• Tough environment in automotive market has not severely hurt Astra International’s performance in 9M09 where the company's revenue and net profit declined moderately by only 4.2% YoY and 3.6% YoY to Rp70.6tn and 7.1tn respectively.
• The company's revenue from automotive business fell slightly by 7.6% YoY to Rp36.7tn amid steep decline in its sales volume. Astra’s car sales dropped to 194,876 units (-17.4% YoY) while motorcycle sales faltered to 1.9mn units (-15.6% YoY). Such moderate decrease in revenue was due to Astra’s ability in implementing effective pricing strategy in order to minimize the impact of slower domestic economic growth condition on its financial performance.
• Meanwhile, the company’s financial service units managed to deliver a positive growth in revenue at Rp6.1tn, 6.7% YoY higher from Rp5.8tn in 9M08. This growth has increased the revenue contribution from financial service to 8.7% in 9M09 from 7.7% a year ago.
• For heavy equipment business, United Tractors managed to contribute a stable revenue at Rp21.3 tn (+1.3% YoY) backed by its mining contracting business that was able to post strong revenue growth at Rp11.0tn or increased by 32.9% YoY. Such growth balanced the decline in UT’s heavy equipment and coal mining units where revenue dropped to Rp8.1tn (-19.5% YoY) and Rp2.2tn (-20.1% YoY) respectively.
• Furthermore, Astra’s IT business also posted positive growth at Rp908bn or 52.0% YoY higher from Rp597bn in 9M08. Together with infrastructure and other business units, this business segment contributed Rp1.1tn of revenue to Astra International, 80.2% YoY higher from Rp616bn in 9M08.
• Nevertheless, the company’s agribusiness unit did not manage to flee from the impact of bleak condition in CPO price. The unit’s revenue tumbled to Rp5.5tn, or decreased by 18.4% YoY which was the largest decrease amongst Astra’s units. Lower CPO price and stronger Rupiah dragged down the unit’s revenue despite it managed to book higher sales volume at 767,946 tons (+8.8% YoY).
• On a quarterly basis, Astra managed to perform very well where its revenue posted 11.5% QoQ growth to Rp25.9tn in 3Q09 fueled by a recovery in domestic automotive market which pushed up Astra’s revenue from automotive business to Rp14.0tn, an 18.5% QoQ increase from Rp11.5% in 2Q09. The improvement in 3Q09 revenue has helped Astra’s net income to improve by a strong 20.8% QoQ to Rp2.9tn which was also the company’s highest quarterly net income so far.
• Overall, Astra’s 9M09 revenue and net income came in at 78.0% and 75.7% of our full year estimates and 78.2% and 85.3% of the consensus’ estimates.
• Currently the company is trading at 2010F PER of 12.4x and EV/EBITDA of 9.2x, we maintain our Buy recommendation.
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