Mandiri Sekuritas Share of vehicle sales rising (ASII)

Feb09 vehicles sales were neither disheartening nor spectacular. Astra widened its market share as of 2M09 on both segments, capturing 49% and 57% market share of the 2 and 4-wheeler market, impressively higher albeit lower volumes than its FY08 market share of 46% and 52%, respectively. With calibrate our FY09-01F profits in line with (a) changes in assumption and valuations of main subsidiaries and (b) carry-over effect of FY08 balance sheet items. Our revised net earnings for FY09-10F yielded a 7.2% decline from previous estimates. We maintain Buy on the stock, now trading at PER09F of 7.3x and P/BV09F of 1.3x.

Higher market share for cars….. Official figures pointed to a 9.1% mom increase in domestic 4-wheeler sales, the first mom recovery since July08. This could be mainly be attributed to pre-emptive buying in anticipation of further selling price increase and introduction of various new models. However, 2M09 car sales was still 25.6% lower yoy and only represents about 14.6% of our FY09F estimates of 450k. On a positive note, Astra brands expanded market share with 57% of the cumulative sales, only dropping by 14.3%yoy.

….and 2 wheelers as well. Two-wheelers also recovered, up by 12.7%mom in Feb09, marking the first mom recovery since Aug08. 2M09 two-wheeler sales were at 782k units, still down by 16.6%yoy and representing 15.6% of our FY09F of 5mn units. However, Astra improved its market share to 49% as of 2M09 with units sold of 381k, falling less than market by only 8.3%yoy.

Maintain Buy. Although it may be premature to indicate a sustained demand recovery, the pressure to lower lending rates to afford buyers of more flexible credit remains. We think that lowering the rates will be a gradual process due to continued risk aversion which has created liquidity segmentation in the banking system (i.e., deposit rate discrepancy between private and state banks), that has resulted in higher cost of funds. Note that about 70-80% of the car m arket relies on credit financing. Without any significant changes in our assumptions, we maintain Buy at TP of Rp17,900/share for the stock which now trades at PER09F of 7.3x. Main risks are (a) inability of banks to lower lending rates to afford better financing terms and (b) further depreciation of the rupiah, which could potentially lead to further selling price hikes.