Astra has now overtaken Telkom as Indonesia’s largest stock by market cap @ US$18.1bn. This is only the second time since Telkom listed in 1995 (the other time was one day in 2008 when BUMI was top dog). With a 50% free float, this stock has ample liquidity for investors.
We continue to have firm conviction about group prospects. Sales desk is also of the view that Astra will continue to outperform Telkom. While mobile penetration has reached 75%, motorcycle penetration is very low at 15% in Indonesia. Only about 1% of the urban population bought a car in Indonesia compared to 4% in Thailand, and 5% in China. Still ample room for growth for Astra.
Interestingly, despite the massive outperformance, ASII’s valuation is still in line with the market. Strong management, earnings to grow by an average 17% for the next two years, and 27% ROE should justify premium to the market valuation, in our view. Our near term target price is Rp45k.
ASII has pretty much taken over the mantle of "main proxy to the Indonesian market".
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