ASII booked relatively in-line results, with FY24F top line growing by 4.5% and the bottom line increasing by 0.6%. Astra’s share price has declined -15% over the past year (vs JCI’s -13.6%) – one of the best performances among big caps in Indonesia. FY24 profit was driven by the finco and infra segments, while profit for key business such as autos and UNTR decreased slightly. Since 2021, Astra’s profit has increased by IDR13.9tn, of which IDR5.9tn/IDR3.9tn/IDR3.4tn were driven by autos/UNTR/fincos. In 2024, however, fincos was the only sector that still grew on their net profit, while autos and UNTR declined slightly. Infra is another growth sector that could contribute to Astra’s earnings growth. The company is also focusing on investment in the healthcare sector.

Autos sector – has been driven by price hike

In our view, Astra’s auto sector profit has been driven by price hikes. Two of Astra’s best-selling models – Innova/Zenix and Avanza/Veloz – had price CAGRs of 4% and 5%, respectfully, over the 2014-2024 period, with high price hikes (at 22-30%) in 2022 with the introduction of Zenix (facelifted version of Innova) and also Toyota Veloz. The sales volumes of these models have been mixed, yet Innoza/Zenix sales have been incredibly resilient at around 60-65k units per year despite the price hikes. We believe this is due to limited options in the market for a 7-seater SUV in the IDR500-700mn price range, and the strong brand equity of Toyota in Indonesia. Competition is rising with more new entrants of Chinese and EV brands (see here and here).

Review of the heavy equipment and fincos segment

Astra’s heavy equipment segment faces challenges from declining coal price (see Fig. 11), with Newcastle coal price at USD105/ton as of Feb-25 down 20% y-y. However, we note that UNTR’s gold assets are valuable in the high gold price environment at the moment. For fincos, low sales volume due to weak purchasing power may provide challenges for the segment. However, Astra’s strong ecosystem in choosing high asset quality customers may provide a tailwind, in our view. Also, we believe many of Astra’s fincos may still be able to grow profit given still-elevated provision losses.

Dividend play – maintain Buy

Astra’s infrastructure segment grew strongly by 37% y-y in 2024 – thanks to several acquisitions and long-term investments (see our report on Astra’s investments here). We maintain our Buy recommendation on Astra, given it is an attractive dividend play at c.7% dividend yield for 2025-2026F. Our TP of IDR6,000 is derived using SOTP valuation (2025F P/E of 7x), finco (target 2025F P/B of 2.3x), its listed subsidiaries are valued using Bloomberg consensus TP discounted by 30%, toll roads are valued on (NAV, and equity investments using book value. Risks to our call include: 1) faster-than-expected sales of ex-Astra brands (especially Chinese’s); 2) sluggish purchasing power thus hurting local sales; 3) failure to maximize cash utilization; and 4) margin pressure from the auto value chain.

Fig. 2: Indonesia big-caps performance over past year – Astra amongst the best amid market meltdown

Fig. 3: Astra profit increase/decrease by segment, IDR tn – 2024 was driven by fincos (again) and also infrastructure; Autos and UNTR declined

Fig. 4: Astra FY23 and FY24 profit by segment, IDR tn

Fig. 5: Astra’s top 3 segment profit – Fincos catching up, while UNTR has already surpassed autos

Fig. 6: Flat 2W market and declining 4W market over the past decade

Fig. 7: Astra market share in autos sector – relatively resilient over the past decade

Fig. 8: Sales of Astra’s key model – Avanza/Veloz and Innova/Zenix. Innova/Zenix sales were incredibly resilient at 64-66k units per year in 2023-2024

Fig. 9: Average selling prices of Avanza/Veloz and Innova/Zenix – sharp increases in 2022 period until now

Fig. 10: Investors’ positioning – foreign investors own 2.4x more ASII vs local investors; local investors are already overweight on ASII

Fig. 11: Coal prices – declined -20% y-y in Feb-25

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general. 

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ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this report and certifies that the views about the companies including their securities expressed in this report accurately reflect his/her personal views.  The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.

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Jupriadi Tan (jupriadi.tan@verdhana.id)

David Tjahjadi (david.tjahjadi@verdhana.id)

Gerald Hugo (gerald.hugo@verdhana.id)