Automotive Sector Update Report 17 Oct 2023

KBVS Update
Tuesday, 10 Oct 2023

Automotive - Mixed bag auto sales results, yet overall inline    
(Maintain Overweight)

- Sep ‘23 4W sales dropped by 20.1% yoy and 10.1% mom to 79,883 units, which believed due to high-base volume on Aug ’23 amid previous auto series held in Jakarta. As a result, the 9M23 figure inched down by 0.4% yoy to 755,173 units, still largely in-line at 78.1% of our ‘23F car sales assumption.

- Worth noting that the mom sharp drop in Sep ‘23 sales (-10.1% mom) was recorded in most of well-known brands such as Mitsubishi (-14.4% mom), Nissan (-40.5% mom), Toyota and Daihatsu (-13.9% mom and -14.1% mom), while non-Japanese car (Hyundai) also noted lower sales by -7.0% mom to 3,103 units. Data from Gaikindo revealed that total non-Japanese 4W sales of 5,934 units (Sep ‘23) was tanked by -35.6% yoy worse than total industry performance.

- While it might look astonishing on month-on-month basis (+12.2% mom) which better than non-Japanese car which declined by 11.5% mom (industry growth: -10.1% mom), we have not seen any threat from non-Japanese car and believe that the landscape competition will remain the same. Total non-Japanese brand recorded flattish market share of 6.3% from 6.2% (9M22) and 129bps lower year-on-year at 7.4% from 8.7% in Sep ‘22. On the opposite, Astra market share is maintained at 56% in 9M23 and 127bps higher to 55.8% from 54.5% in Sep ‘22.

- Our ‘23F for 2W and 4W still effortlessly achievable, backed by (1) continuing appetite loan demand (Aug ‘23: +14.7% yoy) and (2) GIIAS auto series in Oct and Nov ‘23 as well as continuing promotions in 4Q23 that will support 2023 auto sales volume to arrives within ours and market expectations.

- Despite recent concerns over a) upcoming election, b) higher fuel price, c) weakening Rupiah and d) geopolitical tension, we believe domestic auto demand will remain intact in 4Q23 thus making our ‘23F sales assumption still achievable. Maintain our Overweight stance on automotive sector and BUY for ASII with an SOTP TP of IDR7,350/share (10.9x ‘23F PE), while currently trades at 8.8x ‘23F PE, far below its -1SD of 10-year historical mean of 9.7x.

Regards,
Akhmad Nurcahyadi - KBVS Research team