PT. Astra International, Tbk (ASII) Company Update, August 11th, 2016 Expecting automotive market recovery.
Buy Current Price 2017E P/E Target Price 2017E P/E Current JCI JKSE
8,125 21.2 9,000 23.4 5,423
Misc Indust ry, Aut o mo t ive Bloomberg Ticker ASII IJ Reuters Ticker ASII JK 52 w eek High 8,325 52 w eek Low 4,975 Market Cap (Rp tn) 329 Market Cap (US$ bn) 25 USDIDR 13,125 Daily Average Vol ('000 shares) 38,723 Daily Average Val (Rp bn) 273 Daily Average Val (US$ mn) 20.8 Majo r Shareho lders (%): Jardine Cycle & Carriage Ltd Others under 5%
50.1 49.9
Relat ive Perfo rmance vs JCI JKSE: ASII
JCI JKSE
30% 25% 20% 15% 10%
5% 0% 14-Aug-15 -5%
14-Nov-15
14-Feb-16
14-May-16
-10% -15%
-20%
1H2016 financial and business performance Revenue declined 5% to Rp88.2 tn in the 1st semester of this year, from Rp92.5 tn in the year before, as a result of a significant decline in Automotive, Heavy Equipment & Mining, and Agribusiness segments’ sales value (Exhibit 2). Net profit fall 11% to Rp7.1 tn from Rp8 tn (Exhibit 3). Overall these numbers are reflecting 50% of our 2016E target, which is consider in-line. Our Prev 1H 2016 Our New Est imat e Act ual to Est imat e Act ual (Rp bn) 2016E 1H 2016 2016E 2016E 2015 Change Revenue 175,925 88,208 50.1% 178,180 184,196 -3.3% Net Income 14,133 7,116 50.3% 14,386 14,464 -0.5%
“The first half challenges of soft commodity prices, weak heavy equipment demand, declines in mining contracting volumes and increases in non-performing loans at Permata Bank are likely to persist for the remainder of the year. Nevertheless, steady performances are expected from the consumer finance and automotive businesses.” as quoted from Mr. Prijono Sugiarto, President Director, in a released statement. Automotive business which contributed more than 50% to the company’s revenue and profit has shown it’s resilience this semester, where Astra Group’s car and motorcycle sales managed to grew above the market, with 4% and 1.3% growth each respectively, meanwhile the domestic car market only managed to grew slightly 1.3% and motorcycle sales declined 23% (Exhibit 1). However, lower commodity prices still hurts Agribusiness and Mining related business where Astra Agro Lestari (AALI) and United Tractors (UNTR) posted a significant decline in revenue (Exhibit 2) and profit. Opportunities and challenges in the future We expect there will be a continuation of growth in domestic automotive market this year, especially after the launch of several new products by Toyota and Daihatsu, as the market share leaders currently (Exhibit 4). We are estimating that there will be 4.5% and 1.3% of growth in car and motorcycle sales for Astra Group this year (Exhibit 1).
-25%
ASII’s price movement is relatively inline with Indonesia Equity Index (JCI, JKSE, IHSG) with 1.4 - 1.6 Beta.
We also expect more contribution from Astra’s new businesses such as insurance (Astra Aviva), toll roads (Semarang-Ungaran-Bawen), construction (Acset Indonusa, ACST), and property (Anandamaya Residence, Astra Tower) segments. However we also see the rising steel prices could be a downside risk for the company (Exhibit 2.1).
Analysts: Robertus Yanuar Hardy
[email protected] +6221 5790 5455 Shanti Dwi Jayanti (Research Associate)
[email protected]
Valuation and recommendation We are upgrading rating to Buy with revised target price at Rp9000. Implying 24.6x of 2017E P/E Ratio. Considering ASII’s share price that already increasing more than 30% in the last 3-months, we are recommending to buy on weakness. Risk to our projection Rising steel price is still a concern, considering it is the most required raw material for automotive manufacturing.
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PT. Astra International, Tbk (ASII) Indonesia Automotive Sector
Exhibit 1: HEAD OFFICE Domest ic Car Sales (unit s) Toy ota Daihatsu Isuzu Peugeot UD Truc ks Subt ot al for Ast ra A stra's LCGC
Honda Suzuki Mitsubishi Nissan Others Subt ot al for Non Ast ra Tot al Domest ic To tal Do mestic LCGC
Domest ic Mot orc yc le Sales (unit s) Ast ra Honda Yamaha Suzuki Kawasaki TVS Subt ot al for Non Ast ra Tot al Domest ic
Jun-16 31,644 16,728 1,314 3 142 49, 831 10,228 19,472 6,633 7,433 960 7,142 41, 640 91, 471 19,540
Jun-16 380,019 127,224 3,780 7,708 147 138, 859 518, 878
Jun-15 Chg 23,992 32% 14,221 18% 1,494 -12% 3 0% 48 39, 758 25% 8,473 21% 15,035 30% 9,669 -31% 8,748 -15% 2,079 -54% 6,850 4% 42, 381 -2% 82, 139 11% 14,571 34%
Jun-15 361,767 191,965 12,097 8,636 249 212, 947 574, 714
Chg 5% -34% -69% -11% -41% -35% -10%
Market Share Jun-16 Jun-15 35% 29% 18% 17% 1% 2%
54% 11% 21% 7% 8% 1% 8% 46%
48% 10% 18% 12% 11% 3% 8% 52%
21%
18%
Market Share Jun-16 Jun-15 73% 63% 25% 33% 1% 2% 1% 2% 27%
37%
6M 2016 175,076 89,510 8,064 19 791 273, 460 54,390 109,662 49,683 50,996 8,148 39,998 258, 487 531, 947 89,952
6M 2016 2,158,388 719,302 31,115 53,051 1,032 804, 500 2, 962, 888
6M 2015 Chg 163,165 7% 88,879 1% 10,656 -24% 26 -27% 48 262, 774 4. 1% 46,710 16% 81,407 35% 62,654 -21% 60,333 -15% 15,729 -48% 42,423 -6% 262, 546 -1. 5% 525, 320 1. 3% 82,013 10%
6M 2015 Chg 2,131,062 1. 3% 919,380 -22% 59,464 -48% 62,541 -15% 1,715 -40% 1, 043, 100 -23% 3, 174, 162 -6. 7%
Our Market Share Est imat es 6M 2016 6M 2015 2016E 33% 31% 17% 17% 2% 2%
51% 10% 21% 9% 10% 2% 8% 49%
50% 9% 15% 12% 11% 3% 8% 50%
17%
16%
33%
Chg
533, 247
510, 264
4. 5%
496, 295 1, 029, 542
502, 896 1, 013, 160
-1. 3% 1. 6%
2015A 4, 453, 888
Chg 1. 3%
2, 026, 267 6, 480, 155
-22. 6% -6. 2%
Our Market Share Est imat es 6M 2016 6M 2015 2016E 73% 67% 4, 511, 031 24% 29% 1% 2% 2% 2% 27%
2015A
1, 568, 775 6, 079, 806
So urce: A stra, Gaikindo .
Domestic Motorcycle Sales (units)
Domestic Car Sales (units) 95,000
600,000
85,000
550,000
75,000
500,000
65,000
450,000
55,000
400,000
45,000
350,000
Astra Group’s car and motorcycle sales managed to grew above the market, with 4% and 1.3% growth each respectively, meanwhile the domestic car market only managed to grew slightly 1.3% and motorcycle sales declined 23%.
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PT. Astra International, Tbk (ASII) Revenue and profit contributors
Revenue Co nt ribut io n by Segment (Rp bn) Automotive
Exhibit 2:
1H2016 1H2015 47,133 48,475
Financial Services
Change -2.8%
Co nt ribut io n 52.4%
8,593
8,584
0.10%
9.6%
22,564
24,949
-9.6%
25.1%
Agribusiness
6,344
7,229
-12.2%
7.1%
Infrastructure logistics and others
4,085
3,712
10.0%
4.5%
Information technology
1,213
957
26.8%
1.3%
Heavy Equipment and Mining
Net Inco me Co nt ribut io n by Segment (Rp bn) Automotive Financial Services Heavy Equipment and Mining Agribusiness Infrastructure logistics and others Information technology
Net Pro fit Margin 1H2016 1H2015 3,864 3,422 1,253 2,085 1,121 2,048 631 354 174 68 73 75
Change 12.9% -39.9% -45.3% 78.2% 155.9% -2.7%
Co nt ribut io n 1H2016 54.3% 8.2% 17.6% 14.6% 15.8% 5.0% 8.9% 9.9% 2.4% 4.3% 1.0% 6.0%
1H2015 7.1% 24.3% 8.2% 4.9% 1.8% 7.8%
Source: Company's financial report.
More than 50% of the company’s revenue and net income is still contributed by automotive related segment. We expect improved profit margin for this sector will remain positive in the future.
Hot-Rolled Coil Steel Price
Exhibit 2.1:
US$ per 20 short tons 650
Steel price has rallied more than 50% ytd.
600
550 500 450 400 350
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PT. Astra International, Tbk (ASII) Past financial performance and future estimates
Exhibit 3: Inco me St at ement (bn Rp) Revenue Gross Profit EBT EAT Net Income EPS
2015 184,196 36,710 19,630 15,613 14,464 357
2016E 178,180 35,636 19,956 16,165 14,386 355
Current Price P/E Target Price P/E Market Cap (Rp tn) Market Cap (US$ bn) Rat io s & Margins: Revenue grow th Gross Profit margin Net Profit margin Net Profit grow th DPR (as paid) DPS (as paid) BVPS ROA ROE Total Debt Net Debt (Cash) DER DPS (as paid) DPR (as paid) Cash Flo ws Chg in w ork cap Net income Depreciation Net CF Fro m Operat io n Capex Net CF Fro m Invest ing Loans and Debts Employee Benefit Liabs Non Ctrling Int Chg in Equity Dividend Net CF Fro m Financing Equit ies Issued & fully paid capital Additional paid in capital Retained earning Approriated Unapproriated Other rsv, equity chg Minority Interest To t al Equit y
2017E 186,198 38,171 21,566 17,469 15,547 384
2018E 195,043 40,959 23,347 18,911 16,831 416
8,125 21.2 9,000 23.4 328.9 25.1
-8.7% 19.9% 7.9% -24.6% 60.5% 216 3,126 5.9% 11.4% 69,323 42,221 33.4% 216 60.5%
-3.3% 20.0% 8.1% -0.5% 60.5% 215 3,289 5.7% 10.8% 70,394 39,369 29.6% 215 60.5%
4.5% 20.5% 8.3% 8.1% 60.5% 232 3,502 5.9% 11.0% 70,155 30,541 21.5% 232 60.5%
4.8% 21.0% 8.6% 8.3% 60.5% 251 3,735 6.2% 11.1% 70,404 20,910 13.8% 251 60.5%
2019E 204,795 44,031 25,318 20,507 18,252 451
Balance Sheet (bn Rp) Asset s Cash Other Investments Receivables Financing Receivables Other Receivables Inventories Prepaid taxes Other prepayments To t 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 Goodw ill Other intangible assets Other assets To t al No n Current Asset s To t al Asset s
5.0% 21.5% 8.9% 8.4% 60.5% 273 3,990 6.4% 11.3% 70,669 10,402 6.4% Liabilit ies 273 Short term borrow ings 60.5% Payables Other liabilities 2015 2016E 2017E 2018E 2019E Taxes payable (801) (3,873) (124) (156) (165) Accruals 14,464 14,386 15,547 16,831 18,252 Employee ben obligations 5,367 3,306 3,240 3,175 3,112 Unearned income 19,030 13,820 18,663 19,850 21,198 Current portion of LT debt (5,819) (3,078) (3,001) (2,926) (2,853) Bank loan (5,819) (3,078) (3,001) (2,926) (2,853) Debt securities 577 679 (248) 258 275 Finance lease 667 287 71 93 95 To t al Current Liabilit ies (223) 1,278 1,674 1,826 1,995 Other Liabilities 902 (366) 829 953 1,096 Unearned income (8,744) (8,697) (9,399) (10,175) (11,034) Defered tax liabilities (7,011) (6,819) (7,072) (7,044) (7,572) Provisions Employee ben obligations 2015 2016E 2017E 2018E 2019E Long term debt 2,024 2,024 2,024 2,024 2,024 Bank loan 1,139 1,139 1,139 1,139 1,139 Debt securities 92,989 98,678 104,827 111,483 118,700 Finance lease 425 425 425 425 425 To t al No n Current Liabs 92,564 98,253 104,402 111,058 118,275 To t al Liabilit ies 5,891 5,525 6,354 7,307 8,403 24,490 25,768 27,442 29,268 31,264 126,533 133,134 141,786 151,221 161,530 Revenue growth Gross Profit margin EBT margin Net Income growth Source: financial report, Reliance Research estimates. margin
2015 27,102 484 17,776 31,728 3,501 18,337 4,729 1,504 105,161 28,377 4,865 29,640 5,320 3,043 3,493 6,686 41,702 4,859 5,298 1,974 2,039 2,978 140,274 245,435
2016E 31,025 674 18,748 32,957 3,919 15,864 4,930 1,974 110,090 29,771 1,962 32,396 5,982 3,254 3,969 7,031 41,474 4,546 5,677 1,974 2,055 3,154 143,246 253,336
2017E 39,614 685 18,560 33,451 3,977 16,102 5,004 2,004 119,397 29,473 1,982 32,720 5,922 3,287 4,009 7,101 41,235 4,501 5,734 1,994 2,076 3,186 143,219 262,616
2018E 49,494 695 18,375 33,953 4,037 16,343 5,079 2,034 130,010 29,178 2,002 33,047 5,863 3,320 4,049 7,172 40,986 4,456 5,791 2,014 2,097 3,218 143,192 273,202
2019E 60,268 705 18,191 34,462 4,098 16,589 5,155 2,064 141,532 28,887 2,022 33,377 5,805 3,353 4,090 7,244 40,727 4,411 5,849 2,034 2,118 3,250 143,165 284,697
2015 11,975 20,557 7,076 2,142 5,621 451 4,170 24,227 16,437 7,357 433 76,242 574 1,694 1,796 293 3,856 34,447 18,315 15,239 893 42,660 118,902
2016E 15,516 19,894 6,820 1,377 7,580 438 4,127 24,739 15,795 8,642 302 80,574 696 1,769 1,653 281 4,155 31,073 14,430 16,010 633 39,628 120,202
2017E 15,827 20,292 6,956 1,405 7,732 447 4,210 24,492 15,637 8,555 299 81,444 689 1,796 1,637 285 4,218 30,762 14,286 15,850 626 39,387 120,830
2018E 16,143 20,698 7,095 1,433 7,886 456 4,294 24,247 15,481 8,470 296 82,338 703 1,778 1,620 291 4,302 30,949 14,143 16,167 639 39,643 121,981
2019E 16,466 21,112 7,237 1,462 8,044 465 4,380 24,004 15,326 8,385 293 83,257 717 1,760 1,604 297 4,388 31,144 14,002 16,491 652 39,910 123,167
1H 2016 1H 2015 88,208 92,505 -4.6% 16,847 17,918 19.1% 19.4% 10,232 12,073 11.6% 13.1% 7,116 8,052 -11.6% 8.1% 8.7%
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PT. Astra International, Tbk (ASII) Latest news
Exhibit 4:
The Official announcement of TMMIN Karawang Engine Plant # 3 was successfully held on Monday, March 7, 2016. This Toyota's engine plant is the first plant in the world that adopts "Through Line" which in the concept of the whole process of production machinery consists of casting , machining and assembling assembly under one roof. With this concept will certainly shorten the production process and reducing the inventory in production. Located in 150 hectares area on Industrial Estate in Karawang, West Java, the engine plant is scheduled to produce 216,000 R-NR aluminum engine every year after starting operations in early 2016. The plant, machinery, and new export activities are part of the Toyota commitment to continue on contributing to the development of the automotive industry in Indonesia particularly, and the Indonesian economy in general. Source: toyotaindonesiamanufacturing.co.id
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