CLSA Astra International (ASII IJ) – Solid results by Wili

Strong set of results for the new Indonesian king (largest company here by market cap). The 1Q10 profit is in line with our forecast and consensus and accounts for 25% of our FY10 estimate. Astra International reported a net profit of Rp3tn in 1Q10, up 61% yoy (albeit from a low base in 1Q09) and +3% qoq.
Interestingly, profitability of motorcycles have recovered nicely from Rp900k per unit in 2009 to Rp1.27m in 1Q2010. This is because the company has become more flexible in volumes (not defending market share at all cost) and more focused on profitability.
Astra has become the mini Indonesia – offers investors exposure to commodities (plantation + coal mining), banks, finance and consumers (motorcycle, cars). This name is in great position to benefit when Indonesia is upgraded to investment grade.

Highlights of the report:
Key drivers are automotive division that doubled its earnings yoy and financial services that grew profit by 62%.
We also see an end to margin pressure in motorcycle business and solid numbers out of United Tractors.
Target price raised from Rp45,000 to Rp55,000 as we get closer to 2011 and expect a rerating to PE 16x 2011CL. BUY.