Automotive Sector Update Report 10 Oct 2023

KBVS Update
Tuesday, 10 Oct 2023

Automotive - ‘23F Auto Sales Likely To Beat Expectation       
(Maintain Overweight)

-    Aug ‘23 4W sales volume of 88,876 units grew strongly by 10.5% mom, bringing the cumulative 8M23 sales to 675,287 units. The solid Aug23 result should make FY23 auto sales achievement potentially beat ours and market expectations.

-    Surprising motorcycle sales achievement was recorded in the same period, whereas sales volume growth reached 12.4% mom to 534,379 units and bringing cumulative sales in 8M23 reaching 4.2mn units (72.9% of our ‘23F for motorcycle sales of 5.78 mn units). AISI has revised up its ‘23F 2W sales to 5.6-5.8mn units and closer to our figure).

-    Assuming Sept ‘23 car sales growth of 2.1% mom (Jan-Aug ‘23 average), and Oct-Dec ‘23 using the average growth in FY19 and FY20 where Covid hit the industry and made sales volume free fall by an average of -29.4%, then FY23 4W sales will reach 1.05mn units (FY22: 1,048,040) and beating association’s and KBVs ‘23F by 8.4%/4.8%.

-    Aside from the strong Aug ‘23 sales volume achievement, worth noting that the auto loan demand appetite also recorded another solid growth. Total households were 9.16% yoy higher to IDR1,907tn, whereas auto loan which formed around 6.6% of the consumer loans grew even stronger at 16.1% yoy to IDR125.3tn.

-    Ceteris paribus, we might see vehicles loan demand to resist and expecting continuing solid sales volume in the following months both for 2W and 4W. Maintain our OW stance on automotive sector and BUY for ASII with an SOTP TP of IDR7,350/share (10.9x ‘23F PE), which currently trades at 9.0x ‘23F P/E, below its -1SD of 10-year historical mean of 9.7x.

Regards,
Akhmad Nurcahyadi - KBVS Research team