Mandiri Sekuritas Auto Sector: Feb09 4-wheelers sales rebound month on month

According to Kontan, initial numbers shows that domestic car sales for February has rebounded, with some 34k units sold, up by 7% mom although 28% lower from year ago level, primarily due to sale of new variants of existing models and the public’s anticipation of further price increase, which have led to upfronting of demand. This brings 2M09 sales to 65,637 units, down by 26% yoy. The first two months sales represent about 14.6% of our FY09 estimates of 450k units, thus lagging behind at the moment. However, with BI rates expected to cut to 7.75% today, this would give added pressure for banks to cut on lending rates, which have remained constant despite a number of BI rate cuts (100 basis point cut year to date), should help financing affordability, thus, a potential for a demand uptick. We maintain Buy for Astra International (ASII, Rp10,800, Buy,TP: Rp17,900), which currently trades at PER09F 5.5x and P/BV 09 of 1.2x.