Sinarmas Sekuritas Investment Research

Transcription

Sinarmas Sekuritas Investment Research
Automotive Parts Industry
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We initiate coverage on automotive parts industry with OVERWEIGHT
rating. The historically low consumer loan rate, current low car ownership with rising GDP per capita and disposable income, coupled with
the increase in investment from foreign automotive companies will be
the key drivers for automotive parts industry in both Original Equipment Manufacturer (OEM) and Replacement (REM) markets. However,
the fuel subsidy cut, labor market risk, rising commodity prices and
the current market of uncertainty will be the primary risks in 2012 for
this industry. We initiate coverage with BUY rating on PT Astra
Otoparts Tbk.
Sector
Rating
Prior
: Automotive Parts
: OVERWEIGHT
:-

Historically low consumer loan rate. With the current consumer credit rate hovering around 14.2% and recent unexpected 25 bps cut on BI reference rate to 5.75%, we expect
these to boost the consumer credit market and auto-finance
industry. We estimate that as borrowing cost decreases and auto-financing becomes more affordable, more consumers will finance their automobiles/motorcycles purchase via loan, enhancing the sales volume.
Date: 24 February 2012

Current low car ownership and Rising Wealth. Indonesia
current car ownership rate is around 32.8 per 1,000 people
while private consumption per capita and GDP per capita are
forecast to increase at 2011E-2016F CAGR of 8.8% and 6.4%,
respectively. This presents a very bright prospect for automotive
industry as car serves not only as a mode of transportation, but
also as a proxy to the wealth status of an individual. Furthermore, EIU forecasts the increase in number of households with
annual income exceeding USD 5,000 and USD 10,000 to increase to 39 mn and 11 mn, respectively, in 2016, as compared
to that of 17 mn and 4 mn in 2011.
Company under Coverage:
PT Astra Otoparts Tbk. (AUTO)
Rating
: BUY
Prior
:-
Wibowo Ng
Research Analyst
[email protected]
+62-21 392 5550
Image taken from Denso
Initiating Coverage
Automotive-parts Industry

Foreign Direct Investment in Automotive manufacturing industry. In a bid to diversify their
production bases away from Thailand and Japan, many Japanese firms are setting up or increasing
their production capacity in Indonesia to take advantage of the rising domestic markets, tax benefits,
stable political system and Indonesia’s investment grade status. From 2011 till January 2012, foreign
automobiles companies have invested/planned to invest a total of IDR 17 tn (USD 1.9 bn) to increase
production capacity.

However, short-term downside risks include the fuel subsidy cut which will drive up inflation, uncertainty in the global markets and potential rising commodities prices which will result in margin compression for automotive parts manufacturing division.

We initiate coverage on PT Astra Otoparts Tbk (AOP) with BUY rating. We believe that AOP will benefit
from increasing sales, in volume terms, of motorcycles and automobiles, rising investment of automobiles manufacturing in Indonesia and the ‘Astra’ brand equity.

AOP has 2 main divisions: manufacturing and trading. Furthermore, AOP has engaged in many joint
ventures with foreign firms with the aim of transfer of technology and of increasing efficiency and
productivity in the manufacturing division with wide product offerings. Diversified customer bases and
extensive supply chain networks (close to vertical integration as it is a consolidated company within
Astra International) are core competitive strengths of AOP.
News Highlights:
February 8, 2012 (Bloomberg)
“Toyota Motor Corp., Asia’s biggest carmaker plans to spend JPY 15bn to increase its capacity in Indonesia
by 50,000 units a year to meet demand in South East Asia’s largest economy
Suzuki Motor Corp. said on Jan. 4 2012, that it will spend JPY 60 bn to increase capacity in Indonesia.
In 2010, Nissan Motor Corp. said it was investing more than USD 20 mn at a plant to double its annual capacity in Indonesia to 100,000 vehicles by 2013.
General Motors spent USD 150 mn in 2011 to produce as many as 40,000 units a year of a seven-seat vehicle, starting 2013.
“We will provide tax holiday to automakers”, Industry Minister Mohammad Suleman Hidayat said in Jakarta.
The tax break will cover factory equipment and components not produced in Indonesia, he said.”
Source: Bloomberg
Overview of Equity Performance for Selected Auto-related Companies
Source: Bloomberg, 02/14/2012 = 100
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Initiating Coverage
Favorable Macro Trend
We initiate coverage of the automotive parts industry with OVERWEIGHT rating. The sales of both 4W cars
and 2W motorcycles have been rising steadily with 2007-2011 CAGR of 15.4% and 12.0%, respectively. The
historically low interest rate environment, coupled with shift of automobile production base from Thailand to
Indonesia, infrastructure investments, and the current low car ownership rate with rising wealth will be the
main growth drivers for auto parts industry.
The historically low interest rate for consumer loan, with current consumer financing cost dropping to as low
as 14.2%, decisions by BI to cut reference rate by 25 bps to 5.75%, and intense competition within the auto
-finance industry will encourage individual to finance their purchase of automobiles and motorcycles via loan.
Securing credit financing for automobiles has becoming easier as now multi-finance companies do not even
require down payment for 2W vehicles and offer affordable loan tenor, making automobiles particularly motorcycles become more affordable to lower-income households.
The current low car ownership rate amidst rising wealth indicates that automobiles or auto-related companies have significant potential. As GDP per capita exceeds the threshold limit, which according to Booz & Co.
is around USD 10,000, the car ownership rate will increase sharply. While Indonesia has not reached the
threshold limit yet, based on historical data collected from countries around the world, Indonesia will eventually reach there and the growth rate of car ownership will be phenomenal. Furthermore, car serves dual purposes – mode of transportation and status symbol. The social norms dictate that car ownership, especially in
a city, is paramount and an individual is expected to eventually own one after sufficient wealth is created.
Low cost cars costing below USD 10,000 (as low as USD 3,000 for NanosTM) have been developed globally
and we expect these to penetrate Indonesian market in the near future.
After suffering significant losses due to force majeure in Thailand and Japan and to counter the rising JPY
which makes Japanese automobiles uncompetitive and costly, many Japanese firms are setting up or increasing their production capacity in Indonesia. Indonesia offers many benefits that include: domestic-driven
markets, close proximity to many emerging ASEAN countries, tax benefits, stable political system, the Investment Grade status and more importantly, the confidence that the government is doing its utmost best to
encourage foreign direct investment (one of the landmark being the passing of land acquisition law which
eases foreign companies to acquire land to build factory). From 2011 to January 2012, foreign automobiles
companies have invested/planned to invest more than IDR 17 tn (USD 1.9 bn) in Indonesia.
However, short-term downside risk include the implementation of fuel subsidy cut, uncertainty in the global
markets, and rising commodities prices which will result in margin compression for manufacturing division.
Labor risk and regulatory risks remain as structural risks for investment in Indonesia. The lack of highlyskilled local professional which results in costly hiring of expatriates, common occurrence of labor strike
which results in loss of productivity, and highly bureaucratic and corrupt legal and regulatory system might
result in potential loss of investment.
We initiate coverage on PT Astra Otoparts Tbk (AOP) with BUY rating. We believe that AOP will benefit from
increasing sales, in volume terms, of motorcycles and automobiles, rising investment of automobiles manufacturing in Indonesia and the ‘Astra’ brand equity. AOP has 2 main divisions: manufacturing of components
and trading. Furthermore, AOP has engaged in many joint ventures with foreign firms with the aim of adding
more products to its portfolio and increasing efficiency and productivity in the manufacturing division. Diversified customer bases and extensive supply chain networks (in fact, it is vertically-integrated as it is a consolidated company within Astra International) are core competitive strengths of AOP.
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Initiating Coverage
The Automotive Industry
4
Key Macroeconomic Indicators
Indonesia registered one of the fastest growth rates in the Asia Pacific region with nominal GDP growing at
2007-2011 CAGR of 14.0%. We expect this trend to continue as Indonesia enters into the second year of its
Master Plan program (MP3EI) with rising investment in the infrastructure supporting the growth of the economy. Consumer Confidence (CCI) and expectation (CCE) remains relatively resilient despite period of uncertainty in the global markets. Consumer’ expectation of 6-month income and economic condition remain robust despite slight deterioration in consumer’s appraisal of current condition for durable goods. Nominal GDP
per Capita has increased with 2006-10 CAGR of 12.6% with private consumption growing at 10.0% annually
from 2007-11. We expect this trend to remain robust as real GDP is expected to grow 5.5-6.5% in 2012.
Chart 1: Consumers’ Confidence remain Resilience
Chart 2: Consumers’ Appraisal of Present Situation
Source: Bloomberg
Source: Bloomberg
Chart 3: Consumers’ 6-month Expectations
Chart 4: Inflation
Source: Bloomberg
Source: Bloomberg
Chart 5: Rising GDP per Capita (USD)
Chart 6: Private Consumption per Capita (USD)
Source: Bloomberg
Source: Economic Intelligence Unit (EIU)
Initiating Coverage
While inflation remains low historically, with the expectation of government to limit fuel subsidy and electricity price hike, we expect 2012 inflation to rise to 5.3% which is in line with the expectation by Bank Indonesia. Based on historical data, despite rising inflation (2005, 2008 and 2010), cars and motorcycles sales, in
volume terms, are still posting a positive value indicating that inflationary effect is transient. A hike in fuel
prices, as shown in 2006 when the government limits the fuel subsidies, results in temporary fall in sales
volume. However, volume picked up and surpassed 2005 value in 2 years. We expect similar situation this
year for domestic cars and motorcycle sales, if fuel subsidy cut is implemented. Nevertheless, the shift of
manufacturing bases to Indonesia for export to ASEAN region which will drive up demand for auto-parts will offset the impact of the decrease in sales volume of vehicles.
Chart 7: Inflation and Motorcycles Sales Volume
Source: Gaikindo, Bloomberg, Sinarmas Sekuritas Research
Chart 8: Inflation and Car Sales Volume
Source: Gaikindo, Bloomberg, Sinarmas Sekuritas Research
Supporting Indicators
The Historically low interest rate environment
The recent decisions by BI to cut reference rate by 25 bps to 5.75%, coupled with intense competition within the auto-finance industry, results in more favorable options for consumer to finance
their automotive purchase. Currently, auto-loan, especially for 2W, can be obtained with zero downpayment and attractive monthly payment with flexible loan tenor, making it an affordable mode of transportation and investment. 2W vehicles are essential especially for individuals living in core cities such as Jakarta
where public transports are not yet sufficient to cater to the population, “3-in-1” policy (during peak period,
only cars with minimum of 3 passengers, inclusive of driver, are allowed to enter the CBD), and heavilycongested road.
Chart 9: Consumer Lending rate and Consumer loan Outstanding
Source: Bloomberg, Bank Indonesia
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Initiating Coverage
Rising wealth and low car ownership rate
Indonesia’s car ownership rate of around 33 cars per 1,000 people is much lower than that of average Asian
countries of around 112 cars per 1,000 people, indicating significant growth potential. Furthermore, GDP per
capita and private consumption per capita has been rising steadily with 2011-16F CAGR of 6.4% and 8.8%,
respectively. EIU forecast car ownership rate to grow at 2011E-16F CAGR of 6.4%. Motorcycles ownership
rate is expected to be significantly higher at an estimated value of 300-400 motorcycles per 1,000 people.
According to Booz & Co., the immense market potential in the emerging markets is based on a welldocumented worldwide phenomenon: the non-linear relationship between the GDP per capita and car ownership rate or personal mobility. In any developing nation, as GDP per capita increases, the car ownership rate
will increase in an “S” curve trend. Rates of vehicles ownership remain low below the threshold limit in the
first phase of economic growth. However, as purchasing power of a country exceeds the level required to
maintain broad prosperity, the sales of vehicles take off as one household owns more than one vehicle.
Eventually growth will level off as GDP per capita increases at the saturation limit.
The threshold of mobility of a country lies at around GDP per capita of USD 10,000. While Indonesia has not
reached this point, based on the “S” curve trend, Indonesia will eventually reach this point and the car ownership rate will rise at phenomenal rate.
In addition, with the growth of wealth, we expect shift of paradigm as people upgrade their mode
of transportation from motorcycle to car and from medium-priced car to luxury car as car has
been viewed as a wealth status in the social hierarchy.
Chart 10: Threshold Mobility
Indonesia
Source: Booz & Co. analysis
A Country’s threshold of mobility lies near USD 10,000 GDP per capita, where automobile ownership accelerates.
The REEs shown here (Brazil, Russia, India, China, Malaysia, Argentina, Mexico, Turkey, Thailand, Iran, and Indonesia) have not reached this point, but they will soon, if they follow the example of every country before them. Each
line of symbols represents a 19-year progression for one country, from 1990 through 2008.
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Initiating Coverage
Chart 11: No. of Household with Annual Earnings
Chart 12: Car Ownership rate (per 1,000 people)
Source: EIU
Source: EIU, Sinarmas Sekuritas Research
Shift of production and rise in foreign investment in automotive manufacturing.
The 2011 severe flood in Thailand, the power deficiency due to shutdown of nuclear power plant in Japan and
the rising JPY which crippled the production capacity of automobiles manufacturing firms and lower the profit
margin of Japanese firms benefit Indonesia as more corporations are expanding their production capacity in
Indonesia to tap into the growing automobiles market in the ASEAN region. The favorable macroeconomic
environment, stable political system, tax incentives, strong consumer demand and relatively cheap labor cost
attract firms to set up their bases to bypass import duties and to lower the cost margin. Foreign Direct Investment in automobiles industry has exceeded IDR 17 tn and we expect companies supplying automotive
parts (particularly OEM) to benefit from this expansion.
Table 1: List of Selected Investments by Foreign Automobiles firms (2011 – January 2012)
Company
Amount Invested
Description
Toyota Motor
JPY 15 bn
Increase annual production capacity at Karawang No. 2 plant to 120,000 from 70,000 vehicles; Total producCorp.
tion in 2014 will rise to 230,000 vehicles (including Karawang No. 1 plant)
Astra Daihatsu
IDR 2.1 tn
Investment in new assembly line in Karawang to boost production capacity to 330,000 units to 430,000 units
Motor
per year; Factory is expected to be completed in 2012
Suzuki Motor
JPY 60 bn
Increase annual 4W production to 120,000 cars (with potential up to 150,000) from current 80,000; plan to
Corp.
add a new seven-seater minivan and will begin production this spring. JPY 40bn is used to expand capacity
and build an engine and component facility (increase the plant’s capacity of 100,000 units per annum to
around 170,000-200,000 units by 2013).
PT Nissan Motor
JPY 25 bn
Plan to increase local contents of its cars assembled to 80% in 2012; Increase production capacity to
Indonesia
180,000units by 2013 and set up new assembly plant
General Motors
USD 150 mn
Initial phase: the plant to be built on 11 hectares, produce 40,000 cars per year
Chrysler LLC
USD 100 mn
Expand business in Indonesia
Tata Motor
under consideraUnder consideration: plan to produce 50,000 NanosTM (priced at USD3,000, the “world's cheapest car”) at a
tion
plant in Jakarta from 2013
BMW AG
IDR 100 bn
Double the annual production capacity to 3,000 from 1,464 cars per year
Daimler AG USD 70.5 mn
New assembly line in Bogor last year with capacity of 4,400 units; to increase production capacity to 10,000
Mercedes Benz
units by 2014; Assembles C-Class, E-Class and S-Class
Hino
Increase capacity to 30,000 units from 20,000 units
Proton
USD 234 mn
Expand production capacity in Indonesia
Beiqi Foton
USD 500 mn
Expand production capacity in Indonesia
Geely Automobile
USD 30 mn
Increase production capacity to 30,000 units; plan to invest up to USD 2bn in the future to establish large
Holding Ltd
scale industry.
Volkswagen AG
USD 140 mn
Built first factory that could produce 50,000 Touran multipurpose vehicles per year.
Audi
Launched car manufacturing operations in Indonesia; expected to produce 2,700 A4 and A6 models by 2015
Source: Company data, newspapers publications, Bloomberg, Sinarmas Sekuritas Research Analysis
Government Incentives
In order to develop motor vehicle components industry further, the government is intensively providing various incentives in form of income-tax exemption through the government regulation No. 52/2011 as revision
of regulation No. 62/2008. The export-import ease based on Finance Ministry Decree No. 580/KMK.04/2003
as well as No. 176 /KMK.011/2009 about import duty exemption on machinery, goods and raw materials for
establishing the development of industry in the framework of capital investment.
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Initiating Coverage
Risk Analysis
Adverse economic conditions.
Adverse macroeconomic conditions such as declining purchasing power as a consequence of high inflationary
pressure, high interest rate and slowdown in the economy will hurt the demand of automobiles, which in turn
will affect the demand of auto-parts. Period of hyperinflation, rising interest rate and global economy recession such as in 1998, 2006, and 2009 results in negative growth of sales of automobiles in volume terms.
Rising commodity prices.
Automobiles parts depend heavily on prices of commodities such as aluminum, copper, lead, steel, iron, plastic/polypropylene and rubber (synthetic and natural). These make up more than 40% of AOP cost of revenue. Rising commodity prices will result in margin compression and thus lower net income. A lagging of 2
quarters to 1 year, depending on the commodity, is expected as AOP needs to procure the raw materials for
manufacturing purposes in advance. 2010 and early 2011 are characterized by rising commodity prices and
thus AOP experienced significant margin compression in 2011. This situation is unlikely to last, as prices of
commodities have started to fall in late 2011, and AOP’s aim to increase efficiency. Hence, we expect gross
margin to grow slowly to 16.9% in 2012.
Chart 13: Commodities prices (yoy change) and AOP margins
Source: Bloomberg, Company data
Competition.
The level of industry for OEM ranges from medium-low as AOP dominates the market with its multi-product
offerings, the ‘Astra’ brand equity, and its joint-venture with Japanese firms. With increasing investment
from foreign firms in the component markets, we expect competition to intensify in the future. AOP has positioned itself as the current dominant de facto leader in the component market and we expect this to last, as
long as AOP maintains its competitive advantage, establish long-term relationship, provide value-added services and products and able to meet demands or specifications required by customers.
However, for the REM, intense competition is expected, especially from the copycat and low-cost Chinese
products. Despite this, we still expect AOP to dominate this market as there are only few companies which
can offer value-for-money products which emphasize safety of products and quality of the performance with
affordable pricing.
Execution risk.
The sustainability of AOP cash flow depends heavily on its ability to expand capacity and invest in R&D to
increase material and production efficiency. Its expansion could be slower than projected, resulting in lowerthan-expected top-line and bottom-line growth.
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Initiating Coverage
9
Rising interest rate.
Most expansions in automobiles manufacturing equipment and facility are funded with debt and rising borrowing cost will increase the interest burden of a corporation. Interest rates are low by relatively low and
they will usually rise during crisis period.
Chart 14: IDR Investment Loan Rates % by Banks
Chart 15: USD Investment Loan Rates % by Banks
Source: Bloomberg
Source: Bloomberg
PT Astra Otoparts Tbk.
Initiating Coverage
13 February 2012
Wibowo Ng
Research Analyst
[email protected]
Stock Data
Total Domination in Domestic Component Markets
BUY
We initiate coverage of PT Astra Otoparts Tbk. with BUY
rating and a 12-month target price of IDR 3,800, implying 12% upside potential. AOP is the biggest manufacturer of automobiles parts catering to the OEM and REM
markets in Indonesia. AOP offers wide range of products
that are necessary for automobiles production and its
client base include Toyota, Honda, Isuzu and other multinationals. We forecast 2010-13 earnings CAGR of 16.1%
and estimate adjusted 2012 and 2013 ROE of 21.1% and
21.2%, respectively, with ROIC/WACC consistently above
1.22×.
Sector
Automotive Parts
Price
IDR 3,400
Target Price 2012
IDR 3,800
12-month rating
BUY
Prior
Not Rated
Ticker
AUTO.IJ (BBG); AUTO.JK (RIC)
Market Cap
IDR 13.0 tn
Shares O/S (mn)
3,855.8
Free Float (mn)
167.3
Avg. Daily Vol.
381,570
Easing Margin Compression in 2012
Severe margin compression is expected in 2011 due to
rising core commodities prices in 2010 and early 2011
which account for more than 40% of the raw materials,
rising labor costs to meet the production target and demand from clients and rising advertising expenses to increase brand awareness of Astra products and
Shop&Drive. Due to falling commodity prices in late 2011
and 2012 (lagging period between procurement and cost
recognition) and better utilization of materials, we expect
slight expansion in the margin, paving way to higher EBIT
and net income.
Share Price Comparison: AUTO vs JCI
AUTO
JCI
Rapid Expansion in 2012.
Capex is expected to increase significantly to around IDR
1.24 tn in 2012 as the company plans to acquire more
land for construction of new facilities to increase manufacturing capacity and purchase new equipment. The current land scarcity observed in prime industrial location is
due to foreign firms snapping up land to increase their
operating capacity. With increasing efficiency through
R&D and production capacity, we expect margin to expand in the future.
Valuation: initiate coverage with a BUY rating and
price target of IDR 3,800
We derive our target price from a sum-of-the-parts analysis. For main company, we used DCF-based valuation
with a discrete growth rate forecast till FY2017F, followed
by a terminal growth rate of 4% and 13.3% WACC. Valuation for the associates and jointly-controlled entities is
via EV/Book value of Investment multiple of 3.5. Our
initial SOTP analysis indicates a 12-month price target of
IDR 4,125. However, due to liquidity issue as freefloating shares are only 4.3%, we assign an arbitrary 8%
cut to initial price, resulting in target price of IDR 3,800.
This indicates 2012F and 2013F P/E of 13.7× and 11.9×,
respectively, with a 0.8× PEG.
10
Source: Bloomberg; 01/02/2007 = 100
Summary (IDR bn)
Revenues
EBIT
Net Income
EPS (IDR)
Net DPS (IDR)
2009
5,266
420
768
199
120
Profitabiity
Gross Margin%
EBIT Margin%
EBITDA Margin%
2009
18.0%
8.0%
9.8%
2010
6,255
573
1,141
296
118
2010
18.4%
9.2%
11.1%
2011
7,364
520
1,007
261
104
2012F
8,570
547
1,067
277
111
2013F
9,791
650
1,229
319
128
2011
16.8%
7.1%
8.9%
2012F
17.1%
6.4%
9.4%
2013F
17.6%
6.6%
10.4%
EV/EBITDA x
10.9
9.3
7.4
P/E x
14.6
13.7
11.9
Net Dividend Yield
2.74%
2.92%
3.37%
Source: Company data, Sinarmas Sekuritas Research
*: EPS values have been adjusted for stock-split for comparison
Initiating Coverage
Key Catalysts
Expansion in the production capacity. We expect AOP to increase its production capacity for popular
products in order to meet the demand in the OEM and REM markets.
Scopes for joint-ventures and acquisitions. AOP actively engaged in joint-venture with both global and
local firms in order to expand its product portfolio and remain competitive.
Rising automobiles investment in Indonesia. A total of IDR 17 tn has been invested to increase production capacity of automobiles (both 4W and 2W) and we expect this to increase further in the future as Indonesia has just entered the second year of its master plan to boost efficiency and invest in infrastructure supporting growth. We expect more investment to flow to Indonesia as the infrastructures are developed. The
passing of land acquisition law is probably the first landmark of this program as this reduces the bureaucracies involved in securing land to build factories.
Accelerating Wealth creation and low car ownership. Current low car ownership, as compared to its
neighboring Asian countries and accelerating wealth creation indicate bright prospect in the automobiles industry and industry supplying spare-parts in the OEM and REM markets. Following this trend, AOP tries to
position itself in the retail distribution channels by investing heavily in advertisement and expanding its
Shop&Drive outlets to increase brand awareness on products and services offered by AOP.
Risks
Adverse Economic Conditions such as high inflationary pressure, rising interest rate and slowdown in the
global markets will affect the purchasing power and thus the demand of automobiles in the domestic market.
If the EU crisis spread and/or China suffers hard-landing, global demand for automobiles will fall.
Rising commodity prices will result in margin compression for AOP as 40%-50% of cost of revenue is raw
materials and AOP has to secure them in advance for manufacturing purposes.
Intense Competition. The ASEAN-China Free Trade Agreement (ACFTA) removes tariff imposed on Chinese
products entering Indonesia. Chinese products, which are usually cheaper as they manufactured with lower
quality material and thus compromising the performance of the products, present intense competition in the
industry. However, as more consumers realize the importance of performance and safety of spare parts, we
are confident that they will turn to AOP for high-quality products with affordable pricings. Revenue growth
also depends on the ability of AOP to come out with innovative products to meet demands from customers
and maintain its competitive edges.
Labor Market Risk. The labor market presents high risk to investing in Indonesia. The recent protest by
labor in one of the prime industrial area, Bekasi, resulted in loss of productivity. The reluctance of the government to immediately defuse the tension indicates that this incidence might happen again in the future.
This will be very costly to AOP as its manufacturing division is highly labor intensive and such event will lead
to severe losses and penalty (if it fails to meet the production target set by customers). Furthermore, the
poor quality of the education system will limit the availability of skilled labor and hiring professionals from
developed countries will be very costly to AOP. We estimate that labor cost in manufacturing will increase
30% per annum throughout our projection period.
Efficiency issue. AOP has a total of 35: 17 consolidated, 15 jointly-controlled & associates and 3 costmethod companies and recently AOP, directly or through its subsidiaries, engaged in expansion of production
base to China and Vietnam. This wide portfolio will present miscommunication risk among companies and
partner companies, leading to falling efficiency.
Overseas expansion. AOP and its subsidiaries have expanded overseas to tap into other growing markets.
However, overseas expansion tends to be risky if legal risks are not mitigated and due diligences are not carried out properly.
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Initiating Coverage
Valuation and basis for our target price
Target Price of IDR 3,800, 12% above the current value, is derived from a sum-of-the-parts (SOTP) analysis.
For the main company, we used DCF-based valuation with discrete growth forecast till FY 2017 and a terminal growth of 4% thereafter. Valuation of jointly-controlled entities and subsidiaries is via EV/book-value-ofinvestment method with this ratio derived from the parents companies and competitors. Our initial SOTP
analysis indicates a 12-month price of IDR 4,125. To account for lack of liquidity as shares of AOP are thinly
traded in the market, we assign an arbitrary 8% cut with adjusted target price of IDR 3,800, indicating
13.7× 2012E P/E and 9.3× 2012E EV/EBITDA. We assume 13.3% WACC and around IDR 1.24 tn and IDR
0.98 tn capital expenditure in 2012 and 2013, respectively. Thereafter, capex will fall to 3.5% of revenue for
maintenance purposes.
Competitive Strengths
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The ‘Astra’ Brand Equity
AOP has established itself as a prominent component producer in Indonesia. As one of the few dominant local players in the component markets and due to its connection with the Astra group, we believe that AOP
will still be the main manufacturer of OEM and REM for Astra-related companies. Non-Astra companies will
still engage AOP due to its reliability, superior quality control and competitive pricings. Furthermore, the
brand ‘Astra’ is synonymous to highest standard of quality and this allows AOP to leverage on this branding
power to sell its products at competitive pricings.
Manufacturing Division
AOP has wide products under its portfolio and it seeks to expand its product offerings to cater to growing
demand from automobiles manufacturing firms. It has extensive OEM clients bases allowing it to negotiate a
better terms as AOP is the only domestic company that has the scale, breadth and scope to produce components of desired quantities and of the highest standard of qualities. However, margins of manufacturing divisions often suffer from high commodity prices and rising labor cost as raw materials (steel, lead, aluminum,
plastic/polypropylene, rubber, tin, and iron) and labor costs makes up more than 60% of total cost of revenue. Due to lagging period between procurement and cost recognition, AOP suffers dismal margin due to
high commodity prices in late 2010 and early 2011.
Chart 16: Lead & Aluminum prices (USD/mT)
Chart 17: Rubber (USD/mT)
Source: Bloomberg
Source: Bloomberg
Chart 19: Brent Crude Oil (USD/barrel)
Source: Bloomberg
Source: Bloomberg
Initiating Coverage
Chart 18: Hot-Rolled-Steel (RMB/mT)
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Getting Close and Personal with End Users
AOP aims to increase its market shares in the domestic spare parts market and car workshop services. Aggressive advertising (around 3.5% of trading revenue; 1.5% of total revenue), expansion in the Shop&Drive
to more than 200 outlets and its innovative products and services to meet the changing consumer tastes
help to secure its market shares in the domestic auto-related components markets. Currently, Shop&Drive
sells fast moving parts and offers services such as changing oil and battery and 24-hour emergency services.
Based on our survey, the price point is significantly higher than that of neighborhood car workshop. However, the quality of services, cleanliness, product knowledge and guarantee of authenticity of products are not
comparable and we believe that this will cater to the medium-high income segment of the society who prefers qualities, performance and safety over cost.
Initiating Coverage
Financial
Income Statement
We estimate that revenue will grow 16.4% and 14.3% in 2012 and 2013, respectively. The decline in revenue growth rate in 2012 and 2013 is due to uncertainty in the global markets which will lower the purchasing
power of consumers, drive down demand for component by multinationals and the implementation of fuel
subsidy limitation. While fuel subsidy will have severe impact on automobiles industry as it discourages people to own a car, based on historical data, the effect is transient (around 2 years for sales of automobiles to
exceed the sales of previous year). Rising wealth, as well as the importance of car as status symbol, will be
the main driver of growth in the automobiles division.
Rising commodity prices are unlikely to be sustained this year as commodity producing firms, such as Rio
Tinto, have indicated that there is oversupply of Aluminum in the markets, leading to falling prices. Furthermore, AOP has implemented many programs to increase efficiency of raw material which will lead to gross
margin expansion.
Table 2:Income Statement Summary
2009
5,265,798
4,317,181
948,617
528,626
419,991
3,701
13,535
509,774
947,001
(137,046)
809,955
(41,690)
768,265
2010
6,255,109
5,102,483
1,152,626
579,511
573,115
58,813
1,172
761,161
1,394,261
(168,956)
1,225,305
(84,126)
1,141,179
2011
7,363,659
6,126,058
1,237,601
718,053
519,548
56,242
(14,493)
693,786
1,255,083
(153,500)
1,101,583
(94,867)
1,006,716
2012F
8,569,658
7,104,125
1,465,533
918,864
546,669
81,412
(55,149)
763,165
1,336,097
(154,692)
1,181,405
(114,833)
1,066,572
2013F
9,791,487
8,071,990
1,719,496
1,069,370
650,126
93,019
(81,517)
877,639
1,539,268
(178,640)
1,360,628
(131,206)
1,229,422
Gross Margin
EBITDA margin
EBIT Margin
NOPAT Margin
Net Margin
18.01%
9.76%
7.98%
5.48%
4.91%
18.43%
11.09%
9.16%
6.72%
6.08%
16.81%
8.89%
7.06%
5.15%
4.25%
17.10%
9.39%
6.38%
4.66%
3.54%
17.56%
10.41%
6.64%
4.85%
3.59%
Revenue Growth
EBITDA Growth
EBIT Growth
Net Profit Growth
-1.35%
-3.41%
-7.05%
35.73%
18.79%
35.00%
36.46%
48.54%
17.72%
-5.69
-9.35%
-11.78%
16.38%
22.96%
5.22%
5.95%
14.26%
26.66%
18.92%
15.27%
Revenues
Cost of Revenue
Gross Profit
SG&A
EBIT
Other non-operating income
interest, net
Equity linked, net income
Profit before tax
Taxation
Profit after tax
Minorities
Net Profit
Source: Company data, Sinarmas Sekuritas Research Estimate
Chart 20: 3Q11 Cost of Revenue Breakdown (100% = IDR 4.5 tn)
Source: Company data
14
Chart 21: Revenue Breakdown
Initiating Coverage
Chart 22: Gross Profit and EBIT
Chart 23: Gross Margin and EBIT Margin
Estimate
Estimate
Chart 24: Equity Net Income and yoy growth rate
Chart 25: 3Q11 Equity Net Income, 100% = IDR 544 bn
Chart 26: 3Q11 Revenue Breakdown by Segment (100% = 5.45 tn)
15
Initiating Coverage
Time to Leverage the Balance Sheet
We expect a CAGR of 50% for its fixed assets from 2011 to 2013 as AOP plans to acquire more lands for capacity expansion, research & development and manufacturing facility of new products and invest in new
equipment to maintain its efficiency and competitive advantage. Investments in Associates and Jointly Controlled entities are set to increase at 15% annually from 2011 to 2013 as AOP plans to add more products
under its portfolio through acquisitions and joint venture with well-established international firms.
We expect AOP to leverage itself to finance this expansion, leaving a net debt position of around IDR 737 bn
in 2012F and IDR 1.33 tn in 2013F and rising net-debt-to-equity ratio. While this ratio is high on historical
standard, we feel that it is sustainable and considering the low cost of debt currently, AOP should tap into
debt markets to finance the expansion. Another alternative is equity offering through rights issue or private
placement. While possible, we do not expect any rights issue this year. We forecast, should it take place, it
will be in late 2013 (2H13) or early 2014 (1H14) to redeem the debt outstanding and deleverage.
Table 3: Projected Balance Sheet
Net Tangible fixed assets
Net Intangible Assets
Investments in Associates & Jointly Controlled Entities
Other Assets
Net Working capital
Net Cash (debt)
Other Liabilities
Shareholders' Equity
Minority Interest
2009
696,716
6,715
1,615,947
194,225
1,150,908
540,433
139,113
3,208,778
173,869
2010
985,029
6,096
2,154,640
240,362
947,994
203,122
153,767
3,860,827
242,320
2011
1,547,831
6,096
2,475,031
376,910
671,637
(527,714)
168,650
4,423,544
299,340
2012F
2,512,795
6,096
2,846,286
146,821
1,424,344
(736,842)
212,528
5,058,095
374,175
2013F
3,307,717
6,096
3,273,228
246,276
1,147,798
(1,328,875)
242,829
5,795,748
467,719
2009
746,758
514,620
96,022
597,935
382,493
376,972
2010
849,087
708,322
642,316
682,561
569,170
947,994
2011
1,017,494
955,369
591,592
777,573
1,112,269
674,613
2012F
1,165,858
951,081
1,766,552
1,020,940
1,438,208
1,424,344
2013F
1,312,999
982,330
1,532,295
1,035,618
1,644,208
1,147,798
46
49
47
48
46
43
45
44
46
43
46
43
46
43
46
44
46
43
46
43
Table 4: Calculation of Net Working Capital
Account Receivables
Inventory
Other Current Assets
Trade Payables
Other Short term Liabilities
Net Working Capital
Days of Receivables
Days of Inventory
Days of Payables
Net Cash Cycle
Chart 27: Net Cash Balance and Leverage
16
Initiating Coverage
Cash Flow
We estimate a negative free cash flow of IDR 3.6 bn in 2011-13 due to significant increase in capex, totaling
to IDR 3.0 tn. AOP plans to secure land as much as possible as it plans to shift its manufacturing facility from
Kelapa Gading/Sunter area due to potential development for residential property in the future. We estimate a
significant capital gain on sale of land in the future should AOP sell the land it is currently owned as land
around Kelapa Gading has risen significantly. However, due to uncertainty of this cash inflow and the timing,
we will not be able to forecast with certainty.
Net debt is expected to increase at 2011-13 CAGR of 58% and despite this, the company is firmed on its dividend policy of 40%.
Chart 28: Capex and capex as % of revenue
Projected Cash Flow (IDR mn)
EBIT
Depreciation
Working Capital (increase)
Taxes
Operational Cash Flow (Sinarmas Sekuritas Estimate)
Capex
Increase in Investments in Associates & Jointly Controlled Entities
Dividends received from Investments
Dividends Payout
Net increase in debt
Enterprise Value FCF
2009
2010
419,991
93,958
86,998
(161,888)
557,745
(117,480)
(434,761)
573,115
120,693
(85,458)
(137,046)
374,748
(423,407)
(538,693)
519,548
169,326
156,192
(153,500)
691,566
(773,467)
(320,391)
546,669
257,950
407,442
(154,692)
1,057,369
(1,235,011)
(371,255)
650,126
369,013
7,076
(178,640)
847,576
(979,149)
(426,943)
97,303
461,152
(98,374)
440,265
223,250
456,525
48,939
(48,659)
441,016
402,686
611,715
(81,901)
398,480
426,629
1,369,277
(177,642)
458,252
491,769
322,563
(131,573)
Source: Company data, Sinarmas Sekuritas Research Estimate & Calculation
17
2011
2012F
2013F
Initiating Coverage
Sacrificing Short-term Profitability for Long-term Benefits
We estimate a lower return on capital employed (ROCE) at 17%, lower than that in 2009-10 and its peers
despite aggressive capex expansion in 2011. This is due to the fact that any capital investment will not yield
immediate returns as completion of new manufacturing facility will take at least 1 year and another 3-5
years for production to reach full capacity and expansion in current facility will take at least 6-12 months to
reach full capacity.
Its EBIT margin will fluctuate depending on commodity prices. We assume commodity prices will be the
same or lower than that in 2011 and EBIT margin will rise slightly.
Table 6: Return on Capital Summary
2009
Asset Turnover
EBIT Margin
EBIT/Total capital
ROIC
IC as % capital employed
ROCE
Operating Margin
Interest Burden
Tax and minorities burden
Total Asset Turnover
Financial Leverage
ROE (DuPont)
2010
2011
2012F
1.1
9%
15%
29%
90%
27%
1.1
7%
10%
19%
100%
21%
0.9
6%
9%
17%
89%
17%
0.9
7%
9%
16%
95%
17%
7.98%
2.3
0.8
1.1
1.4
23.9%
9.16%
2.4
0.8
1.1
1.4
29.6%
7.06%
2.4
0.8
1.1
1.6
22.8%
6.38%
2.4
0.8
0.9
1.9
21.1%
6.64%
2.4
0.8
0.9
1.8
21.2%
Chart 29: Return on Capital Employed of Selected Companies
Source: Bloomberg, Sinarmas Sekuritas Research Estimate
18
2013F
1.1
8%
15%
27%
78%
22%
Initiating Coverage
Valuation
Table 7: Comparables Analysis
Ticker
Name
AUTO
PT Astra Otoparts
ASII
PT Astra International
IMAS
PT Indomobil Sukses International
GJTL
PT Gajah Tunggal
MASA
Multistrada Arah Sarana
SMSM
PT Selamat Sempurna
Average
Average
Target price was derived via sum-of-the-part analysis. For the main company, we discretely forecast growth
rate of each division till 2017 and assume constant long term terminal growth rate of 3%. DCF-based methodology is appropriate because of the availability and visibility of its revenue and earnings and there is lagging period for investment in new equipment and manufacturing facility and DCF allows us to discretely forecast the revenue generated. We estimate a target capital structure or D/E ratio of 0.45 and tax rate of 27%
and we assumed WACC to be 13.3%. We estimate higher WACC to account for lack of liquidity of AOP shares
in the market.
Relative valuation, specifically EV/BV, is employed due to lack of revenue and earnings data for the valuation
of investments in associates and jointly-controlled entities. EV/BV multiple is determined to be 3.5, closer to
that of current P/B but lower than average.
Trailing P/E
12.8
16.5
30.9
12.4
15.2
12.9
13.4
P/B
3.5
5.2
4.9
2.2
1.7
4.0
3.6
Current EV/EBITDA
20.7
14.8
37.3
8.6
15.7
7.6
17.4
PEG ratio
0.8
1.0
0.4
N/A
0.6
N/A
0.7
Source: Bloomberg, Sinarmas Sekuritas Estimate
Our initial SOTP analysis indicates a 12-month price of IDR 4,125. However, to account for the lack of liquidity, we assign 8% cut resulting in 12-month target price of IDR 3,800 implying a P/E multiple of 14.6 for
2011, 13.7 for 2012F and 11.9 for 2013F. These values are lower than that of its peers, indicating that AOP
is undervalued in the market. Furthermore, the relatively low PEG indicates undervaluation and we believe
there is potential for AOP share price to appreciate in the next 12-month.
Chart 30: Trailing P/E ratio
Source: Bloomberg
19
Forward P/E 2012
13.7
16.6
24.7
12.0
15.5
12.8
15.9
Initiating Coverage
Appendix
The company established many joint-ventures with Japanese and European component manufacturing firms
and we expect AOP to continue to participate in more joint-venture to expand its products offerings.
20
Company Brief Description
PT Astra Otoparts TBk. (AOP) is the most prominent automotive component manufacturer in Indonesia with
wide and diversified products under its portfolio. AOP produces components for both Original Equipment for
Manufacturers (OEM) and Replacement Market (REM). AOP’s key clients include giant multinationals such as
Toyota, Daihatsu, Isuzu, Mitsubishi, Suzuki, Honda and Yamaha. AOP is probably the only local company that
is capable to manufacture products with scale and scope required by multinationals and its ‘Astra’ branding is
synonymous to the Gold Standard in the automotive industry.
AOP has expanded regionally (68 main dealers and sales office across Indonesia), more than 140
Shop&Drive Outlets and international presence across 39 countries with the emphasis on the emerging markets.
Initiating Coverage
Company
21
Description
Ownership
Coverage/Clients
Marketing, sales, and distribution company of automotive and motorcycle
spareparts for domestic replacement
market
AOP: 100%
46 main dealers, 22 sales offices; 5,300 retailers
PT Astra Otoparts
Tbk – International
Division
International Division distributes and
exports automobile and motorcycle
components for overseas market, such
as: Battery, Filter, Motorcycle Tyre &
Tube
AOP: 100%
39 countries in APAC (Asia Pacific) and EMEA
(Europe, Middle East and Africa) and South
America
PT Astra Otoparts
Tbk – Retail Division
An automotive retail franchise chain
that provides parts and services
AOP: 100%
Shop&Drive: 130 outlets; Super Shop&Drive: 7
outlets; Pertamina Speed Shop&Drive: 8
PT Ardendi Jaya Sentosa
Automobile and motorcycle parts dealers.
AOP: 100%
46 main dealers, 22 sales offices; 5,300 retailers
Trading
PT Astra Otoparts
Tbk – Domestic Division
Products
Initiating Coverage
22
Company
Manufacturing
Adiwira Plastic
Description
Ownership
Clients/Coverage
Products
Manufacturer of plastic injection components.
AOP: 100%
Air Cleaner, Back Mirror, Head Lamp, Painting Line, Plastic Injection, Seal Assy Line,
Mould Shop
Nusametal
Manufacturer of aluminum dye casting
components
AOP: 100%
Astra Honda Motor, Toyota Motor Manufacturing Indonesia, PT Astra Daihatsu Motor, PT Denso Indonesia, Kawasaki, PT Pantja Motor, GS Battery, PT Hino Motor Manufacturing Indonesia, PT Nissan
Motor Indonesia, ABA, ASMO, PT Century Batteries Indonesia, PT
Indokarlo Perkasa, Ichikoh, Musashi, Pama Persada, PT Toyoda
Gosei Safety Systems Indonesia, PT Trimitra Citrahasta
(2W) – Honda, Suzuki, Kawasaki, Kubota, Honda Trading Indonesia
(4W) – Mitsubishi, Daihatsu, Toyota, Isuzu, Suzuki
Adyawinsa Dinamika
Winteq
Specializes in manufacturing precision
machinery, automation, and production
equipment.
AOP: 100%
Manufacture, repair,
upgrades and maintenance of precision machinery
PT Aisin Indonesia
Producer of automotive parts which consists of body parts,
drive train and engine parts.
AOP: 34%
Aisin Seiki Co., Ltd.;
Aisin Takaoka Co.,
Ltd; Aisin Chemical
Co., Ltd.;Toyota
Tsuho Corporation:
66%
Nusametal,Adwira Plastik, PT Indokarlo Perkasa, PT Akebono Brake
Astra Indonesia, PT Menara Terus Makmur, PT GS Battery, PT Astra Daido Steel Indonesia, PT Federal Izumi Manufacturing, PT Federal Nittan Industries, PT Kayaba Indonesia, PT SKF Indonesia, PT
FSCM Manufacturing Indonesia, PT Inti Ganda Perdana, PT DIC
Astra Chemical, PT Astra Agro Lestari, PT Pama Persada, PT Showa
Indonesia, PT Palyja
Domestic market: Toyota, Daihatsu, Isuzi, Suzuki, Mitsubishi, Hondo, Hino, Kramayada Tiga Berlian
Export: Singapore, Malaysia, Thailand, India, Japan, Taiwan, Australia
PT Akebono Brake
Astra Indonesia
Producer of safe and
reliable brake systems.
AOP: 50%
Akebono Brake Industry Co., Ltd.:
50%
PT Astra Daihatsu Motor, PT Astra Otoparts Tbk, Akebono Corporation Guangzhou, Akebono Brake (Thai) Co., Ltd., PT Indomobil Suzuki International, PT Kramayudha Tiga Berlian Motor, PT Pantja
Motor, Perodua Manufacturing Sdn. Bhd., PT Toyota Astra Motor,
PT Toyota Manufacturing Indonesia, PT Yamaha Indonesia Motor
Manufacturing, PT Yamaha Motor Manufacturing West Java, Yamaha Motor Asian Center Co., Ltd.
Aluminum dye casting
components & products
for Automotive:
(2W) Engine parts,
Frames, Casting wheel,
Other Components
(4W) Engine parts,
Cover Cylinder Head Housing Clutch etc.
Body Parts: Door Lock,
striker, door frame,
window regulator, door
hinge, door check,
hood lock, and door
handle
Drive train: clutch cover and clutch disc
Engine parts: resin intake manifold
Disc brake (2W&4W),
Drum brake (4W) and
Master Cylinder (2W)
Initiating Coverage
23
Company
PT Astra Daido Steel
Indonesia
Description
Provider of customized high grade tool
steel, machining
plate, and heat treatment services
Ownership
AOP: 66.67%
Daido Steel Co.,
Ltd. And Daido
Kogy Co., Ltd.:
33.33%
PT Astra Komponen
Indonesia
Manufacturer of plastic injection component
Producer of automotive gasket and its
related materials,
trading of automotive parts and brake
discs
AOP: 100%
PT AT indonesia
Producer of high
quality Ferro casting,
Ferro casting ductile,
metal forming products, and provider of
precision machining
proves for automotive and nonautomotive parts
AOP: 40%
Aisin Takaoka Co.,
Ltd.; Aisin Seiki
Co., Ltd.; Toyota
Tsuho Corp.: 60%
PT Century Batteries
Indonesia
Manufacturer of high
quality batteries
which meet the JIS,
DIN, AS, SNI quality
standard
AOP: 80%
PT Sumber Selatan Nusa: 20%
PT Astra Nippon Gasket Indonesia
AOP: 50%
Nippon Gasket
Co., Ltd.: 50%
Clients/Coverage
PT Astra Honda Motor, PT Menara Terus Makmur, PT Toyota Motor
Manufacturing Indonesia, PT Astra Otoparts Tbk - Divisi Nusametal, PT Astra Otoparts Tbk - Divisi Winteq, PT Indokarlo Perkasa, PT
Kayaba Indonesia, PT Akebono Brake Astra Indonesia, PT Denso
Indonesia , PT Gemala Kempa Daya, PT Musashi Auto Parts Indonesia, PT Central Motor Wheel Indonesia, PT Meiwa Mold Indonesia, PT ISK Indonesia, PT Melco Indonesia, PT Bumiputra Manufactur Teknologi, PT Almasindo, PT Mitsuba Indonesia, PT Indonesia
Steel Tube Works, PT Pakoakuina
Adiwira Plastic (Honda)
Products
Tool Steel, Machinery
Steel, Stainless Steel,
Parts, Heat Treatment
Service, Machining Plate.
PT Toyota Motor Manufacturing Indonesia, PT Astra Daihatsu Motor, PT Astra Honda Motor, PT Astra Nissan Diesel Indonesia, PT
Indomobil Suzuki International , PT Yamaha Indonesia Motor Manufacturing, PT Kawasaki Motor Indonesia, PT Inti Ganda Perdana,
PT Kubota Indonesia, PT Pantja Motor, PT Kymco Lippo Motor Indonesia, PT Yanmar Diesel Indonesia, PT Danmotor Vespa Indonesia, PT Akashi Wahana Indonesia, PT Mitsubishi Kramayudha Motor & Manufacturing, PT Korindo Heavy Industry, PT Mikuni Indonesia, NHK Gasket Thailand Co., Ltd. , Nippon Gasket Co., Ltd.
OEM: Toyota Motor Manufacturing Indonesia, Astra Daihatsu Motor, Krama Yudha Tiga Berlian Motor, Indomobil Suzuki International , Hino Motors Manufacturing Indonesia, Pantja Motor,
Mitsubishi Krama Yudha Motor Manufacturing, Aisin Indonesia,
Advics Indonesia, Akebono Brake Astra Indonesia, NT Piston Ring
Indonesia, OTICS Indonesia, Fukoku Tokai Rubber, Inti Ganda
Perdana, Ekaprasarana Aryagunasatya, Yohzu Indonesia, Sankei
Gohsyu Industries, Karya Hidup Sentosa
Automotive & Motorcycle’s
Gasket (composite &
MLS), Gasket Kit for Automotive & Motorcycle and
non-automotive gasket,
raw material for gasket,
trading automotive parts.
GS Yuasa Batteries
Export Market (international division), Domestic Market, After
market (distributed by Hyundai), OEM (distributed by Isuzu)
Plastic Injection, Painting
Line
Engine Components: Flywheel, Exhaust Manifold,
Bearing Cap, Pulley
Transmission Components: Pressure Plate, Retainer, Intermediate
Brake Components:
Knuckle Sub-Assy Steering, Brake Drum, Body
Non-Automotive Parts:
Caliper, Support Mounting, Compressor Cylinder
Rotor, Cylinder Sleeve,
Gear Case
Storage Batteries
Initiating Coverage
Company
PT Denso Indonesia
24
Description
PT Denso Indonesia strive for fulfill
the aspiration of its
customers by continuously developing
technology competence.
Producer of colorants
for plastic, textile,
plywood, and leather
Producer of automotive engine piston.
Its products have
been widely used by
the global brands
and majority of new
vehicles are using
FIM piston.
Producer of automotive engine valve
Ownership
AOP: 25.66%
Denso International
Singapore, Toyota
Industries Corporation, Toyota Tsushi
Corporation: 74.34%
PT FSCM Manufacturing Indonesia
Manufacturer of motorcycle chain and
silent chain; producer of fuel, oil and air
filter
AOP: 100%
PT Gemala Kempa
Daya
Producer of all kind
of chassis for truck
and buses
AOP: 50.67%
PT Sapta Panji Manggala; PT Trikirana
Investindo Prima; PT
Santiniluwansa Lestari; PT Wahanalaksana Kertapradhana: 49.33%
PT DIC Astra Chemicals
PT Federal Izumi
Manufacturing
PT Federal Nittan
Industries
AOP: 25%
DIC Corporation:
75%
AOP: 58.06%
MAHLE Engine Components Japan Corp.
& PT KRama Yudha
Tiga Berlian Motors:
41.94%
AOP: 40%
NIttan Valve Co.,
Ltd.: 60%
Clients/Coverage
Car manufacturer: PT Toyota Motor Manufacturing Indonesia, PT
Astra Daihatsu Motor, PT Pantja Motor, PT Indomobil Suzuki International, PT Krama Yudha Tiga Berlian Motors, PT Honda Prospect Motor.
Motorcycle manufacturer: PT Astra Honda Motor, PT Indomobil Suzuki International, PT Yamaha Indonesia Motor Manufacturing, PT
Kawasaki Motor Indonesia
Poly Union Chemicals (Textile), Tara Chemindo Perkasa (plastic),
Direct distribution
Products
Air conditioner, compressor, radiator aluminum, spark plug, stick
coil, oxygen sensor,
and horn
PT Astra Daihatsu Motor, PT Astra Honda Motor, PT Hino Motor Manufacturing Indonesia, PT Hino Motor Sales Indonesia, PT Indomobil
Suzuki International, PT Kawasaki Motor Indonesia ,PT Pantja Motor , PT Krama Yudha Tiga Berlian Motors , PT Kubota Indonesia, PT
Mesin Isuzu Indonesia, PT Mitsubishi Krama Yudha Motors & Manufacturing, PT Yamaha Indonesia Motor Manufacturing, Kubota – Japan, Yamaha – Japan, Yanmar - Japan
Automotive Engine Piston
PT Astra Honda Motor (AHM), PT Yamaha Indonesia Motor Mfg.
(YIMM), PT Indomobil Suzuki Indonesia (ISI), PT Toyota Motor Mfg.
Indonesia (TMMIN), PT Astra Daihatsu Motor (ADM), PT Toyota
Tsusho Indonesia (TTI) for Perodua Malaysia, PT Kubota Indonesia,
Nittan Valve Co., Ltd., Japan
Motorcycle chain
OEM: PT Astra Honda Motor , PT Indomobil Suzuki International, PT
Kawasaki Motor Indonesia , PT Yamaha Indonesia Motor Mfg
REM: PT Astra Honda Motor , Aspira, PT Indomobil Suzuki International , PT Kawasaki Motor Indonesia , PT Yamaha Indonesia Motor
Mfg
Filter
PT Dirga Putra , PT Omega Saringan Utama, GUD Australia, GUD
New Zealand, PT Astra Otoparts Tbk-International Division, PT Astra
International-Domestic Division, PT Astra Daihatsu Motor, PT Indomobil Suzuki International, Sun Motor, PT Kia Mobil Indonesia, PT
Kymco Lippo Motor Indonesia
PT Krama Yudha Tiga Berlian Motor ( Mitsubishi), Akebono Brake
Astra Indonesia, PT Hyundai Mobil Indonesia ( Hyundai), PT Hino
Motor Mfg. Indonesia ( Hino), PT Inti Ganda Perdana ( Component),UD Trucks Co., Ltd.
Automotive Engine
Valve Manufacturer
Colorants
Motorcycle chain, silent
chain and filter
Frame Chassis and
press parts
Initiating Coverage
25
Company
PT GS Battery
Description
Manufacturer of automotive and motorcycle lead acid storage
battery.
Ownership
AOP: 50%
GS Yuasa International Ltd. And Toyota Tsuho Corporation: 50%
PT Indokarlo Perkasa
Manufacturer of high
quality rubber parts.
AOP: 100%
PT Inti Ganda Perdana
Manufacturer of rear
axle and propeller
shaft which are used
in trucks, buses and
passenger cars.
PT Kayaba Indonesia
Producer of shock
absorber, front fork,
oil cushion unit and
damper with highly
precision machines to
meet stringent international OEM quality
standard.
AOP: 42.5%
PT Sapta Panji Manggala; PT Indomobil
Sukses International;
PT Santiniluwinsa
Lestari; PT Trikirana
Wahanalaksana Ketapradhana: 57.50%
AOP: 50%
Kayaba Corporation,
Toyota Tsuho Corporation, PT Yamaha
Indonesia Motor Manufacturing: 50%
PT Menara Terus
Makmur
Producer of precision
forged products.
AOP: 100%
Clients/Coverage
4W OEM: Toyota, Mitsubishi, Nissan, Daihatsu, Suzuki, Hino,
Hyundai, Honda Prospect Motor, Mercedes, UD Trucks
2W OEM: Honda, Yamaha, Suzuki, TVS
Heavy Equipment: Komatsu, Mitsubishi Forklift, Toyota Forklift,
Sakai, Hitachi
REM: AOP Domestic division
Export market: AOP international division
Export destination: EMEA, APAC and South America
OEM:
Motorcycle – Honda, Suzuki, Kawasaki, Vespa, Yamaha
Car – Mitsubishi, Toyota, Daihatsu, Hino, Isuzu, GM, Nissan
Automotive – Denso, Toyo Denso Group, Kayaba
Component Makers – Showa, Mitsuba
Non-automotive – Panasonic Manufacturing Indonesia, Surya
Toto, Sanyo, UD Tractors, Komatsu
Industry – Toto, Sanyo, UD Tractors, Komatsu
Export: Malaysia, Japan, Australia, Philippine, the Netherland,
Germany
PT Krama Yudha Tiga Berlian Motor ( Mitsubishi), PT Toyota Motor Mfg. Indonesia (Toyota), PT Astra Daihatsu Motor
( Daihatsu), PT Astra Nissan Diesel Indonesia ( Nissan UD), PT
Hino Motor Mfg. Indonesia ( Hino), PT Indomobil Suzuki International ( Suzuki), PT Pantja Motor ( Isuzu), PT Nissan Motor Indonesia ( Nissan Motor Ltd.), General Motors (Thailand), UD Truck
Co., Ltd.
Products
Automotive and motorcycle lead acid battery
OEM:
Motorcycle – Kanzen, Suzuki, Kawasaki, Vespa, Yamaha
Car – Mitsubishi, Toyota, Daihatsu, Hino, Isuzu, Chevrolet, Nissan, Nissan Diesel, Mercedes Benz, Hyundai, Kia, Nissan, Yamaha
Export: Daytona Int. Trading Corp., PT Kaereta Api Indonesia,
Kayaba Industry Co., Ltd., Kayaba Thailand Co., Ltd., Yamaha
Motor Da Amazone, KYB-UMW Malaysia Sdn. Bhd.
Automotive: Toyota, Daihatsu, Suzuki, Mitsubishi, Honda, Hyundai, Nissan, Hino, Isuzu
Component: Showa Indonesia Manufacturing, IGP Group, Denso
Indonesia
Motorcycle: Honda, Kawasaki, Suzuki, Yamaha
Others: Aspira, Kubota Indonesia, PT Yanmar Diesel Indonesia
Shock absorber, front
fork, oil cushion unit,
and damper (stay
damper, chair damper,
steering damper, engine hood)
Rubber Part manufacturer
Real axle and propeller
shaft
Forging part, mechanical jack and hand tools
manufacturing
Initiating Coverage
Company
PT Nusa Keihin Indonesia
Description
Producer of machining and subassembling automotive component.
Ownership
AOP: 51%
Keihin Seimitsu
Kogyo Co., Ltd.:
49%
PT EDS Manufacturing Indonesia
Manufacturing of automotive wiring harness
Manufacturer and
distributor of deep
grove ball bearing
with high accuracy
and precision
Producer of compressor and compressor
with clutch
AOP: 5%
Yazaki Corporation:
95%
AOP: 13.52%
SKF AB: 86.48%
PT SKF Indonesia
PT TD Automotive
Compressor Indonesia
PT Toyoda Gosei
Safety System Indonesia
PT Wahana Eka Paramitra
Producer of steering
wheels for OEM
PT Astra Visteon
Manufacturer of electronic instrument
cluster
Manufacture of motorcycle tires
Co-branding
Astra-Pirelli
Astra-Shell
26
Provider of high
quality transmission/
gear box and machinery process for
OEM.
Clients/Coverage
4W: PT Astra Daihatsu Motor, PT Toyota Motor Manufacturing Indonesia, PT Hino Motor Manufacturing Indonesia, PT Akashi Wahana
Indonesia, PT Mesin Isuzu Indonesia
2W: PT AOP-Nusametal
Export: Keihin Seimitsu Kogyo Co., Ltd.
Toyota Motor Corp., Ford, GM, PT Toyota Manufacturing Indonesia,
PT Astra Daihatsu Motor, PT Suzuki Indomobil Indonesia
Products
Machining and Subassembling for automotive component
2W: Honda, Suzuki, Yamaha, Kawasaki, Vespa, TVS.
4W: Daihatsu, Mitsubishi, Isuzu, Suzuki
Exports: Singapore, Malaysia, Thailand, Argentina, Spain, Brazil, Italy.
Ball bearing
AOP: 25.7%
Toyota Industry
Corp., Denso International Asia, PT
Toyota Tsuho Indonesia: 74.3%
AOP: 20%
Toyoda Gosei Co.,
Ltd.: 80%
AOP: 43.5%
PT Sapta Panji Manggala; PT Stiniluwansa
Lestari; PT Trikirana
Wahanalaksana
Kertapradhana:
56.5%
AOP: 50%
VIHI, LLC: 50%
Toyota Industries Corp., Denso Corp.
Compressor, compressor with clutch.
PT Astra Daihatsu Motor, PT Toyota Motor Manufacturing Indonesia,
PT Pantja Motor , PT Mitsubishi Kramayudha Motor & Manufacturing,
PT Hino Motors Manufacturing Indonesia
Toyota Motor Corp., PT Astra Daihatsu Motor
Steering wheel
AOP: 40%
Pirelli: 60%
Export and domestic
Automotive wiring harness
Transmission assembly
and machinery process
Electronic Instrument
cluster
Motorcycle tires
Lubricants
Initiating Coverage
Fiscal Year End
2009
2010
2011
2012F
2013F
Income Statement (IDR bn)
Sales Revenue
5,266
6,255
7,364
8,570
9,791
Gross Profit
949
1,153
1,124
1,466
1,719
Operating Income
420
573
520
547
650
94
121
135
258
369
514
694
655
805
1,019
4
59
56
81
93
14
1
(14)
(55)
(82)
Depreciation & Amortization
EBITDA
Other non-operating income
Net Interest Income (expense)
Equity net income
510
761
694
763
878
Profit before tax
947
1,394
1,255
1,336
1,539
Tax expenses
(137)
(169)
(154)
(155)
(179)
Profit after tax
810
1,225
1,102
1,181
1,360
Minority Interests
(42)
(84)
(95)
(115)
(131)
Net Profit
768
1,141
1,007
1,067
1,229
EPS (IDR, split-adjusted for comparison)
199
296
261
277
319
Operating Cash Flow
579
375
692
1,057
848
Capex
117
423
773
1,235
979
Investment in Jointly Controlled Entities
435
539
320
371
427
Free Cash Flow
461
(49)
(82)
(178)
(132)
97
223
441
398
458
Dividends Paid
236
506
403
427
492
Debt Issuance (redemption)
(98)
49
612
1,369
323
Net cash (debt)
540
203
(528)
(737)
(1,329)
Cash & cash equivalents
774
486
365
1,526
1,256
Account Receivables
747
849
1,017
1,166
1,313
Inventories
515
708
955
951
982
Other Current assets
870
642
226
241
276
Cash Flow (IDR bn)
Dividends Received from Investments
Balance Sheet (IDR bn)
Net fixed assets
Total Assets
Short term Liabilities
Long term Liabilities
697
985
1,548
2,513
3,308
4,645
5,586
6,946
9,389
10,655
980
1,252
1,893
2,459
2,680
282
231
349
1,498
1,712
Total Liabilities
1,262
1,483
2,241
3,957
4,391
Shareholders’ Equity
3,209
3,861
4,424
5,058
5,796
174
242
299
374
468
4,645
5,586
6,964
9,389
10,655
Revenue Growth (%)
-1.35
18.8
17.7
16.4
14.3
EPS Growth (%)
35.8
48.5
-11.8
6.0
15.3
EBITDA Margin (%)
9.8
11.1
8.9
9.4
10.4
Payout Ratio (%)
59
40
40
40
40
23.9
29.6
22.8
21.1
21.2
Quick Ratio (×)
1.7
1.2
0.9
1.2
1.1
Debt/Equity (%)
7
7
20
45
45
Minority Interest
Total Equity & Liabilities
Key Ratio
ROE (%)
27
EV/EBITDA
10.9
9.3
7.4
P/E (×)
14.6
13.7
11.9
Initiating Coverage
Disclaimer
This report has been prepared by PT Sinarmas Sekuritas, an affiliate of Sinarmas Group.
This material is: (i) created based on information that we consider reliable, but we do not represent that it is
accurate or complete, and it should not be relied upon as such; (ii) for your private information, and we are
not soliciting any action based upon it; (iii) not to be construed as an offer to sell or a solicitation of an offer
to buy any security.
Opinions expressed are current opinions as of original publication date appearing on this material and the
information, including the opinions contained herein, is subjected to change without notice. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different
results. The analyst(s) responsible for the preparation of this publication may interact with trading desk personnel, sales personnel and other constituencies for the purpose of gathering, integrating and interpreting
market information. Research will initiate, update and cease coverage solely at the discretion of Sinarmas
Research department. If and as applicable, Sinarmas Sekuritas’ investment banking relationships, investment banking and non-investment banking compensation and securities ownership, if any, are specified in
disclaimers and related disclosures in this report. In addition, other members of Sinarmas Group may from
time to time perform investment banking or other services (including acting as advisor, manager or lender)
for, or solicit investment banking or other business from companies under our research coverage. Further,
the Sinarmas Group, and/or its officers, directors and employees, including persons, without limitation, involved in the preparation or issuance of this material may, to the extent permitted by law and/or regulation,
have long or short positions in, and buy or sell, the securities (including ownership by Sinarmas Group), or
derivatives (including options) thereof, of companies under our coverage, or related securities or derivatives.
In addition, the Sinarmas Group, including Sinarmas Sekuritas, may act as market maker and principal, willing to buy and sell certain of the securities of companies under our coverage. Further, the Sinarmas Group
may buy and sell certain of the securities of companies under our coverage, as agent for its clients.
Investors should consider this report as only a single factor in making their investment decision and, as such,
the report should not be viewed as indentifying or suggesting all risks, direct or indirect, that may be associated with any investment decision. Recipients should not regard this report as substitute for exercise of their
own judgment. Past performance is not necessarily a guide to future performance. The value of any investments may go down as well as up and you may not get back the full amount invested.
Sinarmas Sekuritas specifically prohibits the redistribution of this material in whole or in part without the
written permission of Sinarmas Sekuritas and Sinarmas Sekuritas accepts no liability whatsoever for the actions of third parties in this respect. If publication has been distributed by electronic transmission, such as email, then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. The sender therefore does
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©Sinarmas Sekuritas(2012). All rights reserved.
28

Sinarmas Sekuritas Investment Research

Transcription

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