Waiting for Positive Catalysts in 2H24
Key Takeaways :
▪️ ASII booked IDR160.0tn revenue in 1H24, decreasing by -1.5% YoY and representing 49.5%/51.7% of the MNCS/Consensus estimates for FY24E. ASII’s bottom-line slumped by -9.1% to IDR15.9tn in 1H24 (vs IDR17.5tn in 1H23), reflecting 48.6%/52.2% of the MNCS/Consensus estimates.
▪️ Sales of 4W saw a -0.6% MoM decline to 74,160 units in 7M24, resulting in a cumulative -17.5% YoY decrease. The GIIAS event held from 19-28 July 2024 did not succeed in boosting the sales. Although there have been signs of recovery in the past three months, we still believe that meeting the FY24E sales target of 1.1 million units set by Gaikindo will remain challenging, with only 44% of the target achieved so far.
▪️ On the other hand, sales of 2W vehicles improved modestly by 2.5% YoY to 3.8mn units in 7M24 (vs 3.7mn units in 7M23), remaining relatively stable amidst challenging industry condition. Despite this resilience in 2W sales, AISI (Motorcycle Industry Association) revised its FY24E sales target to 6.2-6.3mn units (vs 6.3-6.5mn units previously).
▪️ We maintain a BUY recommendation for ASII at a TP: IDR6,000/share, which implies a PE/PBV of 6.1x/0.7x in FY24E and 5.2x/0.7x in FY25F. Its stable financial position and strong brand positioning should be able to drive growth. Meanwhile, the existence of “Korea and China car”, would be the main concern. Currently, ASII is trading at -1.5 STD of its 5-year average PE Ratio, with a current PE level of 5.9x.
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