23 23 Analisa Saham ASSA CIMB 20170428

Company Flash Note IMPORTANT DISCLOSURES, INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT. IF THIS REPORT IS DISTRIBUTED IN THE UNITED STATES IT IS DISTRIBUTED BY CIMB SECURITIES USA, INC. AND IS CONSIDERED THIRD-PARTY AFFILIATED RESEARCH. Powered by the EFA Platform Adi Sarana Fast car ASSA’s 1Q17 core profit in line with expectations, at 26 of our FY17F forecast. ■ Strong used car market and declining 4x4 vehicle disposals point to further ■ recovery in used car margins. The stock is trading at 0.8x FY17 PBV. Our target price reflects its deep ■ undervaluation and growth potential in a recovery environment. Maintain Add. 1Q17 results in line ● The company booked a revenue of Rp411bn in 1Q17 +12 yoy, -6 qoq, forming 23 of our FY17F forecast. The revenue growth was supported by a strong rebound in used car sales revenue +49 yoy, 16 of 1Q17 revenue, and also by positive growth in rental business +11 yoy, 67 of 1Q17 revenue and auction services +124 yoy, 1 of 1Q17 revenue. ● The positive segmental revenue growth offset the decline in logistics service revenue -7 yoy, 16 of 1Q17 revenue. ● 1Q17 core net profit was Rp23bn +117 yoy, +1 qoq, forming 26 of our FY17 estimate. We deem the results in line. ● The company’s cars under management rose to 19,389 units as at 1Q17, with a net increase of 190 units during the quarter. Used car margins rise further ● ASSA disposed a total of 661 vehicles in 1Q17. The disposal target this year is 3,000 units. Passenger car disposals made up the bulk of the vehicles disposed during the quarter, at c.80. Majority of the disposals were of popular MPV products i.e. Toyota Avanza and Toyota Kijang Innova. ● ASSA’s used car sales margin jumped to Rp14.9mcar in 1Q17 from Rp6.9mcar in 4Q16. This was supported by strong margins from sales of four-year old Toyota Avanza, which were sold at 72 of their acquisition price vs. 67-72 in FY14-16. ● We note that fewer disposals of 4x4 ex-mining units 25 units vs. 38 units in 4Q16 as well as narrower loss per car of Rp65mcar Rp80m loss per car in 4Q16 also contributed to the rebound in used car margin. ● The average used car margin in 1Q17 was in line with our expectation of Rp15mcar in FY17F. We expect this margin to be sustainable over the next three years, supported by a better economic growth outlook and higher new car prices. Still undervalued ● The company is trading at 0.8x forward PBV and 8.4x forward PE. Given the improving visibility of a recovery scenario, used car upside and a rapidly rising ROE, we believe ASSA is still undervalued. ● We maintain our forecasts, and our GGM-based target price ROE 16, LTG 0 and COE 14 implies 10x FY18 PE and 1.1x FY18 PBV. ● Re-rating catalysts include faster-than-expected adjustments in borrowing rates and ROE. Downside risks include lower-than-expected used car sales margins. Figure 1: 1Q17 results comparison SOURCES: CIMB, COMPANY REPORTS FYE Dec Rp bn 4QFY16 qoq chg 1QFY17 1QFY16 yoy chg Current FY17F Revenue 437 6.0 411 365 12.5 1,779 23 of CIMB forecast Operating costs 265 6.9 247 221 11.7 1,050 EBITDA 172 4.8 164 144 13.7 730 23 of CIMB forecast EBITDA margin 39 40 40 41 Depn amort. 96 1.0 95 90 5.9 422 EBIT 77 9.4 69 55 26.6 308 23 of CIMB forecast Interest expense 45 5.5 43 48 9.8 210 Interest invt inc 17.3 38.0 1 Others 5 51.7 3 5 51.7 15 Pretax profit 37 20.2 29 13 130.5 113 Tax 14 54.6 7 2 262.4 24 Tax rate 39 22 14 22 Minority interests 128.5 343.2 - Net profit 23

1.5 23

11 108.9 89 26 of CIMB forecast Core net profit 22

1.2 23

10 117.0 89 26 of CIMB forecast EPS Rp 7 1.5 7 3 108.9 26 Core EPS Rp 7 1.2 7 3 117.0 26 ▎ Indonesia April 28, 2017 - 5:44 PM ADD no change Consensus ratings: Buy 2 Hold 0 Sell 0 Current price: Rp238.0 Target price: Rp355.0 Previous target: Rp355.0 Updownside: 49.2 CIMB Consensus: 3.6 Reuters: ASSA.JK Bloomberg: ASSA IJ Market cap: US60.73m Rp808,605m Average daily turnover: US0.07m Rp950.4m Current shares os 7,147m Free float: 40.0 Source: Bloomberg Key financial forecasts Source: Bloomberg Price performance 1M 3M 12M Absolute -4.8 22.7 103.4 Relative -7.8 15.3 85.6 Major shareholders held Adi Dinamika Investindo 24.9 Daya Adicipta Mustika 19.2 Theodore Permadi Rahmat 6.0 Analysts Peter P. SUTEDJA, CFA T 62 21 3006 1726 E peter.sutedjacimb.com Dec-17F Dec-18F Dec-19F Net Profit Rpb 88.7 115.3 153.1 Core EPS Rp 26.11 33.94 45.05 Core EPS Growth 42.6 30.0 32.7 FD Core PE x 9.12 7.01 5.28 Recurring ROE 9.5 11.4 13.7 PBV x 0.83 0.76 0.69 DPS Rp 6.11 8.72 11.34 Dividend Yield 2.57 3.66 4.76 81 121 161 201 241 93 143 193 243 293 Price Close Relative to JCI RHS 50 100 150 Apr-16 Jul-16 Oct-16 Jan-17 V ol m 2 BY THE NUMBERS SOURCE: CIMB RESEARCH, COMPANY DATA Profit Loss Rpb Dec-16A Dec-17F Dec-18F Dec-19F Total Net Revenues 1,570 1,779 2,038 2,366 Gross Profit 814 961 1,140 1,342 Operating EBITDA 640 744 891 1,050 Depreciation And Amortisation 367 422 494 573 Operating EBIT 273 322 396 477 Financial IncomeExpense 184 209 249 282 Pretax IncomeLoss from Assoc. Non-Operating IncomeExpense Profit Before Tax pre-EI 89 113 147 195 Exceptional Items Pre-tax Profit 89 113 147 195 Taxation 27 24 32 42 Exceptional Income - post-tax Profit After Tax 62 89 115 153 Minority Interests Preferred Dividends FX GainLoss - post tax Other Adjustments - post-tax Net Profit 62 89 115 153 Recurring Net Profit 62 89 115 153 Fully Diluted Recurring Net Profit 62 89 115 153 Balance Sheet Rpb Dec-16A Dec-17F Dec-18F Dec-19F Total Cash And Equivalents 40 43 36 36 Total Debtors 201 229 262 304 Inventories 31 32 31 33 Total Other Current Assets 20 50 57 66 Total Current Assets 292 354 386 439 Fixed Assets 2,631 3,127 3,672 4,328 Total Investments Intangible Assets Total Other Non-Current Assets 106 106 106 106 Total Non-current Assets 2,738 3,234 3,778 4,434 Short-term Debt 2 2 2 2 Current Portion of Long-Term Debt 440 671 808 972 Total Creditors 88 109 123 142 Other Current Liabilities 67 67 77 89 Total Current Liabilities 597 849 1,010 1,206 Total Long-term Debt 1,387 1,624 1,954 2,353 Hybrid Debt - Debt Component Total Other Non-Current Liabilities 143 143 143 143 Total Non-current Liabilities 1,529 1,767 2,097 2,496 Total Provisions Total Liabilities 2,126 2,616 3,107 3,702 Shareholders Equity 904 971 1,057 1,172 Minority Interests Total Equity 904 972 1,057 1,172 Cash Flow Rpb Dec-16A Dec-17F Dec-18F Dec-19F EBITDA 640.1 744.4 890.5 1,050.1 Cash Flow from Invt. Assoc. 0.0 0.0 0.0 0.0 Change In Working Capital 0.6 37.4 15.0 22.5 IncrDecr in Total Provisions 0.0 0.0 0.0 0.0 Other Non-Cash IncomeExpense 0.0 0.0 0.0 0.0 Other Operating Cashflow 252.9 903.1 1,022.9 1,212.1 Net Interest PaidReceived 184.0 209.4 249.4 282.2 Tax Paid 26.7 24.3 31.6 41.9 Cashflow From Operations 177.2 429.8 428.3 508.7 Capex 12.4

15.1 15.9