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07 November 2024

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ASII: 3Q24 Results – BUY, SSI TP: IDR 5,900

Strength:
3Q24 bottom line jumped +19.1% QoQ/+21.3% YoY, driven mainly by forex gain thanks to stronger IDR; automotive revenue grew +12.1% QoQ/+3.3% YoY in 3Q24, supported by seasonality and GIIAS; UNTR and financing segment booked solid 3Q24 results, fueled by strong heavy equipment sales and robust demand for used car and 2W financing

Weakness:

3Q24 automotive gross margin declined to 11.0% (vs. 11.4% in 3Q23), primarily due to aggressive discounts and promotional efforts aimed at bolstering weakening 4W demand amid economic uncertainty

Opportunity:

Upcoming BI rate cut(s) are expected to reduce the interest on auto loans, potentially boosting 4W demand; low BEV penetration rate in Indonesia, mainly due to limited number of charging stations, should benefit ASII and its HEV line-up; earnings upgrades may improve sentiment and result in market underperformance reversal

Threat:

Weak consumer spending may hinder 4W sales recovery, adversely affecting ASII’s future growth; competition from Chinese EV players could place pressure on ASII’s market share; current IDR depreciation may spell further bad news for ASII’s auto segment which has high USD-linked COGS of around 80-85% (our assumption)

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ASII One Page 3Q24

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ASII One Page 3Q24

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