Astra Intl, The magnificent Honda, CLSA

Honda is not slowing down even after a victory over Yamaha last year. It
gained another 4% lead over Yamaha in 1Q12, supported by successful
launch of new model, with more to come. Impact from higher down
payments on financing and potential subsidized fuel price hike are risks to
earnings, but Astra is a much more diversified company now, with less
reliance on 2W market. With demand unleashes on the under-penetrated
4W market and UNTR business expansion unfolds, we expect mkt cap to
reach US$50bn by 2015. Maintain O-PF.


Honda charging ahead
Honda 2W sales in 1Q12 rose 7.5% YoY, while Yamaha’s dropped 15.2%. Its
market share is now 18% ahead of Yamaha; another 4% gain from FY11.
This puts Honda’s share in 2W market at 55%, against Yamaha at 37%.
Indicative national sales showed an unexpected contraction of 2.7% YoY.
Yamaha cited softening commodity prices as a factor, while Honda dealers in
Java said that the supply is yet to catch up with the strong demand.

King of automatic scooter!
Honda finally claimed victory in 2011 in the fight with Yamaha in the popular
automatic scooter segment. Yamaha was the first entrant, however, Honda
fought back in 2006, and had steadily taking market share, and now leads
with 57.4%. Honda now provides more choices for buyers, with 9 variants,
vs Yamaha’s 5, and will keep on launching new products this year. Honda is
also supported by vast network and capacity expansion.

Looming impact from regulatory risks
The impact from the new regulation on minimum down payment effective
Jun2012 is yet to be seen. There is also the risk of potential subsidized fuel
price increase. We currently expect Honda sales to grow 8-10% this year at
the expense of Yamaha. Our worst case scenario is a 20% drop in demand,
which translates into a 7% downside risk to our earnings forecast for 2012

A more diversified Astra
Contribution from auto had declined to 46.5% from 70% ten years ago.
Astra is now more diversified with less reliance on 2W market, especially if
demand unleashes on the still under-penetrated 4W market, and as UNTR’s
business expansion unfolds. Our thesis that Astra will grow to a US$50bn
mkt cap company by 2015, implying Rp100k/sh remains intact. It now trades
at 14.8x PE12 and 12.9x PE13, at par with peers, but delivering higher ROE.

Download file : Indonesia ASII 110412