Company Update

09 Maret 2023

ASII IJ - MNC Sekuritas Equity Report March 9, 2023

Revving Up the Engines

Key Takeaways :

• ASII showed a satisfactory performance, with FY22 consolidated revenue climbing to IDR301.38tn (+29.08% YoY), slightly higher than consensus and our target, representing 104%/103% of the FY22 forecast. Meanwhile, net profit grew by 43.32% YoY to IDR28.94tn with net profit margins of 10% (vs 9% in FY21).

• With global coal outlooks poised to stand by the sidelines in FY23E, we believe that UNTR’s 2- year revenue share domination will dissipate this year. We view that the automotive segment will take on the spotlight instead, driven by accommodative 4W sales outlook that is projected to reach a solid 1mn units, accompanied by a more rife 2W sales projected at 5.4-5.6mn units for FY23E.

• ASII’s position as a market leader (~68% for 2W and ~53% for 4W) will partially offset UNTR’s projected earnings decline, thus we estimate that ASII will incur a -4.54% YoY top-line slippage, though we believe this to have been adjusted by the market.

• ASII is set to pay out final dividends amounting to IDR640/share (85% payout ratio). An interim dividend of Rp88/share was paid on Oct-22, and the remaining Rp552/share will be distributed on Apr-23. Moreover, a healthy balance sheet and positive cash flow with a low DER level will provide an attractive dividend ahead.

• We recommend BUY for ASII at a TP: IDR7,000, which implies PE/PBV 9.8x/0.9x on FY23E and 9.1x/0.9x in FY24F. Stable 2W and 4W sales is to uphold ASII's earnings in FY23E. On the other hand, "Korean and Chinese cars" and chipset availability are important factors to consider. Valuation remains attractive as ASII is currently trading at the level -1.5 STD PE Ratio (5-year average PE) with a current PE level of 8.5x.

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