1Q16.
During the period, domestic car wholesale was flat, while motorcycle wholesale
declined 3.1% QoQ.
¨ Reiterate BUY, TP upgraded. Rolling-over our valuation to FY17F cashflow, we raise our SOP-based TP to IDR8,500, which implies 19x FY17F P/E. Main risks to our call is the rising non-performing loans (NPL) from Bank Permata (BNLI JK, NR) (Astra holds a 44.6% stake). However, Astra’s financing unit merely accounted for about 7% of the company’s valuations. In our sensitivity analysis, assuming that Bank Permata’s NPL provision increase by IDR1trn, Astra’s fair value is expected to decline by only 0.2%.
¨ Reiterate BUY, TP upgraded. Rolling-over our valuation to FY17F cashflow, we raise our SOP-based TP to IDR8,500, which implies 19x FY17F P/E. Main risks to our call is the rising non-performing loans (NPL) from Bank Permata (BNLI JK, NR) (Astra holds a 44.6% stake). However, Astra’s financing unit merely accounted for about 7% of the company’s valuations. In our sensitivity analysis, assuming that Bank Permata’s NPL provision increase by IDR1trn, Astra’s fair value is expected to decline by only 0.2%.
Best
regards,
Andrey Wijaya
Senior Vice President
Research Analyst – Auto,
Consumer, Cement
PT. RHB Securities Indonesia 