February vehicle sales wrap – first uptick since July/August: Indonesian 4-wheeler sales ticked up in February, rising 9% m/m, the first respite from declines since July. 2-wheeler sales also saw their first m/m gain since August, up 12% m/m. YTD volumes are down 26%/16% y/y for 4-wheelers/2-wheelers, and are keeping pace with our full-year run rate estimates.
The prospect of stabilizing sales has catalyzed a sharp rally: While stabilizing volumes is an encouraging development, stabilization is not necessarily recovery. The length of this downturn is still short compared to previous cycles, suggesting that it may take a while for volumes to change trajectory in a secular manner. In our note published 10 March 2009, we commented that there seemed to be a break in the trend of declining vehicle sales. This trend has been widely flagged recently and
we note that Astra’s stock price has rallied sharply recently, gaining almost 25% in a fortnight. We would advise against chasing the stock higher in the short term.
Consensus FY09E EPS is skewed by few forecasts and hence is misleading:
One concern that we have had on Astra has been that with our FY09 EPS forecast 16% below consensus, expectations may still be too rich. However, we see the consensus average being skewed by a small number of outliers. Median FY09E EPS of Rp1,466 is more representative of expectations, in our view. We see lower expectations as a positive, although we are below consensus.
Maintain Neutral and Rp11,000 PT: We retain our SOTP-based, Dec-09 Rp11,000 PT on Astra. Our PT values Astra’s unlisted businesses using DCF (18.5% cost of equity). We set a 30% conglomerate discount, and our PT translates to 8.2x FY09E EPS. The key risk to our view and PT is if the February vehicle sales advance proves to be an aberration (downside risk) or is the precursor to a swift recovery (upside risk).
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