ASII - 9M22 earnings surged 56% yoy

Astra International (ASII) 3Q22 net profit weakened -54.4%qoq and -16.1%yoy, largely driven by a sharp drop in fair value gain on investment in TO, while on cumulative basis surged 55.8% to IDR23.3 tn, beating KBVS and consensus expectation (74.7%/77.2%). Astra continue dominating both 2W and 4W market shares at 74% and 55%, respectively. Likewise, Komatsu also remain as favorites machineries in the market and leading the competition with 28% market shares (21% in 9M21) or more than doubled to its closest peers Hitachi at 13%. (Source: Company) Comment: We like Astra 9M22 result and view that the quarterly poor result was acceptable. Excluding the To lower fair value gain, ASII 3Q22 net profit remain grow at +2.4%qoq and 26.7%yoy. On divisional net income, the lower contribution from auto segment to 31% vs 37% in 9M21 was as a result of UNTR business solid growth at 105%yoy which surpassing auto segment at 23.1%yoy and made the contribution increased by 12% to 43% compared to 31% in 9M21. Despite we believe that 4Q22 result could remain solid, we view that Astra business could see a more challenging year in 2023. Our main concern lies on high inflation, continuing economic uncertainty and the end of low interest rate environment.