RHB Indonesia Morning Cuppa - 21 February 2018 (Astra International, Today's News)

Indonesia Morning Cuppa

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Company Update

Astra International

Solid January Vehicle Wholesale Growth

Astra recorded solid January vehicle wholesale growth with an increased MoM market share. It managed to lower the sales discount of its backbone products as a result of a healthier inventory. Despite the intense competition – especially in the 4W market – we see the company maintaining its dominance thanks to its robust distribution and after-sales service network, spare parts availability, as well as strong re-sale value. Maintain BUY with a IDR9,500 TP (14% upside) which implies to 16x-15x FY18F-19F P/Es, near to its historical average rolling forward P/Es.

Analyst: Andrey Wijaya (6221) 2970 7058

Link to report: Astra International : Solid January Vehicle Wholesale Growth

Morning Cuppa Full Report: Indonesia Morning Cuppa 210218

Today’s News

Construction of elevated infrastructure projects throughout Indonesia are temporarily suspended

Tax revenue realisation grows 11.17% YoY in 1M18

Kimia Farma prepares IDR2trn for acquisition

Metropolitan Land targets 15% YoY growth in sales

Indofood Sukses allocates IDR530bn in capital expenditure

Agung Podomoro targets IDR4.9trn marketing sales in FY18

Toyota New Yaris targets 1,200 units monthly sales

Top BUYs
		TP	Upside	Catalysts
		(IDR)	(%)	Catalysts
Astra International		9,500	13	Given the robust of the All New Toyota Rush and Daihatsu Terios sales orders, Astra has raised its monthly sales target. Its lowering of Daihatsu Terios’ selling price while positioning Toyota Rush at a higher class are seen as a good strategy to reclaim market share. We also see the company’s coal mining unit benefiting from higher coal prices. We raise its earnings estimates, and SOP-based TP to IDR9,500 (from IDR9,200, 13% upside), implying 16-15x FY18F-19F P/Es. Key risk is the intense competition in the auto industry. SAIC-GM Wuling just launched its 1.8-litre MPV – Wuling Cortez – with an attractive selling price. Maintain BUY.
BSD City		2,650	44	Expectations of higher marketing sales due to lower interest rates, which ought to incentivise mortgage users. BSD City has the largest proportion of mortgage users vis-à-vis other developers. There is also better monetisation from its large landbank.
Bukit Asam		4,100	20	Bukit Asam is the cheapest coal counter in our coal universe. We think earnings growth should be the catalyst for its share price. We believe investors’ concerns about a potential cost-plus margins formula in determining coal selling prices to domestic power plants should fade. This is based on our checks with several competent sources. The formula is only valid for coal sales to new mine mouth power plants. It is not for existing/under construction mine mouth power facilities.
Indofood Sukses Makmur		10,300	28	We expect higher domestic consumer spending in 2018. This would be thanks to the Government stimulus initiatives for low-end consumers. Indofood Sukses Makmur, as one of the largest food & beverage (F&B) players, should benefit from this situation. F&B accounted for around 62% of its total 9M17 EBIT. Higher flour prices may also boost Bogasari Flour Mills’ earnings, which accounted for around 14% of the company’s EBIT.
	Ramayana Lestari	1,550	34	Consumer spending recovery – especially from the lower income segment in 2018 – is likely to benefit Ramayana Lestari after a flat performance in 2017. This is due to increased subsidies by the Government that have been allocated in the 2018 budget via the Ministry of Social Affairs. In addition, President Joko Widodo’s (Jokowi) work-for-cash programme is likely to help raise consumer spending.