Overview of Astra International Tbk

Astra International Tbk (ASII) is a diversified conglomerate operating across multiple industries, including automobile distribution and assembly, mining, plantations, finance, and information technology. With a significant presence in Indonesia, Astra continues to evolve its business model to remain resilient amidst changing market dynamics.

Stock Analysis and Recommendation

The stock is currently priced at Rp4,910, with a target price of Rp6,000, representing an upside potential of 22.2%. The company is categorized under the Industrials sector and trades under the Bloomberg ticker ASII IJ. UOB Kay Hian maintains a BUY recommendation for the stock, supported by robust fundamentals and strategic diversification efforts.

Performance Highlights

In 2024, domestic car sales reached 865,723 units, while motorcycle sales stood at 6.3 million units. For 2025, Gaikindo forecasts domestic car sales of 850,000 units and motorcycle sales between 6.4 million and 6.7 million units. Despite increased competition from Chinese EV players and high interest rates, these projections are considered achievable.

Astra’s financial health remains strong, with net profit growing from Rp28,944 billion in 2022 to Rp33,839 billion in 2023. The company anticipates further growth in net profit to Rp39,026 billion by 2026. Additionally, earnings per share (EPS) are expected to rise from Rp728.3 in 2022 to Rp968.2 in 2026, reflecting consistent profitability.

Regional Option Tax Impact

The regional option tax, set to take effect in 2025, is expected to raise car selling prices. This tax includes components such as Motor Vehicle Tax (PKB), Motor Vehicle Transfer Fee (BBNKB), and Non-Metal and Rock Mineral Tax (MBLB). For example, a car priced at Rp500 million in Jakarta with a 2% PKB tax rate would incur an additional tax payment of Rp16.6 million. Currently, 26 provinces have relaxed this policy to mitigate its impact.

Electric Motorcycle Launches and Competition

In November 2024, Astra introduced two new electric motorcycles: the Honda ICON-e and Honda CUV-e. The ICON-e is priced at Rp28 million, offering a top speed of 55 km/h and a range of 53 km. The CUV-e is priced at Rp54.45 million, with a maximum speed of 83 km/h and a range of 80.7 km. However, these models lag behind competitors like the Alva Cervo, which offers a range of 125 km, a top speed of 103 km/h, and is priced at Rp37 million.

Diversification Strategy

Astra is strategically transitioning away from its dependency on the automobile sector, which currently accounts for 57% of its profit. The company is diversifying into renewable energy, nickel mining, healthcare, banking, and other sectors. For instance, Astra’s healthcare investments, including a 7.45% stake in Hermina and 95% ownership of Heartology, are performing well. Hermina now operates 48 hospitals across 33 cities, while Heartology is expected to become EBITDA-positive by 2025.

Financial Services

Astra’s financial services division maintains a healthy portfolio, with non-performing loan (NPL) rates at 0.9-1% for Federal International Finance and 0.5-0.6% for Astra Credit Companies. The division employs a 70:30 split between new and used vehicle financing, ensuring stable earnings during economic downturns.

BYD Factory in Indonesia

BYD Indonesia, a significant player in the electric vehicle (EV) market, is set to commence operations by the end of 2025. The Subang factory, with a production capacity of 150,000 units, represents a US\$1 billion investment. In just seven months starting June 2024, BYD sold 15,429 units, capturing 36% of Indonesia’s EV market share.

Valuation and Forward Outlook

Astra International is valued at 6.4x 2025F PE, which is near the lower end of its historical valuation range. The target price of Rp6,000 is derived from a sum-of-the-parts (SOTP) valuation, factoring in contributions from subsidiaries like United Tractors (UNTR) and Astra Agro Lestari (AALI). With a strong upside potential of 22.2%, the stock remains a compelling BUY.

Key Financial Metrics

• Net Turnover: Projected to grow from Rp316,565 billion in 2023 to Rp407,624 billion in 2026.
• EBITDA: Expected to reach Rp52,543 billion by 2026.
• Net Profit Margin: A steady margin of around 10% is anticipated over the forecast period.
• ROE: Projected to remain above 14%, demonstrating strong shareholder returns.
• Dividend Yield: Estimated to increase from 6.8% in 2024 to 7.6% in 2026.

Conclusion

Astra International Tbk stands out as a resilient and forward-looking conglomerate, leveraging diversification to mitigate risks and capitalize on emerging opportunities. Despite challenges in the automobile sector, the company’s strategic investments in healthcare, financial services, and renewable energy position it for sustained growth. With a robust financial outlook and a strong BUY recommendation, Astra remains an attractive option for investors seeking long-term value.