June 13: ASII: reiterate Sell rating Relevant excerpt:
*ASEAN: Conglomerates: Indonesia: Prefer commodities to consumer* *Stock outperformance depends on growth and catalysts* Given what we see as fair 2011E P/Es (14X-15X) for our Indonesia conglomerate coverage, we expect only stocks with superior growth and strong catalysts to outperform. We rate Astra International a Sell, as while it enjoys strong end automobile demand today, it is increasingly subject to negative risks like higher interest rates and potential fuel subsidy removal. *Astra: Sell - Negative risks have been delayed but not diminished* We expect Astra to underperform as it faces slower growth and lower returns through 2012, yet trades above historical peak cycle valuations. We view its recent share price outperformance as unjustified, as while some of the negative 4W-related risks have indeed been delayed, these risks have not in fact diminished. We maintain our 4W forecasts, but slightly raise our 2W forecasts given the stronger-than-expected ytd demand. Our 2011-13E auto-only earnings forecasts (key investor focus) for Astra remain below consensus (6% lower on avg). We reiterate our Sell rating. '+'
