Research & Stock Picks

Company Reports

15 January 2025

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Automotive: Neutral with ASII as Top Pick

Strength

For ASII, we like its diversified earnings streams, supported by various subsidiaries in different sectors; DRMA’s expansion into new auto parts and models may help offset the potential impact of lower vehicle sales due to the VAT for luxury goods increase to 12%

Weakness

ASII’s non-hybrid automotive sales to remain low due to pressure from the 12% VAT for luxury goods, which may also affect DRMA’s revenue growth, while lower-than-expected operational efficiencies and low sales volumes may limit margin improvements

Opportunity

In 2025, locally manufactured HEVs will see 3% lower luxury tax incentive to benefit ASII; DRMA to be supported by potential partner-ships with Chinese players on minimum local content compliance; ASII’s market under-performance provides buying opportunities

Threat

Strong dollar for longer will cap Bank Indonesia’s ability to cut rates and hurt vehicle sales demand while weak IDR will lower purchasing power, resulting in continued market underperformance for both counters under our coverage

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