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Feb 28, 2016 23:16:41
Astra International ($ASII)
FY15 core earnings beat


Reiterate BUY; EPS growth to resume
Reiterate BUY on ASII with a SOTP-based TP of IDR7,500. Our TP suggests
14x FY17F PER, lower than its four-year mean of 15x. Our SOTP-based
valuation is supported by the strong EPS CAGR (2015-18) of 10%, driven
by earnings recovery in the automotive-related and plantation segments.

FY15 earnings hit by impairment charge
ASII’s FY15 net profit of IDR14,464b fell 24.6% YoY and is 10.5% lower
than our full-year forecast IDR16,158b, mainly due to a mining asset
impairment charge of IDR2,585b at United Tractors. If we take out the
asset impairment, ASII’s net profit would have been IDR17,049b, 5.4%
higher than our forecast.

FY15 not a good year, but not unexpected
Last year, earnings from all major divisions (automotive, financial
services, heavy equipment, and plantation) were down due to weak
global and domestic economies. However, we believe, this situation has
been factored into the share price, which has recovered from its lowest
level in mid-Oct last year. In terms of earnings contribution, the
automotive segment remained the largest contributor (52%), followed by
financial services (25%), heavy equipment (16%), plantation (3%), and
others (4%).

FY16 outlook better
We forecast FY16 earnings to grow 11% YoY (excl. asset impairment in
2015) to IDR18,930b on higher volumes and profit margins in the
automotive segment, and improving profits in the plantation segment.
We have seen some macro improvements YTD, i.e. lower policy rates and
manageable inflation, which should be positive for earnings. The risks
are mainly in the heavy equipment segment, as the coal market remains
weak.


Source: Maybank kim Eng
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