Astra Gains Most in Seven Weeks on Profit Growth: Jakarta Mover

PT Astra International, Indonesia’s biggest automotive retailer, rose the most in seven weeks after reporting a 13 percent increase in first-half net income.

Astra gained 3.1 percent, the most since June 6, to 6,650 rupiah as of the mid-day break in Jakarta. The Jakarta Composite index climbed 1.6 percent. Astra said yesterday first-half net income increased to 9.7 trillion rupiah ($1 billion) as higher vehicle sales outweighed declining sales at palm oil unit PT Astra Agro Lestari. That’s 51 percent of the 19.1 trillion rupiah full-year estimate among 24 analysts in a Bloomberg survey. Astra sells Toyota Motor Corp. and Daihatsu Motor Co. vehicles and Honda Motor Co. motorcycles.

“First-half core earnings were slightly ahead of our forecast,” Erwan Teguh and Cindy Effendi, Jakarta-based analysts at CIMB Group Holdings Bhd., wrote in a report today. “Better Astra Agro production and the launch of low-cost cars by Toyota or Daihatsu are expected to revive growth in the fourth quarter.”

Rising vehicle sales help Jakarta-based Astra cushion the impact that declining commodity prices may have on heavy-equipment unit PT United Tractors and palm-oil producer Astra Agro. The Thomson Reuters/Jefferies CRB Index of raw materials dropped 7 percent in the first half as Europe’s debt crisis and slowing growth in China cut raw-materials demand.

Low borrowing costs are helping to spur vehicle sales as the central bank has kept its benchmark interest rate at a record low 5.75 percent for five straight months. Indonesia’s domestic vehicle sales gained 28 percent to 535,263 units in the six months to June from a year ago, Astra said on July 12. The company’s own vehicle sales increased 32 percent to 301,636 units over the period, while motorcycle sales were little changed from last year at 2.1 million units, it said.

Estimate Raised

CIMB today raised Astra’s share-price estimate to 7,700 rupiah from 7,600 rupiah. The stock is rated outperform, meaning its total return is expected to exceed a relevant benchmark’s total return by 5 percent or more over the next 12 months.

Still, vehicle sales may be impacted after Bank Indonesia required banks to ask for down payments, according to CIMB’s Teguh and Effendi. As of June 15, the central bank set the minimum down payment for four-wheeled vehicle loans at 30 percent, motorcycles at 25 percent and commercial vehicles at 20 percent.

The CIMB analysts also expect a “sharp drop” in United Tractors’ heavy equipment sales in the third quarter.

United Tractors reduced its 2012 sales target by 10 percent to 8,800 units, the same amount it sold last year, as lower coal prices cut demand for its heavy equipment, Corporate Secretary Sara K. Loebis said yesterday.

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