CIMB Astra Internasional Company update - Factoring in a re-rating

(ASII IJ / ASII.JK, NEUTRAL - Upgraded, Rp23,200 - Tgt. Rp21,600, Automobiles and Parts)

Astra's May car and motorcycle wholesale volumes rebounded by 4% and 18% mom (estimated) respectively. On the cautious side, we are maintaining our estimates, believing that a sustained recovery would be over six rather than four quarters, or by 2Q2010. On the other hand, we now share the view that Astra's re-rating could be sustained should Indonesian economic growth stay resilient and support a sustained auto recovery. We raise our earnings estimates by 3-6%, and upgrade Astra to Neutral from Underperform with a higher target price of Rp21,600, now on par with its NAV using sum-of-the-parts valuation (from Rp16,200, 15% discount to NAV previously). This implies 13.5x and 11.7x CY09-10 earnings respectively.