ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> released its FY2020 results with an EPS decline of -53% before exceptional (gain on sale of <a href="https://www.smartkarma.com/entities/bank-permata-tbk-pt" target="_blank" data-smartkarma-citation="entities:728:1" rel="noopener">Bank Permata (BNLI IJ)</a> to <a href="https://www.smartkarma.com/entities/bangkok-bank-public-co-ltd" target="_blank" data-smartkarma-citation="entities:213:1" rel="noopener">Bangkok Bank Public (BBL TB))</a>. Including the one-off gain from the sale of the bank then profits were down -28%. 
Car sales were down -50% in 2020 with <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> seeing a slight decline in market share, whilst motorcycle sales were -41% but with Astra Honda gaining market share. 
<a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> saw a slight increase in loan loss provisions for its financial services business due to the impact of the pandemic. 
<a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a> was impacted by lower coal prices impacting heavy equipment sales and mining contracting volumes. 
Its agribusiness under <a href="https://www.smartkarma.com/entities/astra-agro-lestari-tbk-pt" target="_blank" data-smartkarma-citation="entities:4050:1" rel="noopener">Astra Agro Lestari (AALI IJ)</a> saw positive tailwinds from the higher crude palm oil price. 
The company finished the period with a strong balance sheet and a strong funding position given it has booked the proceeds from the sale of <a href="https://www.smartkarma.com/entities/bank-permata-tbk-pt" target="_blank" data-smartkarma-citation="entities:728:1" rel="noopener">Bank Permata (BNLI IJ)</a>. This gives <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> the wherewithal to look for acquisition opportunities in the wake of the pandemic. 
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<a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> is trading around 20% below the historical mean on a forward PER basis and could trade higher during a recovery. It continues to be one of our top picks to play the recovery in the Indonesian economy. 
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Astra International (ASII IJ) released its FY2020 results with an EPS decline of -53% before exceptional (gain on sale of Bank Permata (BNLI IJ) to Bangkok Bank Public (BBL TB)). Including the one-off gain from the sale of the bank then profits were down -28%. 
Car sales were down -50% in 2020 with Astra International (ASII IJ) seeing a slight decline in market share, whilst motorcycle sales were -41% but with Astra Honda gaining market share. 
Astra International (ASII IJ) saw a slight increase in loan loss provisions for its financial services business due to the impact of the pandemic. 
United Tractors (UNTR IJ) was impacted by lower coal prices impacting heavy equipment sales and mining contracting volumes. 
Its agribusiness under Astra Agro Lestari (AALI IJ) saw positive tailwinds from the higher crude palm oil price. 
The company finished the period with a strong balance sheet and a strong funding position given it has booked the proceeds from the sale of Bank Permata (BNLI IJ). This gives Astra International (ASII IJ) the wherewithal to look for acquisition opportunities in the wake of the pandemic. 

Astra International (ASII IJ) is trading around 20% below the historical mean on a forward PER basis and could trade higher during a recovery. It continues to be one of our top picks to play the recovery in the Indonesian economy. 


Astra International (ASII IJ) - Sitting in Pole Position

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

The LQ45 Index is a market cap weighted index of the 45 most liquid stocks listed on the Indonesia Stock Exchange. The LQ45 Index covers at least 70% of the stock market capitalization and transaction values in the Indonesia Stock Market.The next rebalance of the LQ45 Index will be effective after the close of trading on 29 January and will be announced latest by 26 January, though it is likely that it could be announced as early as 22 January post market close.Stocks that could be included in the index are <a href="https://www.smartkarma.com/entities/bank-brisyariah-tbk-pt" target="_blank" data-smartkarma-citation="entities:26981:1" rel="noopener">Bank Brisyariah (BRIS IJ)</a>, <a href="https://www.smartkarma.com/entities/kimia-farma-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:8524:1" rel="noopener">Kimia Farma Persero (KAEF IJ)</a>, <a href="https://www.smartkarma.com/entities/timah-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:11174:1" rel="noopener">Timah Persero (TINS IJ)</a> and <a href="https://www.smartkarma.com/entities/pp-london-sumatra-indones-pt" target="_blank" data-smartkarma-citation="entities:9039:1" rel="noopener">Pp London Sumatra Indones (LSIP IJ)</a>, while stocks that could be deleted from the index are <a href="https://www.smartkarma.com/entities/sri-rejeki-isman-tbk-pt" target="_blank" data-smartkarma-citation="entities:20178:1" rel="noopener">Sri Rejeki Isman (SRIL IJ)</a>, <a href="https://www.smartkarma.com/entities/summarecon-agung-tbk-pt" target="_blank" data-smartkarma-citation="entities:5693:1" rel="noopener">Summarecon Agung (SMRA IJ)</a>, <a href="https://www.smartkarma.com/entities/wijaya-karya-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:1877:1" rel="noopener">Wijaya Karya Persero (WIKA IJ)</a> and <a href="https://www.smartkarma.com/entities/jasa-marga-persero-tbk-pt" target="_blank" data-smartkarma-citation="entities:12747:1" rel="noopener">Jasa Marga (Persero) (JSMR IJ)</a>.Given the subjective nature of stock inclusion and exclusion, plus the short time frame between announcement of the changes and the implementation, the adds outperform the deletes between announcement and implementation.Though passive assets tracking the index are limited, the LQ45 is a very popular benchmark for mutual funds and pension funds and active managers will also be trading the stocks to realign their portfolios to the new index names.

The LQ45 Index is a market cap weighted index of the 45 most liquid stocks listed on the Indonesia Stock Exchange. The LQ45 Index covers at least 70% of the stock market capitalization and transaction values in the Indonesia Stock Market.The next rebalance of the LQ45 Index will be effective after the close of trading on 29 January and will be announced latest by 26 January, though it is likely that it could be announced as early as 22 January post market close.Stocks that could be included in the index are Bank Brisyariah (BRIS IJ), Kimia Farma Persero (KAEF IJ), Timah Persero (TINS IJ) and Pp London Sumatra Indones (LSIP IJ), while stocks that could be deleted from the index are Sri Rejeki Isman (SRIL IJ), Summarecon Agung (SMRA IJ), Wijaya Karya Persero (WIKA IJ) and Jasa Marga (Persero) (JSMR IJ).Given the subjective nature of stock inclusion and exclusion, plus the short time frame between announcement of the changes and the implementation, the adds outperform the deletes between announcement and implementation.Though passive assets tracking the index are limited, the LQ45 is a very popular benchmark for mutual funds and pension funds and active managers will also be trading the stocks to realign their portfolios to the new index names.

LQ45 Index Rebalance Preview: Potential Candidates for Change

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A call with <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> management revealed that it has seen the worst of it for its core auto division, with a gradual recovery underway for both its autos and motorbikes, where its market share is back to pre-COVID-19 levels at 52% and 75% respectively.  Most of the company's businesses have already started to see significant recoveries from COVID-19 and this momentum will continue into the end of the year and into 2021. Watch out for the increasing impact of digitalization and potential acquisitions utilizing the proceeds of the <a href="https://www.smartkarma.com/entities/bank-permata-tbk-pt" target="_blank" data-smartkarma-citation="entities:728:1" rel="noopener">Bank Permata (BNLI IJ)</a> sale.
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October may see slightly less positive car sales given a 2nd round of PSBB measures were in place for half the month and consumers delayed purchases in the hope that luxury tax would be removed, which did not happen. 
<a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> financial services arm is seeing some recovery and has already made adequate provisioning.
The company has a rock-solid balance sheet post the <a href="https://www.smartkarma.com/entities/bank-permata-tbk-pt" target="_blank" data-smartkarma-citation="entities:728:1" rel="noopener">Bank Permata (BNLI IJ)</a> sale but is considering a number of investment opportunities, potentially in the digital space where it has already invested in <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a>.
<a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> is very focused on digitalizing its overall business with an "Astra Digital" department at head office focused on creating synergies across its businesses, as well as utilizing data analytics.
<a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a> is supported by its gold exposure, where this business is worth more than the rest of its businesses combined. 
<a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> remains one of our top picks for the recovery in the Indonesian economy going into 2021. It trades on 12.7x FY21E PER, with EPS growth forecast at +9.5% and +20.6% for FY21E and FY22E respectively.


A call with Astra International (ASII IJ) management revealed that it has seen the worst of it for its core auto division, with a gradual recovery underway for both its autos and motorbikes, where its market share is back to pre-COVID-19 levels at 52% and 75% respectively.  Most of the company's businesses have already started to see significant recoveries from COVID-19 and this momentum will continue into the end of the year and into 2021. Watch out for the increasing impact of digitalization and potential acquisitions utilizing the proceeds of the Bank Permata (BNLI IJ) sale.

October may see slightly less positive car sales given a 2nd round of PSBB measures were in place for half the month and consumers delayed purchases in the hope that luxury tax would be removed, which did not happen. 
Astra International (ASII IJ) financial services arm is seeing some recovery and has already made adequate provisioning.
The company has a rock-solid balance sheet post the Bank Permata (BNLI IJ) sale but is considering a number of investment opportunities, potentially in the digital space where it has already invested in Gojek (1379371D IJ).
Astra International (ASII IJ) is very focused on digitalizing its overall business with an "Astra Digital" department at head office focused on creating synergies across its businesses, as well as utilizing data analytics.
United Tractors (UNTR IJ) is supported by its gold exposure, where this business is worth more than the rest of its businesses combined. 
Astra International (ASII IJ) remains one of our top picks for the recovery in the Indonesian economy going into 2021. It trades on 12.7x FY21E PER, with EPS growth forecast at +9.5% and +20.6% for FY21E and FY22E respectively.

Astra International (ASII IJ) - An Auto-Recovery Story with a Golden Digital Twist

<a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> just released 1H2020 results with a revenue decline of -23% but a net profit increase of +16% helped by the well-timed sale of its stake in <a href="https://www.smartkarma.com/entities/bank-permata-tbk-pt" target="_blank" data-smartkarma-citation="entities:728:1" rel="noopener">Bank Permata (BNLI IJ)</a> to <a href="https://www.smartkarma.com/entities/bangkok-bank-public-co-ltd" target="_blank" data-smartkarma-citation="entities:213:1" rel="noopener">Bangkok Bank Public (BBL TB)</a> booked in 2Q2020.
Taking out the sale of <a href="https://www.smartkarma.com/entities/bank-permata-tbk-pt" target="_blank" data-smartkarma-citation="entities:728:1" rel="noopener">Bank Permata (BNLI IJ)</a>, net profit fell by -44% YoY largely due to weaker performance from automotive, heavy equipment, mining, and financial services. 
Car sales for <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> were down -45% YoY due to COVID-19, with market share at 53% and in 2Q2020 car sales fell by 92% versus 1Q2020.
Motorcycle sales fell by -40% in IH2020 YoY and -80% in 2Q2020 versus 1Q2020, with increased market share of 77% in 1H2020.
Heavy Equipment and financing divisions both saw declines of -29% and 25% in net income respectively, although <a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a> saw some support from its mining businesses.
The company's palm oil business under <a href="https://www.smartkarma.com/entities/astra-agro-lestari-tbk-pt" target="_blank" data-smartkarma-citation="entities:4050:1" rel="noopener">Astra Agro Lestari (AALI IJ)</a> performed extremely well given higher CPO prices, whilst the infrastructure business registered a loss due to lower toll-road revenues due to PSBB measures.
Unsurprisingly, management expressed caution on the outlook for the rest of the year but we would expect more colour on this from the analyst briefing on 12th August. 
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We continue to like <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> as one of our top recovery plays in Indonesia for FY21.  <a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener">Jardine Cycle &amp; Carriage (JCNC SP)</a> also looks interesting at this juncture given the current 5-year high discount to NAV. 
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Astra International (ASII IJ) just released 1H2020 results with a revenue decline of -23% but a net profit increase of +16% helped by the well-timed sale of its stake in Bank Permata (BNLI IJ) to Bangkok Bank Public (BBL TB) booked in 2Q2020.
Taking out the sale of Bank Permata (BNLI IJ), net profit fell by -44% YoY largely due to weaker performance from automotive, heavy equipment, mining, and financial services. 
Car sales for Astra International (ASII IJ) were down -45% YoY due to COVID-19, with market share at 53% and in 2Q2020 car sales fell by 92% versus 1Q2020.
Motorcycle sales fell by -40% in IH2020 YoY and -80% in 2Q2020 versus 1Q2020, with increased market share of 77% in 1H2020.
Heavy Equipment and financing divisions both saw declines of -29% and 25% in net income respectively, although United Tractors (UNTR IJ) saw some support from its mining businesses.
The company's palm oil business under Astra Agro Lestari (AALI IJ) performed extremely well given higher CPO prices, whilst the infrastructure business registered a loss due to lower toll-road revenues due to PSBB measures.
Unsurprisingly, management expressed caution on the outlook for the rest of the year but we would expect more colour on this from the analyst briefing on 12th August. 

We continue to like Astra International (ASII IJ) as one of our top recovery plays in Indonesia for FY21.  Jardine Cycle &amp; Carriage (JCNC SP) also looks interesting at this juncture given the current 5-year high discount to NAV. 


Astra International (ASII IJ) - Simmering Recovery Afoot

A conversation with <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ</a> early this week was marked by a cautiously optimistic tone for its core auto-related businesses, including its finance business. 
Auto sales are expected to see 5% growth in the coming year, with new model launches ahead potentially providing a further tailwind. 
The company's finance businesses should also perform well in the coming year, with credit issues now put to bed and growth being supplemented by more activity in the used car market and multi-finance.
Subsidiaries <a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a> and <a href="https://www.smartkarma.com/entities/astra-agro-lestari-tbk-pt" target="_blank" data-smartkarma-citation="entities:4050:1" rel="noopener">Astra Agro Lestari (AALI IJ)</a> have rallied recently on expectations of higher coal, CPO, and commodity prices in general. The question is whether this is sustainable.
It remains to be seen whether recent moves in commodity prices, especially coal, can be sustained but the outlook for palm looks to be well underpinned by supply issues and new B30 rules introduced in January. 
<a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> trades on a forward FY20E PER of 12.3x, which is at a slight discount to the overall market on 13x FY20E PER. If the company were to trade back to its 3-year average PER of 14x, this would imply +14% upside or a target price of IDR8,100 but its three-year peak forward PER is at 17x, leaving more significant potential upside. For those of a trading mindset, <a href="https://www.smartkarma.com/entities/jardine-cycle-carriage-ltd" target="_blank" data-smartkarma-citation="entities:347:1" rel="noopener">Jardine Cycle &amp; Carriage (JCNC SP)</a> is looking like a cheap way to gain exposure to <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a>, trading at the highest levels in terms of NAV discount going back five years.

A conversation with Astra International (ASII IJ early this week was marked by a cautiously optimistic tone for its core auto-related businesses, including its finance business. 
Auto sales are expected to see 5% growth in the coming year, with new model launches ahead potentially providing a further tailwind. 
The company's finance businesses should also perform well in the coming year, with credit issues now put to bed and growth being supplemented by more activity in the used car market and multi-finance.
Subsidiaries United Tractors (UNTR IJ) and Astra Agro Lestari (AALI IJ) have rallied recently on expectations of higher coal, CPO, and commodity prices in general. The question is whether this is sustainable.
It remains to be seen whether recent moves in commodity prices, especially coal, can be sustained but the outlook for palm looks to be well underpinned by supply issues and new B30 rules introduced in January. 
Astra International (ASII IJ) trades on a forward FY20E PER of 12.3x, which is at a slight discount to the overall market on 13x FY20E PER. If the company were to trade back to its 3-year average PER of 14x, this would imply +14% upside or a target price of IDR8,100 but its three-year peak forward PER is at 17x, leaving more significant potential upside. For those of a trading mindset, Jardine Cycle &amp; Carriage (JCNC SP) is looking like a cheap way to gain exposure to Astra International (ASII IJ), trading at the highest levels in terms of NAV discount going back five years. 

Astra International (ASII IJ) - A Dawning Recovery Is Afoot

Indonesia

PT Astra Agro Lestari Tbk is a leading Indonesian agribusiness company primarily engaged in oil palm cultivation and the production of crude palm oil (CPO) and palm kernel oil. The company manages extensive plantations across Sumatra, Kalimantan, and Sulawesi, and operates palm oil mills and refineries to produce various derivatives. It sells its palm-based raw materials to industrial buyers globally. The company was established in 1988 and is headquartered in Jakarta, Indonesia.

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Astra Agro Lestari (AALI IJ)

Astra International (ASII IJ) - Sitting in Pole Position

Astra International is trading around 20% below the historical mean on a forward PER basis and could trade higher during a recovery. It remains one...

Angus Mackintosh

LQ45 Index Rebalance Preview: Potential Candidates for Change

The LQ45 rebalance will be effective after the close of trading on 29 January and the announcement will be made in the next few days. There could...

Brian Freitas

Astra International (ASII IJ) - An Auto-Recovery Story with a Golden Digital Twist

Astra remains one of our top picks for post-COVID-19 recovery in Indonesia, with its core auto and other businesses gaining ground. It has a rock...

Angus Mackintosh

Astra International (ASII IJ) - Simmering Recovery Afoot

Astra International (ASII IJ) just released 1H2020 results with a revenue decline of -23% but a net profit increase of +16% helped by the...

Angus Mackintosh

Astra International (ASII IJ) - A Dawning Recovery Is Afoot

A conversation with Astra International (ASII IJ early this week was marked by a cautiously optimistic tone for its core auto-related businesses,...

Angus Mackintosh

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