Astra International, A new MPV rival is coming, Credit Suisse

● Suzuki Indonesia just launched Suzuki Ertiga on 10 February
2012, which we believe could be the new rival for Toyota Avanza
and Daihatsu Xenia (both owned by Astra), as it is targeting the
same market segment.
● Indonesia’s first-time car buyers are very brand cautious, and given
Toyota’s biggest market share in the country (34% market share),
we believe Astra will continue to lead the four-wheeler market.
● However, the entry of Suzuki represents additional competition in
Indonesia’s four-wheeler market, which may not be favourable for
Astra’s share price, particularly considering the high expectation
currently implied in Astra’s premium valuation.
● Astra’s auto division is currently valued at a demanding 62%
premium to the Indonesian market. We maintain our
UNDERPERFORM rating on Astra and target price of Rp65,890,
implying 13.9x FY12E P/E, in line with our index target marketimplied
P/E.

A new MPV rival is coming
Suzuki Indonesia just launched Suzuki Ertiga on 10 February 2012.
We believe that Ertiga could be the new rival for Toyota Avanza and
Daihatsu Xenia (both own by Astra), as it is targeting the same market
segment. Ertiga would be offered at price ranging from Rp143 mn to
Rp165 mn, versus Avanza of Rp144-170.7 mn and Xenia of Rp126.6-
169 mn (all price based on manual type only). Suzuki Indomobil Motor,
the sole agent for Suzuki in Indonesia, is 91%-owned by Suzuki Motor
Corp. Japan, and 9%-owned by Indomobil Sukses International. Ertiga
represents Suzuki’s attempt to enter the market of medium-segment
Multi Purpose Vehicles (MPV), the most popular car-type in Indonesia.
Market’s expectation on ASII remains high
We believe that first-time car buyers are very brand cautious and
given Toyota’s premium standing on the market, we believe that Astra
will continue to lead the four-wheeler market. However, the entry of
Suzuki represents additional competition in Indonesia’s four-wheeler
market, which may not be favourable for Astra’s share price,
particularly considering the high expectation currently implied in
Astra’s premium valuation.
Astra’s auto division is currently valued at a 62% premium to the
Indonesian market. Even at its peak, Indian auto traded at only a 61%
premium to the Indian market. We believe that current valuation on
Astra’s auto division is not sustainable as the long-term average of
Indian auto valuations came in line with the Indian market. Assuming
current Indonesian P/E, the market expects Astra’s FY12E market share
to be 70% and 60% in four-wheelers and two-wheelers, versus the
57.8% and 52.4% maximum market shares achieved by Astra in the
past eight years, respectively. We maintain our UNDERPERFORM
rating on Astra and target price of Rp65,890, implying 13.9x FY12E P/E,
in line with our index target market-implied P/E.

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