Auto Tracker Nov-24_ 4W & 2W sales volumes decline; ASII market share tapers

Summary of Astra International Tbk PT Conference Call Company and Industry Overview - Company: Astra International Tbk PT (ASII.JK) - Industry: Automotive in Indonesia - Market Context: The automotive market in Indonesia is experiencing a decline in sales volumes for both four-wheel (4W) and two-wheel (2W) vehicles, with significant competition and changing consumer preferences impacting market dynamics [8][9][10]. Key Points and Arguments 1. Sales Performance: - Indonesia's 4W retail sales declined by 8.1% year-over-year (y/y), marking the 20th consecutive month of decline [8]. - 4W wholesale volumes decreased by 11.9% y/y in November, with a month-over-month (m/m) decline of 3.7% [9]. - The total 4W retail market share for ASII decreased by 200 basis points (bps) m/m to 53.5% [8]. 2. Market Share and Competition: - ASII's wholesale market share stood at 53%, down from 56.2% year-to-date (YTD) [9]. - BYD's sales increased by 14% m/m, capturing a 3.8% share of the market, with 26% share in xEV [9]. - Wuling's market share rose to 3.4% from 2.9% in October [9]. 3. Electric Vehicle (xEV) Penetration: - xEV penetration reached 15% in November, with contributions from both hybrid electric vehicles (HEVs) and battery electric vehicles (BEVs) [8]. - YTD xEV penetration is at 11.6%, up from 7% in 2023, with HEVs accounting for 6.8% [9]. 4. Future Projections: - The Indonesian government has set a 4W sales target for 2025 of 900,000 to 1 million units, contingent on potential VAT increases [10]. - The automotive industry is expected to face challenges due to rising competition and potential market share erosion [37][39]. Additional Important Insights 1. Financial Metrics: - ASII's current market capitalization is approximately Rp212.54 trillion and an enterprise value of Rp243.55 trillion [12]. - The company's earnings per share (EPS) for 2024 is projected at Rp780.66, with a price target of Rp5,900, indicating a 12% upside potential from the current price of Rp5,250 [12]. 2. Risks: - Upside risks include a notable pickup in 4W demand in the second half of 2024 and successful new model launches [38]. - Downside risks involve continued weakening of auto volumes, increased competition, and potential credit quality issues in the financial segment [39]. 3. Valuation Methodology: - The valuation is based on a sum-of-the-parts approach, with a weighted average of 75% base case, 10% bull, and 15% bear scenarios reflecting the competitive landscape and slower industry growth [37]. This summary encapsulates the critical insights from the conference call regarding Astra International's performance, market dynamics, and future outlook in the Indonesian automotive sector.