Sunday, October 21, 2012

Biggest piece of the pie remained ASII’s

by Trimegah


Sep’12 4W sales increased 33.7% MoM

Sep’12 four-wheelers (4W) sales reached 102k units, jumped 34% MoM,  caused by lower base in Aug’12 on lesser marketing days due to Ied Holiday. Sep’12 sales volumes, which increased 28% YoY and is the second highest historical sales volumes (Jul’12 sales is the highest with 102.5k units), cementing our view that 4W sales will be less impacted by government regulation of minimum down payment for vehicle loan of 30%. 9M12 4W sales reached 816k units, up 24% YoY.

Toyota remains the largest, Mitsubishi and Honda gaining market share in Sep’12 Toyota booked 30% MoM sales growth to 52,476 units (+13% YoY), slower than industry growth, causing Toyota to lose its market share by 1% from 34% in Aug’12 to 33% in Sep’12.  Mitsubishi booked Sep’12 sales volumes of  13,966 units, jumped 52% MoM and 80% YoY, allowing it to gain market share by 1.7% from 12% in Aug’12 to 13.7% in Sep’12. With sales volumes of 7,828 units (+55% MoM, +60% YoY), Honda’s Sep’12 market share improved (+1.1% to 7.7%). However, ASII’s (Toyota, Daihatsu, Isuzu, etc.) 9M12 market share improved to 54.9% (FY11: 54%) on the back of aggressive marketing activities in 1H12.

2W sales increased for the fi rst time in seven months, Honda remains the leader Sep’12 two-wheelers (2W) sales reached 620k units, snapping a six-month decline with 45% MoM increase while dropping 14% YoY, bringing 9M12 sales to reach 5.3m units, dropped 14% YoY. We believe the impact of 30% minimum down payment had faded away as increasing purchasing power would allow low-middle class customer to purchase two-wheelers. Thus, we expect 4Q12 2W sales to improve. In September, Honda remained the largest 2W supplier with 60% market share, dropped 1.1% from its August market share of 61%.

Overweight sector, BUY ASII and IMAS

In the past one month automotive sector outperformed the market by 7%. We expect the sector would remain to outperform the market in 4Q12. We believe in 4Q12, 2W sales would reach around 600k units per month, which would allow FY12 2W sales to reach 7.1m units (-11% YoY), before further increasing by 5% YoY to 7.5m units in FY13. On 4W segment, we expect 4Q12 sales to reach around 90k units per month, which would bring FY12 4W sales to reach 1.1m units (+21% YoY), before further increasing by 15% YoY to 1.2m units in FY13. We believe ASII would retain its largest market share in both 2W and 4W segments. Thus we retain ASII as our top sector pick with total return of 15% (upside: 11.8% and div. yield: 3.2%).

On IMAS, we expect intense competition would deteriorate its volume growth. However, with low PE’13 of 9x we reiterate a BUY rating on IMAS (upside: 32%).

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