CIMB Astra Internasional Result note - Better margins, but...

(ASII IJ / ASII.JK, UNDERPERFORM - Maintained, Rp15,750 - Tgt. Rp16,200, Automobiles and Parts)

Astra's 1Q09 net profit was Rp1.875tr, -17% yoy on flat sales of Rp21.5tr. The results are ahead of consensus and our forecasts by 15%, driven by better-than-expected margins, primarily from the heavy equipment business. While auto margins also rebounded, we are less convinced about their sustainability. We raise our earnings forecasts by 2-6%, mostly for 59%-owned UT. Consequently, our NAV estimate has been boosted by 6%, and our sum-of-the-parts target price rises to Rp16,200 from Rp15,300, implying 10.4x and 9.3x CY09-10 earnings, at a slight discount to our implied index target of 9.9x P/E. Unless its auto business turns around convincingly, we view Astra an Underperform.