Astra International (ASII.JK, Sell) & Jardine Matheson (JARD.SI, Sell):
Astra’s shares are up 26% in the last 3 months, which we believe to be overly discounting the positives from the impending land reform bill. Reiterate Sell as: 1) we think the bill will accelerate Astra’s 2011-2013E EPS growth by 3-4% only in our base case, and would likely drive only a slight multiple upgrade; 2) our industry checks suggest auto competition is likely to intensify in 2012; 3) Astra’s scarcity premium is not sustainable, as we believe its status as the only liquid big-cap Indonesia consumer/auto stock to be at risk. '+'
