JPM Indo: Rp70,000 Astra International?

Astra International – No signs of share price over-shooting; a solid Buy still. Aditya Srinath (analyst) was positively surprised by the 70,384 units car sales in June (16% m/m) with continuing momentum to Lebaran. His FY10 EPS forecast is already 8% higher than consensus, the 1H10 results due on the 29th should trigger another round of upward revisions (this is becoming a quarterly ritual now). On the sales desk we understand why sell side analysts like gradual EPS adjustment, rather than one step adjustment. But this is getting boring now for ASII. There is no strong reason on why ASII could not deliver another 25% EPS growth in FY11 (JPM forecasting a mere 5% growth), and a P/E re-rating back to its historical high (Nov-07) of 17x. If these two happens, we would be looking at a share price target of around Rp70,000 for ASII (another 40% upside). Gaikindo automotive fair is on-going now, so July is looking like another strong month for car sales. *** Also worth looking at the automotive peripheral stocks like Multistrada (MASA) that manufacturers tires, on 7x FY10 P/E with 25% plus growth potential in FY11 and FY12 ***