Apr 18, 2016 00:14:16
2W/4W 1Q16 : On the Road to Recovery
1Q16 4W wholesales stood at 267.2k units (+7% qoq/ -5% yoy) accounting for 25% of our FY16E forecast (1.07mn units,+7% YoY), while 4W retail sales stood at 262.2k units, +2% yoy. 1Q16 2W wholesales stood at 1.5mn units (-9% qoq/ -6% yoy).
1Q16 4W wholesales: 267.2k units (+7%qoq/ -5%yoy) accounting for 25% of our FY16E forecast at 1.07mn units (+7%yoy). 1Q16 wholesales volume for Toyota stood at 80.5k units (-1%qoq/ -6%yoy), while Daihatsu stood at 42.5k units (+3%qoq/ -6%yoy), bringing ASII’s 1Q16 sales volume to 127.3k units (flat qoq/ -7%yoy). ASII’s 1Q16 4W wholesale market share slightly declined to 48% vs. 49% in 1Q15, while Toyota's and Daihatsu’s 1Q16 market shares remained stable at 30% and 16% respectively. Meanwhile, Honda’s 1Q16 wholesales volume totaled 58.4k units (+41%qoq/ +31%yoy), bringing Honda’s 1Q16 market share to 22% vs. 16% in 1Q15. The significant increase in Honda’s market share was driven by successful product launches, the HRV and BRV.
1Q16 2W wholesales volume totaled 1.5mn units (-9%qoq/ -6%yoy). 2W wholesales volume for Astra Honda stood at 1.09mn units (-8%qoq/ flat yoy), bringing ASII’s 1Q16 2W market share to 72% vs. 68% 1Q15. It is worth noting that Mar-16 2W volume has started to recover (563.3k units; +7%mom/+3%yoy), while Astra Honda's 2W sales totaled 440.2k units (+21%qoq/ +17% yoy), bringing its market share to 78% vs. 69% in Feb-16. We suspect the strong increase in Honda’s market share is driven by brand switching.
Positive signals: 1Q16 4W retail sales stood at 262.2k units, +2% yoy. Toyota is still leading 1Q16’s 4W retail sales growth at +15% yoy (85.6k units), followed by Honda at +10% yoy (50.0k units), and Daihatsu at +2% yoy (42.3k units). We highlight that Toyota’s 1Q16 retail market share improved to 33% vs. 1Q15 at 29% due to deliveries of the new Kijang Innova and Fortuner. We believe that 4W wholesales volume will start to pick up if strong retail volumes persist over the next few months, indicating recovery of consumer confidence and purchasing power.
Fortuner on high demand. While Innova sales have normalized at 4-5k units per month, the new Fortuner is still highly demanded as sales are still above Toyota’s target of 1.5-2k units per month. Based on our channel checks, the waiting time for the a diesel Fortuner is approximately 3 months, while the waiting time for a gasoline Fortuner is approximately 1 month. Just like the Innova, we expect Fortuner sales to normalize within 3-4 months post its initial launch. Our channel checks with dealers indicate that discounts for the Toyota Avanza vary around 7-8%, while discounts for the Kijang Innova vary around 2-3.5%, meanwhile, no discounts are offered for the new Fortuner.
Expect turn around in 2H16. We continue to anticipate pick up in 4W volumes in 2H16 on the back of realization of infrastructure spending, rebound in CPO prices,  lower interest rates (3x25 bps BI rate cut), fuel price cuts (effective April 1, 2016: gasoline Rp6,450/liter and diesel Rp5,150/liter),  and recovery of consumer confidence. Maintain BUY with TP of Rp8,000 and trading at FY16 P/E of16.2 x.