ASTRA INTERNATIONAL - ASII

Background

Indonesia has stable economic growth compared to other countries in south East Asia. Gross Domestic Product in three consecutive years 2010 - 2012 are always at approximately 6 %: 6.2 %; 6.5% and 6.2%. The macroeconomic stability is key strength for any industry to grow.  Gross Domestic product in Indonesia is contributed by 55 % from public consumption and 34 % from Investment. With strong domestic economic base, Indonesia has good fundamental in economic for the future.

In Indonesia, it is still lack of competition. The industry in indonesia, both service and manufacturing are contained poor in number of player. Major Player such as Astra International has strong opportunity to grow. 

Government had cut its subsidy in subsidized fuel price. It will decrease private consumption as the increase of cost. For automotive industry, Fuel price hike is heavy for cost of manufacture but it is a challenge for the sales team of the company. in order to anticipate higher fuel price, astra had launch new low cost fuel efficient car, Astra Toyota Agya and Astra Daihatsu Ayla. Astra is the leader in car  and motorcycle market share in indonesia.

In infrastructure industry, length of toll roads in Indonesia is lower compared to malaysia, thailand and etc. According to ministry of transportation, indonesia only has toll road along 778 km which is lower than malaysia with toll road along 3000 km.  Government has several strategic toll road projects in java and outside java. Trans java which is connecting surabaya and jakarta along 615 km was started since 2006. The project is hampered by land acquisition issue. The Government has also planned other strategic Toll road: trans sumatra, trans sulawesi and others. Government has supported with incentive and deregulation of policy through ministry of public works with government regulation number 15 of 2005 on Toll Road. This is a good momentum for subsidiary which operates in infrastructure industry to participate in the project.  

For banking industry, Indonesia is still prospective. In September 2012, Credit increase 23 % compared to 2011, The same condition is occurred to third party funding which is 20 % up.  Non-performing loan is at lower rate, it indicates that credit quality is at well condition. Banking sector is still growing, several new banks appear at 2012, Bank of Nobu, Bank of Pundi and etc. 

Strategic Triple Roadmap

Comprised of:

·         Portfolio Roadmap

·         People Roadmap

·         Public Contribution Roadmap

Shareholder

·         Jardine cycle & carriage ...........50,11 %

·         Budi Setiadharma .............0,02%

·         Anthony john Liddell Nightingale.....0,02%

·         Commissioner

·         Others (each less than 5 %)............49,85%

Jardine is the biggest shareholder in Astra International.  JC &C is Singapore - Listed Company, the company is a member of Jardine Matheson Group, the major player in other countries in automotive industry.  With 50, 11 % of entire shares,  JC & C controlled the company.   JC&C takes control in similar business at Malaysia, Singapore, Thailand and Vietnam.

Business Structure

No	Industry	Product	Brand / Subsidiary
1	Automotive	Car	Toyota
			Daihatsu
			Isuzu
			UD Trucks
			Peugeot
			BMW
		Motor cycle	Honda
		Sparet Parts	Astra Otoparts
		Others	Astra World
2	Financial Service	Car Financing	Astra Sedaya Finance
			Toyota Financial Service
		Motorcycle Financing	Federal International Finance
		Heavy Equipment Financing	Surya Artha Nusantara Finance
			Komatsu Astra Finance
		General Insurance	Asuransi Astra Buana
		Banking	Bank Permata
3	Heavy Equipment  &	Construction Machinery	UT and Traktor Nusantara
		Mining Contractor	Pamapersada Nusantara
		Mining	Tuah Turangga Agung
			Agung Baraprima
			Duta Sejahtera
			Bukit Enim Energy
			Duta Nurcahya
4	Agribusiness	Palm Plantation	Astra Agro Lestari
5	Infrastructure and Logistic	Toll Road	MMS . MTN, MHI
		Logistic	SERA
			Trac
			Mobil 88
			TFLI
6	Water Utility	Water Utility	Palyja
		Fuel Logistic	Gresik Terminal
7	Information Technology	Document Solution	Astra Graphia
		Information Technology	AG Information Technology

My analysis

Financial Summary

General

Indonesia has strong economic growth in 2012, it was 6 % Y-o-Y. With high domestic consumption and high number in productive age, economic is still prospective at the future.  

Automotive

• New down payment requirement in 2012  affected the total revenue for automotive.  Consumer tends to buy new vehicle at the lower down payment.
• Astra Automotive business grows 25 % in 2012 from 79.7 trillion in to 99.6 trillion. It comprised sales of Astra cars and sales of Honda motorcycle.
• Reaching to 605,191 units, Total revenue of Astra car increase 25.4 % compared to 2011. This increase indicate that astra has strong integrated business in sale a car and provide its financial service.

Financial Service

Revenue in Financial Service division increase 15 % compared to previous year. The contribution to the group also increases from 18.7 % in 2011 to 19.1 %. The growth of financial service sector is affected by the increase of revenue in automotive segment.  

Capital Market

Based on return on investment in equities and market return (Jakarta Stock Exchange index) at June 2013, we could get beta (with regression analysis) of stocks in business portfolio of Astra International as the following result:

 Stock                                    beta

Astra Agro............           0.58

Astra Graphia.......           1.00

Bank Permata.....             0.03

United Tractors                 -1.01

Astra Otoparts....             -0.25

Those data are taken from Jakarta stock exchange of June 2013. Betas which are valued between 0 - 1 are Bank Permata, Astra Graphia and Astra Agro Lestari. The rest are at range of 0 to -1, these are United tractor and Astra Otopart.

Not all subsidiaries of Astra International are listed at Jakarta Stock Exchange. I don't calculate the private company for the beta.

Beta describes the risk of investment in stock at capital market in Capital Asset Pricing Model Concept.

 SUMMARY

Astra International has strong portfolio and strong major shareholder which is having the same vision in developing automotive industry as the major business portfolio. In order to do vertical integration astra international has invested their Fund in Infrastructure segment. The company had done the same strategy with Astra otopart which supply the spare part in after market of automobile and motor cycle which are produced by The company.  

Forecasting

Sales	Mar	Jun	Sep	Dec	Total	Growth
2008	21,780.0	22,981.0	29,004.0	23,299.0	97,064.0
2009	21,537.0	24,730.0	24,380.0	27,879.0	98,526.0	1.51%
2010	29,688.0	31,819.0	32,855.0	34,676.0	129,038.0	30.97%
2011	36,693.0	39,571.0	43,266.0	43,034.0	162,564.0	25.98%
2012	46,353.0	49,566.0	47,219.0	44,915.0	188,053.0	15.68%
2013	43,287.9	47,226.1	62,650.0	60,782.2	213,946.3	13.77%

From the table at above we can figure out that The company has good growth rate between 2008 - 2012. In 2013 with smoothing moving average we could calculate that the company will increase 13.77 %. We make assumption with average growth 10 % in the next ten years, we could find the possible condition as the following (IDR).