Analyst Recommends Buying of Tunas Ridean Shares
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Tuesday, 27 November 2007 16:37:08
StockWatch (Jakarta) - Shares of automotive financing company PT Tunas Ridean
Tbk (TURI) have been recommended for buying by Kim Eng Securities' analysts
Ricardo Silaen, at target price of IDR1,900 per unit.
Compared to the closing price on Monday (26/11) at IDR1,330 per share, the
target price of IDR1,900 implies a potential increase of 42.86% in the next 12
months.
Tunas Ridean's net profit shot up 300% at IDR141 billion in the first nine
months of 2007 on 14% increase in revenue. During that period, the company sold
13,803 new cars (up 15%) and 70,007 motorcycles (flat from the previous year).
Margins improved sharply because of weak automotive market in 2006, so the
company had to offer a lot of discounts and promotions to drive sales. Even so,
interest rates then were higher than in 2007, while net profit improved
sharply, bolstered by a gain of Rp16 billion from hedging versus a
hedging-related loss of IDR13 billion in the same period of 2006.
In an analysis report, Ricardo Silaen said he expects 2008 to be another good
year for the auto sector for the car and motorcycle segments. Year-to-date,
sales of cars and motorcycles grew 37% and 10% respectively, setting the stage
for a buoyant 2008. The prevailing interest rate stands at 8.25%, down 450 bps
from two years ago.
Besides, he expects interest rates to stabilise if not decline in 2008 and
furthermore, in the run up to the 2009 general election, government spending
will increase next year.
As such, he expects consumers' purchasing power to improve so consequently he
reckons that sales of cars and motorcycles will grow 20% and 10% respectively
in 2008.
Tunas Ridean plans to open eight new branches in 2008, one Toyota car dealer,
one Honda motorcycle dealer, three Tunas Finance branches, and three Tunas
Rental branches.
It may open a car dealer in 2009 as well, so he expects Tunas Ridean to regain
a market share of 4.5% in 2008 from currently 4.3%, while the company's
upcoming bond issue of IDR750 billion is expected to boost new loans by its
financing business to IDR2.4 trilion in 2008, up 33% from IDR1.8 trillion in
2007. (dwi/bud)
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