Automotive Sector Update Report 27 Nov 2023

KBVS Update
Monday, 27 Nov 2023

Automotive - 10M23 4W sales in-line, while 2W above
(Maintain Overweight)

- Oct ‘23 car sales declined 13.9% yoy, yet better than Sep ‘23 which tanked 20.1% yoy, while on monthly basis inched up by 44bps to 80,271 units. 10M23 4W sales declined by 1.8% yoy, yet largely still in-line with ours and Gaikindo’s FY23 expectations at a run rate of 86%/84%.

- Oct ’23 motorcycle sales grew 1.2% mom while shrank 4.0% on yoy basis. However on cumulative, 2W sales growth remain strong at 26.2% yoy.

- Note that among most well-known and favourites brand, Toyota and Honda are two brands that recorded positive growth of 5.8% mom and 9.4% mom, respectively. While among non-Japanese products, Wuling is the only brand which booked 8.5% mom sales growth.

- We see no significant threat from non-Japanese as market share remains small. Total non-Japanese car such as: Hyundai, KIA, Chery, Wuling, DFSK, MG and others only controls around 7.0% of market share in Oct ‘23 (vs. Jan ‘23 of 5.4%).

- Key to achieve ours and association ’23 sales volume for 2W and 4W will be the upcoming GIIAS event in Nov ‘23 and cyclical trend of massive discount and promotion approaching year end. Maintain OW stance on the sector and BUY for ASII with an SOTP-based TP of IDR7,350 (10.9x ‘23F PE) while currently trading (8.3x ‘23F PE) at deep discount to its historical mean.

Regards,
Akhmad Nurcahyadi - KBVS Research team