ID - [ AUTO IJ]: GPM Likely To Widen On Higher Tariffs; BUY
Andrey Wijaya, Mutiara Nita - RHB Sekuritas
♦ Reiterate BUY on this top sector pick, SOP-based TP of IDR2,100 offers 27% upside plus 3.4% FY19F yield.
♦ Astra Otoparts recorded higher 4Q18 earnings of IDR197bn, above the Street estimate, but below ours – mainly on higher-than-expected selling expenses that partly stem from a one-off impairment.
♦ Still, it booked higher-than-expected income from associates in 4Q18.
♦ We expect its outlook to be buoyed by higher prices of parts sold to auto makers, lower YTD commodity prices and the IDR appreciating against the USD. This should boost 1Q19 GPM.
♦ Supportive regulations on CBU exports and new locally-produced 4W model launches should also lift sales further.
♦ Key downside risks to our call: a weaker IDR and increasing raw material prices.
Link to report: https://research.rhbtradesmart.com/attachments/33/rhb-report-ind_astra-otoparts_results-review_20190227_rhb-910427310623395725c75b7e8ea735.pdf
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