UOB Astra International BUY TP IDR 56.000

Automotive sales remain strong

What’s New
•Domestic car sales grew 16% mom in Jun 10. Thus, car salesvolume remained strong in 6M10, growing 75% yoy to 367,127 units.Astra’s sales grew 22% mom so that in 1H10, Astra sold 207,971 units,growing 71% yoy.
•Motorcycle sales grew 2% mom in Jun 10. Motorcycle sales grew41% to 3,599,322 units in 1H10. Meanwhile, Honda’s sales fell 8%mom in Jun 10 so that in 1H10, Honda posted 43% yoy growth to1,665,509 units.

Stock Impact
•No change in competitive landscape. Astra’s market shares wererelatively stable in1H10 as the company was able to maintain itsposition in the market with 57% and 46% shares of the car andmotorcycle markets respectively.In the motorcycle market,competition with Yamaha remained intense although other producerssuch as Suzuki had not recovered, making do with a mere 7% marketshare (vs 13% in 2008).
•Signs of accelerating economic growth. 1H10 car sales volumeshows that economic growth is accelerating. Mitsubishi sales grew92% yoy in 1H10. At the same time, sales of Nissan Diesel, althoughhaving a smaller base, also showed a strong 177% yoy growth in thesame period. Most of Mitsubishi’s sales are related to commercialvehicles such as pick-ups, small trucks and trucks and it has thelargest market share of the commercial vehicle market comprising pick-ups, small trucks and trucks.
•No signs of slowdown. Jun 10 car sales indicate that car salesshould remain strong going forward. Furthermore, car producers areoffering more free features as their margins are expanding due to astrong rupiah and lower steel and other commodity prices. There is ahigh possibility that car sales may reach 700,000 units this year.Meanwhile, motorcycle sales have been flattish since May 10.However, motorcycle sales should improve in August due to the festiveseason.