Astra International (ASII IJ) update by Sarina Lesmina - CLSA

Clearly the full impact from the headwinds of the Japanese disaster are yet to be quantified (especially on the heavy-equipment division of United Tractor’s (UNTR IJ) side) but analyst Sarina Lesmina sees good tailwinds for ASII from the indefinite postponement of the subsidized fuel ban, and news that Toyota Japan has resumed production for overseas markets.

With strong brand equity and an extensive network providing a strong barrier of entry to a national car market that still brimming with growth, she maintains her BUY call, with TP 64,000 giving 16% upside.

Key points from report:
Govt has postponed the ban on subsidized fuel for passenger cars for an indefinite time
Toyota Japan resumed production of parts for overseas market, but ASII is still assessing potential supply disruption in overall component market
ASII biggest brands have high local content (70-80% for cars, 92% for motorcycles), but still require some imported components
Assuming 10% growth, car sales will grow to over 1m units by 2015 from 760k in 2010, but only moves penetration rate to 6% vs 4% today
Auto players remain bullish, industry pumping in >US$2bn for capacity expansion (Daihatsu double capacity to 400k units, Suzuki to up capacity by 43% to 200k units)
Strong brand equity and 477 outlet distribution network (double nearest competitor) is a strong barrier of entry
Maintain BUY call, TP 64,000 giving 16% upside.