Astra Int'l 2Q11 results: still growing YoY even in difficult times - Deutsche

Reiterating Buy rating
We remain upbeat on the outlook for Astra Int'l as we rate the company, which is
one of Indonesia's best managed, as a prime beneficiary of credit expansion in
Indonesia, high consumer confidence and a doubling of the middle-income
population. Additionally, strong commodity prices provide upside risk to the
earnings contribution from the Heavy Equipment division, which accounts for 20%
of net earnings.

2Q11 net earnings reached Rp4,285bn (+25% YoY; 0% QoQ)
The net results were largely in line with our forecast, some 8% above market
consensus. Astra delivered higher earnings YoY, supported by strong earnings
from non-automotive divisions, while QoQ net earnings were flat due to a weaker
Automotive division following supply constraints after Japan’s catastrophe. We
also saw greater earnings contributions from 1) its associates (+15% YoY; +5%
QoQ), including Astra Honda Motor and Bank Permata, and 2) other income
(+89%; +49%), covering vehicle registration income, dividend income, etc.

Still expecting stronger earnings in 3Q11
We expect the Heavy Equipment, Automotive and Financial Services divisions to
be the main earnings growth drivers in 3Q11 given normalization in automotive
and heavy equipment supplies, and greater earnings contribution from mining
contracting business amid normalized weather.

Reiterating Buy rating with target price of Rp80,500
Our target price is based on an avg. 4% holding company discount to Astra’s
SOTP valuation, based on a 10-year DCF. Risks: inability to raise financing,
seasonality in commodity prices, and delays in infrastructure development