PT Astra International, Tbk (ASII) Fully valued in conservative stance All segments book lower profit ASII posted net profit of IDR 14.46 trillion in FY 2015, fell by 25% from FY 2014 of 19.19 trillion. All segments posted decline with Agriculture posted biggest decline of 75.3% from IDR 2.0 trillion to IDR 493 billion. Largest contributor, automotive segment posted IDR 7.46 trillion of profit, down by 12.1% from IDR 8.5 trillion as automotive industry continued the decline. Margin falls after bad result in financial segment ASII s net profit margin significantly declined from 9.5% in FY 2014 to 7.9% in FY 2015. Automotive segment (constitutes 51.6% of ASII profit) posted 7.7% profit margin, slightly lower than 7.8% in FY2014. Financial segment (constitutes 24.6% of ASII s profit) weighed total margin as it posted profit margin of 20.6%, declined from 30.8% and 30.1% in FY2013 and FY 2014. This was caused especially by lower contribution from Bank Permata, Tbk (ASII owns 44.6% of shares) which experienced 84% decline in profit. Set Hold rating with TP of 6,925 We set our target price for December 2016 at IDR 6,925 with Hold rating. We use forward P/E of 16.9x (average of last 3 year forward P/E) to derive our target price. Currently ASII is traded premium at 17.4x forward P/E. We set our conservative view on ASII by considering flat automotive segment in this year. Although there are several signs of economic rebound, we view that threat of consumer confidence will likely postpone significant rebound on automotive industry in this year. Astra International, Tbk Summary (IDR bn) 2014/12A 2015/12A 2016/12E 2017/12E Revenue 201,701 184,196 184,876 188,515 Revenue growth 4.0% -8.7% 0.4% 2.0% EBITDA 27,247 24,387 25,895 27,464 Net profit 19,191 14,464 15,906 16,626 EPS (IDR) 474 357 393 411 EPS growth -1.2% -24.6% 10.0% 4.5% BVPS (IDR) 2,969 3,126 3,325 3,507 EBITDA margin 13.5% 13.2% 14.0% 14.6% NPM 9.5% 7.9% 8.6% 8.8% ROE 17.0% 11.7% 12.2% 12.0% ROA 8.5% 6.0% 6.3% 6.3% ROIC 10.6% 7.5% 7.8% 7.8% P/E 15.7x 16.8x 17.4x 16.6x P/BV 2.5x 1.9x 2.1x 1.9x EV/EBITDA 13.7x 12.7x 13.4x 12.6x DPS (IDR) 216 216 216 216 Dividend yield 2.9% 3.6% 3.2% 3.2% Data, Bloomberg, NHKS Research Please see the last page for rating criteria & important disclaimer NH Korindo Securities Company Report Mar 07, 2016 Hold Dec 2016 TP (IDR) 6,925 Consensus Price (IDR) 7,081 TP to Consensus Price -2.2% vs. Last Price +0.4% Shares data Last Price (IDR) 6,900 Price date as of Mar 04, 2016 52 wk range (Hi/Lo) 8,575 / 5,125 Free float (%) 49.8 Outstanding sh.(mn) 40,484 Market Cap (IDR bn) 275,288 Market Cap (USD mn) 21,095 Avg. Trd Vol - 3M (mn) 44.54 Avg. Trd Val - 3M (bn) 282.88 Foreign Ownership 99.9% Misc Industries Automotive Bloomberg Reuters Raphon Prima Analyst +62 21 797 6202, ext:214 raphon@nhsec.co.id Share Price Performance ASII.IJ ASII.JK YTD 1M 3M 12M Abs. Ret. 15.0% 9.1% 7.8% -12.4% Rel. Ret. 9.4% 5.1% 0.2% -1.4%
Summary of Financials ASII Summary Last Price (IDR) March 4, 2016 6,900 Target Price (IDR) Dec 2016 6,925 2014/12A 2015/12A 2016/12E 2017/12E Analyst: Raphon Prima Rating: Hold ROE 17.0% 11.7% 12.2% 12.0% ROA 8.5% 6.0% 6.3% 6.3% ROIC 10.6% 7.5% 7.8% 7.8% INCOME STATEMENT EBITDA/Equity 24.1% 19.8% 19.8% 19.9% In IDR bn 2014/12A 2015/12A 2016/12E 2017/12E EBITDA/Assets 12.1% 10.1% 10.3% 10.5% Net Sales 201,701 184,196 184,876 188,515 Cash Dividend (IDR bn) 8,744 8,744 8,744 8,744 Growth (% y/y) 4.0% -8.7% 0.4% 2.0% Dividend Yield (%) 2.9% 3.6% 3.2% 3.2% COGS (162,892) (147,486) (147,529) (149,378) Payout Ratio (%) 45.0% 45.6% 60.5% 55.0% Gross Profit 38,809 36,710 37,348 39,136 DER 0.6x 0.6x 0.6x 0.5x Gross Margin 19.2% 19.9% 20.2% 20.8% Net Gearing 22.2x 22.3x 23.5x 23.2x Operating Expenses (18,646) (19,498) (18,666) (19,407) LT Debt to Equity 0.5x 0.5x 0.5x 0.4x EBIT 20,163 17,212 18,681 19,730 Capitalization Ratio 0.4x 0.4x 0.4x 0.3x EBIT Margin 10.0% 9.3% 10.1% 10.5% Equity Ratio 0.5x 0.5x 0.5x 0.5x Depreciation 7,084 7,175 7,214 7,734 Debt Ratio 0.3x 0.3x 0.3x 0.3x EBITDA 27,247 24,387 25,895 27,464 Financial Leverage 2.0x 2.0x 1.9x 1.9x EBITDA Margin 13.5% 13.2% 14.0% 14.6% Current Ratio 1.3x 1.4x 1.7x 1.6x Interest Expense (1,375) (1,370) (1,697) (2,112) Quick Ratio 1.1x 1.1x 1.4x 1.3x EBT 27,058 19,630 22,523 23,529 Cash Ratio 0.3x 0.4x 0.4x 0.4x Income Tax (4,927) (4,017) (4,159) (4,410) Par Value (IDR) 50 50 50 50 Minority Interest (2,940) (1,149) (2,459) (2,493) Total Shares (mn) 40,484 40,484 40,484 40,484 Net Profit 19,191 14,464 15,906 16,626 Share Price (IDR) 7,425 6,000 6,825 6,825 Growth (% y/y) -1.2% -24.6% 10.0% 4.5% Market Cap (IDR tn) 300.6 242.9 276.3 276.3 Net Profit Margin 9.5% 7.9% 8.6% 8.8% BALANCE SHEET In IDR bn 2014/12A 2015/12A 2016/12E 2017/12E 2014/12A 2015/12A 2016/12E 2017/12E Cash 20,902 27,102 29,127 29,419 Price /Earnings 15.7x 16.8x 17.4x 16.6x Other Current Assets 76,339 78,059 82,227 83,703 Price /Book Value 2.5x 1.9x 2.1x 1.9x Total Current Assets 97,241 105,161 111,354 113,122 Price/Sales 1.5x 1.3x 1.5x 1.5x Net Fixed Assets 41,250 41,702 44,112 46,461 PE/EPS Growth -13.5x -0.7x 1.7x 3.7x LT Investments 35,207 38,453 39,612 40,318 EV/EBITDA 13.7x 12.7x 13.4x 12.6x Other Non Current Assets 62,329 60,119 64,121 65,903 EV/EBIT 18.6x 18.0x 18.5x 17.5x Total Assets 236,027 245,435 259,199 265,804 EV (IDR bn) 374,180 310,457 346,481 344,769 Payables 18,839 20,557 18,850 21,051 Sales CAGR (3-Yr) 7.5% -0.7% -1.6% -2.2% Curr Maturities of LT Debt 26,835 24,227 14,924 18,624 EPS CAGR (3-Yr) 2.6% -9.4% -6.4% -4.7% ST borrowings 10,586 11,975 11,295 10,284 Basic EPS (IDR) 474 357 393 411 Total Current Liabilities 74,241 76,242 66,062 70,196 Diluted EPS (IDR) 474 357 393 411 LT Debt 32,651 34,447 48,249 44,622 BVPS (IDR) 2,969 3,126 3,325 3,507 Other Non Current Liab. 8,948 8,213 10,275 9,017 Sales PS (IDR) 4,982 4,550 4,567 4,657 Total Liabilities 115,840 118,902 124,587 123,835 DPS (IDR) 216.0 216.0 216.0 216.0 Shareholders' Equity 120,187 126,533 134,612 141,969 CASH FLOW STATEMENT DCF, RIM & EVA In IDR bn 2014/12A 2015/12A 2016/12E 2017/12E 2014/12A 2015/12A 2016/12E 2017/12E Net Income 19,191 14,464 15,906 16,626 DCF (IDR bn) Deprec & Amortization 7,084 7,175 7,214 7,734 NOPAT 16,427 13,693 15,232 16,032 Chg. In Working Capital (11,312) 4,651 (4,390) (18) +Depr./Amor. 6,993 7,084 7,175 7,214 CFO 14,963 26,290 18,729 24,342 -CAPEX (12,809) (9,086) (10,265) (10,657) Capex (12,809) (9,086) (10,265) (10,657) -Incr. (Decr.) in Working Cap. (11,312) 4,651 (4,390) (18) CFI (9,564) (7,541) (12,697) (13,842) (Unlevered) FCFF (701) 16,342 7,752 12,571 Dividends Paid (8,744) (8,744) (8,744) (8,744) WACC Net Borrowing (PMT) 5,549 577 3,820 (939) Cost of Debt (Tax Adj.) 8.9% 9.9% 9.9% 9.9% CFF (4,045) (13,407) (4,006) (10,209) Cost of Equity (COE) 10.6% 11.3% 11.1% 11.1% Net Changes in Cash 1,354 5,342 2,025 291 WACC (%) 10.2% 10.9% 10.7% 10.7% RIM OWNERSHIP PROFITABILITY & STABILITY VALUATION INDEX Spread (FROE-COE) (%) 7.5% 0.8% 1.4% 1.2% Residual Income (IDR) 842 105 202 182 By Geography % Shareholders % Equity Charge 11,223 13,530 14,091 14,990 Singapore 70.7 Jardine Cycle & C 50.1 EVA United States 13.3 Franklin Resources 3.0 Invested Capital (IDR bn) 196,143 202,809 209,081 215,498 Luxembourg 8.6 Aberdeen 2.9 ROIC-WACC (%) 0.4% -3.5% -2.9% -2.9% Britain 2.2 Vanguard Group 1.5 EVA (IDR bn) 758 (7,053) (5,968) (6,189) PT NH Korindo Securities Company Research www.nhsec.co.id Page 22
Revenue Breakdown FY 2015 Net Profit Breakdown FY 2015 Segment Revenue and Net Profit (IDR bn) FY 2014 - FY 2017E Revenue FY 2014 FY 2015 FY 2016E FY 2017E Automotive 108,635 96,792 95,810 97,920 Financial Services 15,788 17,281 19,093 21,081 Heavy Equipment & Mining 53,142 49,347 47,704 45,900 Agribusiness 16,306 13,059 14,098 15,025 Infrastructure, logistic, & others 8,785 7,902 8,113 8,321 Information technology 2,282 2,655 2,924 3,195 Net Profit FY 2014 FY 2015 FY 2016E FY 2017E Automotive 8,491 7,464 7,604 7,878 Financial Services 4,750 3,555 5,138 5,762 Heavy Equipment & Mining 3,263 2,342 1,243 852 Agribusiness 1,996 493 1,301 1,544 Infrastructure, logistic, & others 491 406 390 352 Information technology 200 204 229 238, NHKS research Gross and Net Profit Margin FY 2014 - FY 2017E Gross Margin FY 2014 FY 2015 FY 2016E FY 2017E ASII 19.2% 19.9% 20.2% 20.8% Automotive 9.8% 10.4% 10.2% 10.4% Financial Services 57.4% 56.3% 58.0% 58.6% Heavy Equipment & Mining 22.7% 23.7% 21.7% 21.1% Agribusiness 30.4% 23.6% 28.1% 30.4% Infrastructure, logistic, & others 19.3% 19.9% 20.5% 21.5% Information technology 29.9% 28.9% 29.3% 29.0% Net Margin FY 2014 FY 2015 FY 2016E FY 2017E ASII 9.5% 7.9% 8.6% 8.8% Automotive 7.8% 7.7% 7.9% 8.0% Financial Services 30.1% 20.6% 26.9% 27.3% Heavy Equipment & Mining 6.1% 4.7% 2.6% 1.9% Agribusiness 12.2% 3.8% 9.2% 10.3% Infrastructure, logistic, & others 5.6% 5.1% 4.8% 4.2% Information technology 8.8% 7.7% 7.8% 7.5%, NHKS research PT NH Korindo Securities Company Research www.nhsec.co.id Page 33
Car sales (thousand units) FY 2011 - FY 2015 Motorcycle sales (thousand units) FY 2011 - FY 2015 Multiple Valuation Forward P/E band Last 3 years Dynamic Forward P/E band Last 3 years Rating and target price update Date Rating Target Price Last Price Consensus vs Last Price vs Consensus 3/7/2016 Hold 6,925 (Dec 2016) 6,900 7,081 0.4% -2.2% Analyst Coverage Rating Closing and Target Price Source: Bloomberg PT NH Korindo Securities Company Research www.nhsec.co.id Page 44
NH Korindo Securities (NHKS) stock ratings 1. Period: End of year target price 2. Rating system: Based on a stock s absolute return from the date of publication Strong Buy: high conviction Buy rated stocks Buy: greater than 15% Hold: between 0% and +15% Reduce: less than 0% DISCLAIMER This report, and any electronic access to it, is restricted to and intended only for clients of PT NH Korindo Securities or a related entity to PT NH Korindo Securities. This document is for information only and for the use of the recipient. It is not to be reproduced or copied or made available to others. Under no circumstances is it to be considered as an offer to sell or solicitation to buy any security. Any recommendation contained in this report may not to be suitable for all investors. Moreover, although the information contained herein has been obtained from sources believed to be reliable, its accuracy, completeness and reliability cannot be guaranteed. We expressly disclaim any responsibility or liability (express or implied) of PT NH Korindo Securities, its affiliated companies and their respective employees and agents whatsoever and howsoever arising (including, without limitation for any claims, proceedings, action, suits, losses, expenses, damages or costs) which may be brought against or suffered by any person as a results of acting in reliance upon the whole or any part of the contents of this report and neither PT NH Korindo Securities, its affiliated companies or their respective employees or agents accepts liability for any errors, omissions or misstatements, negligent or otherwise, in the report and any liability in respect of the report or any inaccuracy therein or omission therefrom which might otherwise arise is hereby expresses disclaimed. All rights reserved by PT NH Korindo Securities PT. NH Korindo Securities Member of Stock Exchange Head Office : Wisma Korindo 7 th Floor Jl. M.T. Haryono Kav. 62 Pancoran, Jakarta 12780 Telp: +62 21 7976202 Fax : +62 21 7976206 Branch Office Pluit: Jl. Pluit Kencana Raya Blok O No. 79 B-C, Pluit Penjaringan Jakarta 14450 Telp : +62 21 66675088 Fax : +62 21 66675092 Representative Office Solo : Jl. Ronggowarsito No. 8 Kota Surakarta Jawa Tengah 57111 Telp: +62 271 664763 Fax : +62 271 661623 A Member of NongHyup Financial Group Seoul New York London Hong Kong Singapore Shanghai Beijing Hanoi Ho Chi Minh City Jakarta PT NH Korindo Securities Company Research www.nhsec.co.id Page 55