20150317-大和证券-Indonesian_Automotive_17页_1mb

Indonesian Automotive Sector Summary

Core Content

The Indonesian automotive sector, particularly focusing on 4W (four-wheel) and 2W (two-wheel) vehicles, experienced a decline in sales during February 2015. This decline was attributed to weak demand, intensified competition, and policy-related challenges. The report also outlines the outlook for the sector, investment recommendations, and key financial data for major players like Astra International (ASII), Indomobil Sukses (IMAS), and Gajah Tunggal (GJTL).

Main Points

February 2015 Sales Performance

• 4W Sales:
  • Total: 88.7k units, down -21% y-y and -6% m-m.
  • ASII: 43.5k units, -28% y-y and -1% m-m, with Avanza and Xenia struggling against competition.
  • Nissan (IMAS): 3.4k units, -20% y-y but +87% m-m, driven by Xtrail.
  • Honda: 13.7k units, +15% y-y but -19% m-m, supported by HRV and Mobilio.
• 2W Sales:
  • Total: 556k units, -18% y-y but +11% m-m.
  • Honda (ASII): 377k units, -11% y-y but +11% m-m, maintaining 67.8% market share.
  • Yamaha: 151k units, -30% y-y but +8% m-m.

Outlook for 2015

• Expected flat 4W sales volumes in 2015, leading to weak margins due to increasing competition.
• Aggressive marketing in MPV and SUV segments will likely result in market share erosion and margin pressure for ASII.
• New dealership developments will also affect IMAS's margins, especially with the weak IDR (Indonesian Rupiah).
• ERP (Electronic Road Pricing) implementation is expected to have a negative impact on car sales in Jakarta and Banten, which account for 20% of 4W sales in 9M14.

Investment Recommendations

• REDUCE ratings for ASII (SOTP-based TP of IDR6,600) and IMAS (DCF-based TP of IDR2,500) due to weak demand and margin pressures.
• HOLD rating for GJTL with an unchanged TP of IDR1,270, as it has limited downside potential.
• Risks include higher margins for ASII, increased Datsun sales for IMAS, and a stronger or weaker IDR for GJTL.

Key Information

Market Share and Product Performance

• Honda's 4W market share increased to 15% in February 2015 from 11% in February 2014, driven by Mobilio and HRV.
• Mobilio reached No.2 in the MPV segment in 2014 with 37% domestic market share, challenging ASII's Avanza and Xenia.
• ASII's Agya and Ayla continue to dominate the LCGC (Low-Cost Green Car) segment, accounting for 18% of the domestic market in 2014.

Valuation and Performance

• Sector relative valuation for 2015F shows ASII at 15.6x P/E, IMAS at 56.4x P/E, and GJTL at 9.9x P/E.
• ASII has outperformed the market by 2.9% ytd but is expected to face a reversal due to policy risks and weak monthly sales in 2Q15.
• Regional auto sector trades at 18.7x P/E with 8.1% y-y EPS growth, while the tire sector trades at 11.4x P/E with 11.9% y-y EPS growth.

Policy Headwinds

• Increased luxury tax on LCGC to 10% is expected to negatively impact ASII and IMAS.
• Motorcycle ban in Jakarta and other main roads is in a trial phase, affecting 2W sales.
• Higher taxes on motor vehicles up to 10% are signed, impacting 4W and 2W sales.
• ERP policy (planned for end-2015) is expected to limit car sales in Jakarta and Banten, which are key markets.

Sales and Pricing Trends

• Discounting has intensified in March, with Toyota Innova seeing IDR25mn discounts and Honda Mobilio offering IDR8mn discounts.
• 2W sales are expected to remain unexciting, with Honda maintaining its market share despite challenges.
• ERP monthly costs range from IDR1.3mn to IDR3mn, potentially affecting 4W sales significantly.

Summary Table

Conclusion

The Indonesian automotive sector is facing intensified competition, weak demand, and policy headwinds, which are expected to continue to pressure margins and sales volumes. ASII and IMAS are recommended for reduction, while GJTL is upgraded to HOLD due to limited downside potential. ERP implementation and increased discounts are key factors influencing the sector's performance. The LCGC segment remains a strong driver for ASII, but the MPV and SUV segments are under threat from Honda's aggressive product launches.