/      /      /  
Astra International (ASII IJ) (Buy) - Thoughts on Astra’s investments and the autos sector

Astra International (ASII IJ) (Buy) - Thoughts on Astra’s investments and the autos sector

Automobiles n Components JT DT GH 508 24th Feb, 2025

download (0)

Thoughts on Astra’s investments and the autos sector

Maintain Buy and TP of IDR6,000

We analyze Astra’s investments over the past seven years – which have largely been unfruitful, in our view, with the exception of its heavy equipment and mining segments. Contribution from the automotive sector — once its core profit driver — has been on a downtrend due to intensified competition and a stagnant market. Despite these challenges, Astra maintains an attractive dividend yield of ~7% for FY25F-26F, and we reiterate our Buy rating.

A breakdowsn of Astra’s past investments

Over the past seven years, Astra has generated USD11bn in profits, allocating 66% to dividends and 29% to investments. However, its investments have yielded mixed results, particularly its USD540mn investment in start-ups — including a USD250mn stake in GoTo Gojek (GOTO IJ, Buy) — which has not yielded significant returns. We note that Astra has been investing in the healthcare sector, with around USD135mn in Halodoc (unlisted), and is now building position in HEAL IJ (Buy), and Cardiovascular Hospital – nominal at around USD40mn.

Automotive sector — a challenge

Astra’s automotive segment faces headwinds from a flat 4W and 2W market, coupled with rising competition. Ten years ago, the automotive sector contributed over 50% to net profit, but that figure has now dropped to just 32%. Market saturation and evolving consumer preferences present challenges for growth. While Astra remains a dominant player, we believe its competitive edge is being eroded, thus raising market concerns over the long-term profitability of this segment.

Increase 2024F earnings, but penciling in a decline in profit. Dividend yield makes the stock still attractive

We adjust 2024F-2026F earnings by 7.9%/1.9%/-2.4%. Despite challenges in its investment performance and the automotive sector, Astra remains a solid dividend play, offering a yield of 4-6%. Given its strong cash flow and resilient heavy equipment and mining businesses, we reaffirm Buy. Our SOTP-based TP remains IDR6,000 (implying 7x P/E). We value its finco at a P/B of 2.3x, its listed subsidiaries using Bloomberg consensus TPs discounted by 30%, toll roads (NAV), and equity investments using book value. Our TP implies 9.0x 2025F forward P/E (currently: 6x P/E). Downside risks: 1) faster-than-expected sales of ex-Astra brands (especially Chinese), 2) sluggish purchasing power thus hurting local sales, 3) failure to maximize cash utilization, and 4) margin pressure from auto value chain.

Year-end 31 DecFY23FY24FFY25FFY26F
Currency (IDR)ActualOldNewOldNewOldNew
Revenue (bn)316,565310,080326,953317,458322,193323,873317,403
Reported net profit (bn)33,83929,84232,21830,89331,55931,75831,121
Normalised net profit (bn)33,83929,84232,21830,89331,55931,75831,121
FD normalised EPS835.87737.14795.84763.09779.56784.47768.74
FD norm. EPS growth (%)16.9-11.8-4.83.5-2.02.8-1.4
FD normalised P/E (x)5.7–6.0–6.1–6.2
EV/EBITDA (x)4.7–4.9–5.1–5.3
Price/book (x)1.0–0.9–0.9–0.8
Dividend yield (%)20.1–10.9–7.3–7.1
ROE (%)17.314.715.814.314.513.613.3
Net debt/equity (%)25.823.323.022.321.921.420.6
Source: Company data, Verdhana estimates

Key data on Astra International

Income statement (IDRbn)
Year-end 31 Dec
FY22
FY23
FY24F
FY25F
FY26F
Revenue
301,379
316,565
326,953
322,193
317,403
Cost of goods sold
-231,291
-243,255
-254,709
-251,497
-247,883
Gross profit
70,088
73,310
72,244
70,696
69,520
SG&A
-27,887
-29,042
-30,043
-29,708
-29,283
Employee share expense
Operating profit
42,201
44,268
42,201
40,988
40,236
EBITDA
56,001
53,405
51,662
51,092
50,973
Depreciation
-13,800
-9,137
-9,461
-10,103
-10,737
Amortisation
EBIT
42,201
44,268
42,201
40,988
40,236
Net interest expense
428
-59
-450
-248
-641
Associates & JCEs
8,231
9,499
10,236
10,281
10,287
Other income
-470
1,021
1,351
982
1,255
Earnings before tax
50,390
54,729
53,339
52,003
51,138
Income tax
-9,970
-10,228
-10,776
-10,431
-10,213
Net profit after tax
40,420
44,501
42,563
41,572
40,925
Minority interests
-11,476
-10,662
-10,345
-10,013
-9,804
Other items
Preferred dividends
Normalised NPAT
28,944
33,839
32,218
31,559
31,121
Extraordinary items
Reported NPAT
28,944
33,839
32,218
31,559
31,121
Dividends
-15,295
-38,707
-20,949
-14,026
-13,713
Transfer to reserves
13,649
-4,868
11,270
17,533
17,408
Valuations and ratios
Reported P/E (x)
6.6
5.7
6.0
6.1
6.2
Normalised P/E (x)
6.6
5.7
6.0
6.1
6.2
FD normalised P/E (x)
6.6
5.7
6.0
6.1
6.2
Dividend yield (%)
8.0
20.1
10.9
7.3
7.1
Price/cashflow (x)
4.5
5.9
3.8
5.3
5.3
Price/book (x)
1.0
1.0
0.9
0.9
0.8
EV/EBITDA (x)
3.9
4.7
4.9
5.1
5.3
EV/EBIT (x)
5.0
5.5
5.8
6.1
6.4
Gross margin (%)
23.3
23.2
22.1
21.9
21.9
EBITDA margin (%)
18.6
16.9
15.8
15.9
16.1
EBIT margin (%)
14.0
14.0
12.9
12.7
12.7
Net margin (%)
9.6
10.7
9.9
9.8
9.8
Effective tax rate (%)
19.8
18.7
20.2
20.1
20.0
Dividend payout (%)
52.8
114.4
65.0
44.4
44.1
ROE (%)
15.9
17.3
15.8
14.5
13.3
ROA (pretax %)
15.4
14.2
12.6
11.6
10.8
Growth (%)
Revenue
29.1
5.0
3.3
-1.5
-1.5
EBITDA
65.0
-4.6
-3.3
-1.1
-0.2
Normalised EPS
43.3
16.9
-4.8
-2.0
-1.4
Normalised FDEPS
43.3
16.9
-4.8
-2.0
-1.4
Source: Company data, Verdhana estimates
Cashflow statement (IDRbn)
Year-end 31 Dec
FY22
FY23
FY24F
FY25F
FY26F
EBITDA
56,001
53,405
51,662
51,092
50,973
Change in working capital
-2,295
-6,472
11,929
162
52
Other operating cashflow
-10,831
-14,260
-13,404
-14,718
-14,844
Cashflow from operations
42,875
32,673
50,186
36,536
36,181
Capital expenditure
-29,651
-39,441
-27,323
-26,926
-26,525
Free cashflow
13,224
-6,768
22,863
9,610
9,656
Reduction in investments
0
0
0
0
0
Net acquisitions
Dec in other LT assets
Inc in other LT liabilities
Adjustments
8,257
3,708
1,465
2,971
3,496
CF after investing acts
21,481
-3,060
24,328
12,582
13,152
Cash dividends
-15,295
-38,707
-20,949
-14,026
-13,713
Equity issue
Debt issue
-6,186
22,170
6,493
9,693
10,154
Convertible debt issue
Others
CF from financial acts
-21,481
-16,537
-14,456
-4,333
-3,559
Net cashflow
0
-19,597
9,872
8,249
9,593
Beginning cash
61,581
61,581
41,984
51,856
60,105
Ending cash
61,581
41,984
51,856
60,105
69,698
Ending net debt
9,140
51,326
47,946
49,391
49,951
Balance sheet (IDRbn)
As at 31 Dec
FY22
FY23
FY24F
FY25F
FY26F
Cash & equivalents
61,581
41,984
51,856
60,105
69,698
Marketable securities
Accounts receivable
35,001
33,688
37,971
37,418
36,862
Inventories
36,626
45,537
35,381
34,935
34,433
Other current assets
16,933
17,239
18,055
17,610
17,287
Total current assets
150,141
138,448
143,263
150,068
158,281
LT investments
46,725
61,348
64,419
67,503
70,589
Fixed assets
94,697
114,374
121,261
127,267
132,401
Goodwill
5,016
5,310
5,310
5,310
5,310
Other intangible assets
Other LT assets
116,718
126,199
145,731
165,102
184,497
Total assets
413,297
445,679
479,984
515,251
551,078
Short-term debt
34,669
39,061
45,554
55,247
65,401
Accounts payable
37,644
40,529
41,455
40,933
40,344
Other current liabilities
46,885
45,432
51,378
50,618
49,878
Total current liabilities
119,198
125,022
138,387
146,798
155,623
Long-term debt
36,052
54,249
54,249
54,249
54,249
Convertible debt
Other LT liabilities
14,327
15,990
16,366
16,760
17,174
Total liabilities
169,577
195,261
209,001
217,807
227,046
Minority interest
51,578
51,778
62,123
72,136
81,940
Preferred stock
Common stock
Retained earnings
181,523
188,997
199,217
215,665
232,449
Proposed dividends
Other equity and reserves
10,619
9,643
9,643
9,643
9,643
Total shareholders' equity
192,142
198,640
208,860
225,308
242,092
Total equity & liabilities
413,297
445,679
479,984
515,251
551,078
Liquidity (x)
Current ratio
1.26
1.11
1.04
1.02
1.02
Interest cover
–
750.3
93.8
165.2
62.8
Leverage
Net debt/EBITDA (x)
0.16
0.96
0.93
0.97
0.98
Net debt/equity (%)
4.8
25.8
23.0
21.9
20.6
Per share
Reported EPS (IDR)
714.96
835.87
795.84
779.56
768.74
Norm EPS (IDR)
714.96
835.87
795.84
779.56
768.74
FD norm EPS (IDR)
714.96
835.87
795.84
779.56
768.74
BVPS (IDR)
4,746.17
4,906.68
5,159.13
5,565.42
5,980.01
DPS (IDR)
377.81
956.12
517.46
346.45
338.74
Activity (days)
Days receivable
37.1
39.6
40.1
42.7
42.7
Days inventory
48.9
61.6
58.1
51.0
51.1
Days payable
49.5
58.6
58.9
59.8
59.8
Cash cycle
36.5
42.6
39.3
33.9
33.9
Source: Company data, Verdhana estimates
Company profileASII was established in Jakarta in 1957 annd has since evolved to be one of the biggest conglomerates company in Indonesia and has expanded its business into seven business segments: 1) automotive, 2) financial services, 3) heavy equipment, mining, construction & energy, 4) agribusiness, 5) infrastructure and logistics, 6) information and technology, and 7) property.
Valuation MethodologyOur TP of IDR6,000 is derived from SOTP valuation (2025F P/E 7x), finco (target 2025F P/B of 2.3x), its listed subsidiaries are valued using Bloomberg consensus TP discounted by 30%, toll road (NAV), and also equity investment using book value. The benchmark for the stock is JCI.
Risks that may impede the achievement of the target priceDownside risks: 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 auto value chain.
ESGASII has a 2030F sustainability aspirations, which can be seen through their portfolio with focus to reduce greenhouse gas emmisions, water & wastewatere management, energy management (50% renewable energy to supply operation), business model resilience (by growing non-coal revenues to 88%) and solid waste management (achieve 99% solid waste recycling and recovery).

Fig. 1: Astra – investments breakdown (FY18-FY24)

Source: Various sources, Verdhana research

 

Fig. 2: Astra's investment breakdown - significant share of metals/mining non-coal. But share of startups is not small. Healthcare is picking up but is still immaterial

Source: Various sources, Verdhana research

 

Fig. 3: ASII - Profit distribution

Source: Company data, Verdhana estimates

 

Fig. 4: EBITDA/assets is trending down

Source: Company data, Verdhana estimates

 

Fig. 5: Autos market is challenging - besides not growing, it declined during 2022-2024

Source: Gaikindo, Verdhana estimates

 

Fig. 6: Contribution trend of autos to overall profit is declining

Source: Company data, Verdhana estimates

 

Fig. 7: ASII — valuation methodology

(IDR bn)Stake Valuation  NAV  Holding disc.  SOTP  %SOTP 
Automotive100% Target P/E 7x            75,062                    -             75,06231%
Finco100% Target P/B - ROE            64,335                    -             64,33526%
UNTR60% Consensus TP           106,88030%           44,51518%
AALI80% Consensus TP            13,21530%             7,3713%
Toll road100% NAV            22,604                    -             22,6049%
Equity investment100% Book Value            29,959                    -             29,95912%
SOTP          243,847
#shares, bn              40.5
NAV/share, IDR                 6,000 
Notes: Automotive (4W, 2W, AUTO), Finco (ASDF, FIFA, Buana), Others (Toll road, Property)
Source: Company data, Verdhana estimates

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. 

GENERAL DISCLOSURE/DISCLAIMER 
This report is prepared by PT Verdhana Sekuritas Indonesia (“PTVSI”) a securities company registered in Indonesia, supervised by Indonesia Financial Services Authority (OJK) and a member of the Indonesia Stock Exchange (IDX).

This report is intended for client of PTVSI only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of PTVSI.

The research set out in this report is based on information obtained from sources believed to be reliable, but PTVSI do not make any representation or warranty as to its accuracy, completeness or correctness. The information in this report is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. Any information, valuations, opinions, estimates, forecasts, ratings or targets herein constitutes a judgment as of the date of this report is published, and there is no assurance that future results or events will be consistent.


This report is not to be construed as an offer or a solicitation of an offer to buy or sell any securities or financial products. PTVSI and its associates, its directors, and/or its employees may from time to time have interests in the securities mentioned in this report or it may or will engage in any securities transaction or other capital market services for the company (companies) mentioned herein.

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.


RESTRICTIONS ON DISTRIBUTION

By accepting this report, the recipient hereof represents and warrants that you are entitled to receive such report in accordance with the restrictions and agrees to be bound by the limitations contained herein. Neither this report nor any copy hereof may be distributed except in compliance with applicable Indonesian capital market laws and regulations. 

Rating Table

Rating
Remains
Buy
Target price
Remains
IDR 6,000
Closing price
21 February 2025
IDR 4,750
Implied upside+26.3%
Market Cap (USD mn)11,797.4
ADT (USD mn)9.7

Relative performance chart



Source: LSEG, Verdhana
M cap (USDmn)
11,797.4
Free float (%)
49.9
3-mth ADT (USDmn)
9.7
(%)
1M
3M
12M
Absolute (IDR)
-3.3
-2.9
-9.5
Absolute (USD)
-3.1
-5.1
-13.2
Rel to Jakarta Stock Exchange Composite Index
2.2
2.1
-1.9

Research Analysts

Jupriadi Tan (jupriadi.tan@verdhana.id)

David Tjahjadi (david.tjahjadi@verdhana.id)

Gerald Hugo (gerald.hugo@verdhana.id)

Tags: AUTOS AND AUTO PARTS, ASII, ASII JK, ASII IJ, Jupriadi Tan, David Tjahjadi, Gerald Hugo
Disclaimer
Facebook
Twitter
Instagram
Google
Website