Comprehensive Analysis of Astra International

PT Maybank Sekuritas Indonesia

November 12, 2024

Astra International (ASII IJ) remains a dominant player in Indonesia’s automotive industry and beyond. This comprehensive analysis delves into the various segments of Astra International’s business, examining their performance, key metrics, and future prospects.

Investment Recommendation

PT Maybank Sekuritas Indonesia reaffirms its BUY recommendation on Astra International with a target price (TP) of IDR5,650. This recommendation is based on a valuation of 7.8x FY25E P/E. Despite challenges in car sales, Astra International’s diversified portfolio and stable market share make it an attractive value play.

Key Financial Highlights

The 9M24 results for Astra International outperformed expectations, driven primarily by the strong performance of PT United Tractors Tbk (UNTR). The automotive segment saw a significant growth of +12% QoQ and +3% YoY in 3Q24, despite a decline in four-wheel (4W) sales volume. This growth was attributed to a favorable sales mix from higher-end models and strong performance in the two-wheel (2W) segment.

Automotive Segment

The automotive segment remains a core part of Astra International’s business. The company holds distributorships for Toyota and Daihatsu, two of the largest auto franchises in Indonesia. Astra International’s market share increased to 56.5% in Oct-24, driven by strong performances from Daihatsu and Isuzu. The launch of a popular hybrid vehicle, presumed to be the Avanza hybrid, is expected to boost industry demand further.

Heavy Equipment, Mining, Construction, and Energy (HEMCE)

HEMCE performed better than expected due to strong overburden (OB) removal, coal, and gold sales volumes. The segment also saw higher average selling prices (ASP) across its business, contributing to YoY margin improvements and stronger-than-expected results.

Healthcare Expansion

Astra International continues to diversify its business portfolio, with significant investments in the healthcare sector. The company aims to generate IDR1.2-1.5 trillion in profit from its healthcare business by FY30E. Strategic initiatives include leveraging Halodoc’s doctor panels and pharmacy volumes for referral schemes and medicines procurement, enhancing synergy within its healthcare arm.

Toll-Road and Logistics Investments

The company is also expanding its investments in toll roads, particularly in the Sumatera area, and exploring model logistics facilities. This expansion is seen positively as it helps offset weaknesses in other cyclical segments.

Financial Metrics and Forecasts

For FY24, Astra International’s earnings are expected to drop by 13% YoY due to weakening HEMCE sales and a moderating financial services business. However, the auto and bike sales volume is forecasted to grow by 5% and 3% YoY, respectively. The company maintains a robust balance sheet, supporting a stable dividend payout ratio of 40%.

Key Financial Metrics

• Revenue: IDR301,379 billion (FY22A), IDR316,565 billion (FY23A), projected IDR310,613 billion (FY24E)
• EBITDA: IDR52,779 billion (FY22A), IDR56,895 billion (FY23A), projected IDR53,957 billion (FY24E)
• Core Net Profit: IDR28,944 billion (FY22A), IDR33,839 billion (FY23A), projected IDR31,748 billion (FY24E)
• Net Dividend Yield: 4.9% (FY22A), 9.2% (FY23A), projected 6.3% (FY24E)

Future Prospects

Astra International is well-positioned to benefit from its diversified business model. The company’s focus on expanding its healthcare, toll-road, and logistics segments is expected to provide stable growth and offset cyclical weaknesses in other areas. Additionally, the anticipated launch of hybrid vehicles and continued strong performance in the 2W segment will support the company’s market dominance.

Conclusion

PT Maybank Sekuritas Indonesia’s comprehensive analysis reaffirms Astra International’s strong market position and diversified business model. Despite challenges in the automotive sector, the company’s strategic investments and robust financial health make it a compelling investment opportunity with a BUY recommendation and a target price of IDR5,650.