Equity Research March 2nd, 2015
PT Astra International, Tbk (ASII)
BUY Target Price (Rp) Current Price (Rp)
8,500 7,850
Miscellaneous Indust ry Bloomberg Ticker ASII IJ Reuters Ticker ASII JK 52 week High 8,175 52 week Low 6,325 Market Cap (bn Rp) 317,796 Free float (%) 50 Daily Average Vol ('000 shares) 33,566 5 yrs average P/E 15.5 Major Shareholders (%): Jardine Cycle & Carriage Ltd 50.10 Others under 5% 49.90 Relat ive Performance vs JCI:
Company Update
Net profit declined after the recording of mining impairment losses The recording of mining impairment losses as a result of weakening coal price has led to Astra’s declining consolidated net profit (yoy).
FY 2014 Financial Performance Sales revenue grew 4% from Rp193.89 in 2013 to Rp201.7 trillion in 2014, while the recording of mining impairment losses has led to declining net income by 1.2% from Rp19.4 trillion in 2013 to Rp19.2 in 2014. However, gross profit still managed to grew 9.9% as a result of cost efficiency. According to the management, there is still a possibility of impairment reversal in the future, if there will be a significant increase of coal price. Forex gain from business segments related to commodities such as Palm Plantation and Coal Mining has led to positive contribution from Astra Agro Lestari and United Tractors. In our view, the company will have a better performance from this year forward. We believe the auto segment will recover despite challenges from other emerging 4-wheels products especially in the middle segment. The management of Toyota, Daihatsu, and Isuzu dealers are fully committed to maintain market share above 50%, although it slightly declined to 46% in January 2015 due to declining demand from the market. While in the 2-wheels segment, Astra Honda is considered very successful in dominating the market with 68% of market share in January 2015. We believe the company’s aggressive expansion to several new business segments last year will bring more benefits from this year forward. Among others are Astra Aviva Life Insurance that is preparing to enter the promising domestic insurance market, while Acset Indonusa (ACST) is starting to approach several state-owned construction companies to seek for opportunities as a sub contractor in several government infrastructure projects. The completion of Kertosono – Mojokerto and Kunciran – Serpong toll road, together with Tangerang – Merak that already operating will add more contribution from the infrastructure business segment. As for the Property business segment, the company is planning to finish Astra Tower and Anandamaya Residences projects in 2018. Both projects are located in a neighboring area in Jakarta’s Central Business District.
Other Opportunities and Challenges We see the declining price of Coal as a challenge that the company still have to handle, especially for United Tractors that is still highly correlated to the coal industry. However we expect the company’s decision to start expanding to construction business and gold mining will bring positive result.
Analysts: Robertus Yanuar Hardy 62 21 5790 5455 ext. 204
[email protected] Shanti Dwi Jayanti (Research Associate)
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Meanwhile for business segment related to Crude Palm Oil (CPO), we expect better sales performance from PT. Astra Agro Lestari (AALI) due to the weakening of Malaysia’s palm oil industry after flood disaster recently. We also believe the company’s decision to invest in the downstream of palm oil processing will add more value to the company’s end products. Rating, valuation, and recommendation We are maintaining our Buy rating with an upgraded target price to Rp8,500, from our previous target price at Rp7800,-. Our new target price is implying a 15.5x of 2016E P/E Ratio, which is also in-line with the company’s historical average P/E Ratio in the last 5 years.
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Other Possible Opportunities: Possible Higher Auto Industry Turnovers and Government’s Prioritization of Public Transportation In order to reduce traffic jams, the Jakarta city government has banned motorcycle from passing through several protocol streets, and planning to limit old cars, above 10 years old, from traveling around Jakarta streets. The regulation is planned to be fully implemented in 2017. We believe these regulations will increase automotive product turnovers. Even though the used-car market in several neighboring cities outside Jakarta will likely be oversupplied, we expect new car and motorcycle sales in the city will increase, due to the high dependency of most Jakarta residents to private transportation. Corporates and transportation businesses who will be affected by these regulations will also be forced to upgrade their vehicles. The commitment from the city government to increase public transportation’s fleet starting this year will bring opportunity to Astra’s subsidiary, PT. United Tractors, Tbk (UNTR), to involve in the procurement project. As been reported before, there is interest from the governor to UNTR’s Scania bus. Floating Fuel Price The administration of President Joko Widodo has erased fuel subsidy for gasoline that leads to floating fuel price. In the declining trend of global crude oil price, we expect consumer’s purchasing power will increase along with declining fuel price. Connection to Current Government We expect a further support from the current government to Indonesia’s manufacturing industry in the future. Mr. Johnny Darmawan, a former Toyota Astra Motor’s board of director, and the current President Commissioner of Astra Otoparts (AUTO) recently has been appointed as a special staff to Mr. Rachmat Gobel, the Minister of Trade. Both names are previously known as executives in manufacturing industry that are expected to bring some breakthroughs to support government’s development plan.
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Past Financial Performance and Future Forecasts Income St at ement (bn Rp) Revenue Gross Profit EBT EAT Min Interest Net Income EPS
2013A 193,880 35,311 27,523 22,297 2,880 19,417 480
2014A 201,701 38,809 27,352 22,125 2,944 19,181 474
2015E 213,198 41,554 29,391 23,774 3,163 20,611 509
Current Price P/E Target Price P/E Rat ios & Margins: Revenue growth Gross Profit margin Net Profit margin Net Profit growth DPR (as paid) DPS (as paid) BVPS ROA ROE Total Debt Net Debt DER DPS (as paid) DPR (as paid)
2016E 225,883 44,591 31,561 25,530 3,397 22,133 547 7,850 14.4 8,500 15.5
3.1% 18.2% 10.0% -0.02% 44.6% 214 2,623 9.1% 18.3% 63,030 44,473 41.9% 214 44.6%
4.0% 19.2% 9.5% -1.2% 45.6% 216 2,972 8.1% 15.9% 69,023 48,121 40.0% 216 45.6%
5.7% 19.5% 9.7% 7.5% 45.6% 232 3,329 8.2% 15.3% 67,880 38,609 28.7% 232 45.6%
Cash Flows Chg in work cap Net income Depreciation Net CF From Operat ion Capex Net CF From Invest ing Loans and Debts Employee Benefit Liabs Non Ctrling Int Chg in Equity Dividend Net CF From Financing
2013A (13,384) 19,417 5,518 11,551 (9,054) (9,054) 7,766 282 3,637 1,950 (8,664) 5,005
2014A (14,363) 19,181 4,151 8,969 (7,539) (7,539) 5,549 411 2,463 1,290 (8,744) 915
2015E (2,888) 20,611 5,189 22,911 (7,351) (7,351) (1,170) 161 2,963 249 (9,396) (7,192)
Equit ies (bn Rp) Issued & fully paid capital Additional paid in capital Retained earning Approriated Unapproriated Other rsv, equity chg Minority Interest Tot al Equit y
2013A
2014A
2015E
2,024 1,139 77,076 425 76,651 3,699 22,250 106,188
2,024 1,139 87,459 425 87,034 4,989 24,713 120,324
2,024 1,139 98,674 425 98,249 5,238 27,676 134,752
Balance Sheet (bn Rp) Asset s Cash Other Investments Receivables Financing Receivables Other Receivables Inventories Prepaid taxes Other prepayments Tot al Current Asset s Financing Receivables Other Receivables Investment in assc & joints Other investments Defered tax assets Investment properties Plantations Fixed Assets Mining properties Concession/ Joint operation Goodwill Other intangible assets Other assets Tot al Non Current Asset s Tot al Asset s
2013A 18,557 262 19,843 28,814 2,988 14,433 2,283 1,172 88,352 25,863 3,389 23,870 4,177 2,488 1,372 4,973 37,862 12,027 3,982 1,534 1,615 2,490 125,642 213,994
2014A 20,902 277 21,332 30,297 3,130 16,986 3,168 1,149 97,241 30,408 2,543 27,250 5,455 2,891 2,534 6,007 41,250 9,149 4,930 1,534 1,968 2,869 138,788 236,029
2015E 29,270 291 21,865 31,812 3,208 17,411 3,247 1,178 108,282 31,168 2,607 27,931 5,591 2,963 2,597 6,157 43,412 9,378 5,053 1,534 2,017 2,941 143,350 251,632
2016E 40,201 305 22,412 33,402 3,288 17,846 3,328 1,207 121,991 31,947 2,672 28,630 5,731 3,037 2,662 6,311 44,093 9,612 5,180 1,534 2,068 3,014 146,491 268,481
5.9% 19.7% 9.8% 7.4% 45.6% 249 3,711 8.2% 14.7% 66,782 26,581 17.7% 249 Liabilit ies 2013A 2014A 2015E 2016E 45.6% Short term borrowings 12,854 10,586 10,904 11,231 Payables 17,275 18,839 19,781 20,770 2016E Other liabilities 5,135 5,648 5,817 5,992 (2,920) Taxes payable 1,600 2,132 2,239 2,351 22,133 Accruals 6,013 5,450 5,614 5,782 6,486 Employee ben obligations 252 430 430 430 25,699 Unearned income 3,461 3,603 3,963 4,360 (7,167) Current portion of LT debt 24,549 26,835 26,164 25,510 (7,167) Bank loan 14,832 17,898 17,451 17,014 (1,123) Debt securities 9,198 8,487 8,275 8,068 169 Finance lease 519 450 439 428 3,181 Tot al Current Liabilit ies 71,139 73,523 74,911 76,425 262 Other Liabilities 822 947 994 1,044 (10,090) Unearned income 2,364 2,537 2,791 3,070 (7,601) Defered tax liabilities 3,268 2,645 2,777 2,916 Provisions 116 192 202 212 2016E Employee ben obligations 2,977 3,210 3,371 3,539 Long term debt 27,120 32,651 31,835 31,039 2,024 Bank loan 12,885 19,587 19,097 18,620 1,139 Debt securities 13,261 12,465 12,153 11,850 110,717 Finance lease 974 599 584 569 425 Tot al Non Current Liabs 36,667 42,182 41,969 41,820 110,292 Tot al Liabilit ies 107,806 115,705 116,881 118,244 5,500 30,857 150,237 Source: Bloomberg, Reliance research estimates
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STOCK RATING DEFINITION : Reliance Securities research recommendations are based on an Absolute Total Return (price appreciation + dividends) Rating system, defined as follows BUY – Expected positive Total Return of 15% or more over the next 12 months. HOLD – Expected Total Return of between -15% and +15% over the next 12 months. SELL – Expected negative Total Return of 15% or more over the next 12 months. NOT RATED - Stock is not within regular research coverage Reliance Securities research is available on the following electronic platform: Reliance Securities (www.reliance-securities.com), Reuters and Bloomberg (RIJK GO). Following table contains the disclosure of interest in order to adhere to utmost transparency in the matter:
Disclosure of Interest Statement 1.
Analyst ownership of the stock
No
2.
Clients/Company Associates ownership of the stock
No
3.
Broking relationship with company covered
No
4.
Investment Banking relationship with company covered
No
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HEAD OFFICE
RESEARCH DIVISION
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Jasa Adhi Mulya Robertus Yanuar Hardy Lanjar Nafi Taulat I Hansen Teguh Aji Setiawan Alan Milgerry Pieter Djatmiko Shanti Dwi Jayanti
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