· We downgrade our
recommendation to Neutral from Outperform; cut our FY12–13E estimates by 6.7%;
and reduce our PT to Rp76k from Rp80k (representing a 15x FY13E PER). Our
downgrade reflects several factors which collectively have made us sufficiently
uncomfortable with the stock’s short term risk/reward profile to downgrade. We
nevertheless remain positive on the long term story, and would look to
re-accumulate in the low 60ks.
· These factors include
the likely material impact of BI down payment (DP) limitations on 2W volumes;
the market share risk posed by Nissan’s upcoming NV200 launch; our existing
expectations (now exacerbated) for ASII’s FY12E earnings growth to slow; and
ASII’s relatively full short/medium term multiples.
·
20%
down payment limitations looking increasingly likely:
We believe the
probability of BI/Bapepam implementing down payment limitations on auto loans
has now significantly risen, although our channel checks indicate that the
limitations are likely to be only c20% vs. the previously-indicated 30%. A
policy announcement is likely to occur prior to the end of the month, and we
expect implementation to follow on from this relatively quickly.
· We expect the impact
on 4W volumes to be only modest (c5–7%), as only a minority of 4W cars are sold
on loan terms with sub-20% down payments (estimated at c10%). However, the
impact on the 2W segment is likely to be material, and could result in a c20%
drop in volumes, given that most bikes are bought on credit with sub-10% down
payments. ASII’s 2W and FIF (2W financing) divisions together comprised 22.7% of
ASII’s FY11A earnings.
·
Nissan’s
NV200 launch to pose a market share headwind: We highlight that the
NV200 (which is expected to go on sale during 2Q12E) will compete directly with
ASII’s core Avanza and Xenia models (which represent c50% of ASII’s
undiversified 4W sales base). We believe the model’s superior fuel economy
(coupled with other features) could act as a timely and strong selling point,
given the likelihood of a 33% hike in subsidised fuel prices next month.
· We expect the model to
shave c180bp of ASII’s FY12E 4W market share, with the impact concentrated in
2H12E – i.e. precisely when the impact of BI’s DP policy is likely to kick in,
and also prior to Daihatsu’s early 2013 LCGC launch.
· FY12E EPS –6.7%; FY13E
EPS –6.7%. Revisions incorporate the expected impact of a 20% DP limit being
imposed from mid 2012. PT lowered to Rp76k.
· Catalyst: Newsflow on
BI’s down payment policy; monthly 4W volume prints.
· We continue to like
ASII’s long term prospects – particularly given its proven ability to recycle
capital. However, we now believe there are simply too many short term risks
relative to ASII’s current valuation appeal to maintain an Outperform call. We
encourage investors to wait and buy on weakness.
13 March
2012
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