With Growing Car Sales, Astra’s Stock Gets Hold Recommendation

PT Astra International Tbk (ASII), an issuer with a core business in the automotive sector, recorded car sales amounting to 273,000 units in the first semester of 2016, rising 4.19% from the first semester of last year’s 262,000 units. The rise also sustained revenue growth of its subsidiary that is PT Astra Otoparts to Rp 6.43 trillion, up 12.41% from the first semester of last year.

Based on the rise, PT CIMB Securities Indonesia recommended hold on ASII’s stock with target price of Rp 7,950. Patricia Sumampouw, an analyst from CIMB Securities, assessed that in the second to the third quarter of this year, Astra has a positive momentum in the auto business segment.

“We project sales increase in the third quarter of 2016, following reduction of interest rate as well as demands on new products,” Patricia said. CIMB Securities believes that the tax amnesty program carried out by the government will also have impact on auto sales, including Astra.

As for now, ASII is traded at 17.1 times from forward price to earnings ratio or 19.1 times in the auto business segment. “We have an expectation that ASII’s stock price will remain with a positive correlation with GDP based on historical data,” Patricia explained. (*)