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Stock Index
Bahana Securities

23 Oct 2019 | 17:40 WIB
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23 Oct 2019 | 17:40 WIB
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Indonesian auto sector: Accelerator required

Based on sales figures released by Gaikindo (4W association) and AISI (2W association), September 4W sales reached 93k units, up 3% m-m but still down 9% y-y, with 2W sales reaching 603k units, down 3% m-m and 15% y-y (exhibits 1 and 2).

For Astra International (ASII), the company saw weaker September 4W sales of 47.5k units, down 3% m-m and flat y-y, reflecting a market share of 51.1% (Aug- 15: 54.1%; Sept-14: 46.4%). We believe this is a move to lower its inventory level as retail sales were weak in August. However, we believe that ASII booked improved September retail sales on the back of improved marketing initiatives. For Nissan (IMAS), the company booked September sales of 1.7k units, down 6% m-m and 32% y-y, on weak demand and intense competition.

On the motorcycle (2W) side, ASII’s Honda continued its dominance with an improved market share to 70.5% (Aug-15: 69.3%; Sept-14: 65.0%) despite declining sales of 425k units, down 1% m-m and 7% y-y. Yamaha’s monthly sales were disappointing, coming in at 158k units, down 7% mm and 25% y-y.

On the weaker economic outlook and continued soft farmers incomes due to low commodity prices, we expect 2015 domestic 4W sales to reach 1.02mn units (-16% y-y) and domestic 2W sales to reach 6.4mn units (-19% y-y). For ASII, we expect a lower 4W market share on tight competition but higher 2W market share on several new product launches. As for IMAS, new dealership developments and a weak revenue should lead to margin pressure.

Looking ahead, we believe the sector will continue to be plagued by margin erosion stemming from intense competition, necessitating increased marketing costs.  This coupled with soft GDP outlook has us retaining our UNDERWEIGHT sector call.

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