70% astra international - credit suisse

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION®

Client-Driven Solutions, Insights, and Access

06 November 2015

Asia Pacific/Indonesia

Equity Research

Automobile Manufacturers

Astra International

(ASII.JK / ASII IJ) CHANGE IN FOCUS LIST

End of a long hard drive! Figure 1: Four wheeler volume is the key driver for relative stock performance

-80%

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120%

Jan-

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Astra relative yoy performance to the market 4W YoY

Source: Credit Suisse, Bloomberg

■ It appears that we have just passed the trough for this downcycle for Autos and Astra in Indonesia. We have seen margins improve from very low levels for the past two quarters, and volumes for both four wheelers and two wheelers have shown some recovery for August and September.

■ A recovery in auto volumes next year (our model suggests 10% growth) should lead to lower discounts compared to 2015. Further, new model launches will move the price point up. These will combine to further improve auto margins.

■ Real rates in Indonesia are running at 3%; we expect a rate cut cycle to start early next year. Astra benefits from this on two fronts. First, it improves demand for 4Ws and 2Ws. Second, it improves the NPL cycle and the margins of the Finance division (25% of total profits in 9M15).

■ This will not be a straight line recovery that we saw in previous cycles. GDP growth will be lower than previous cycles, and will be led largely by govt spending. Which means, we will still see months where data deteriorates and use this pull back to further build a position in Astra. Trading at 13x 2016 earnings, Astra offers a good entry point at the beginning of a recovery cycle. We are now adding Astra to the Credit Suisse AxJ Focus List.

Share price performance

8090100110120

4000

6000

8000

10000Price (LHS) Rebased Rel (RHS)

The price relative chart measures performance against the JSX

COMPOSITE INDEX which closed at 4577.23 on 05/11/15

On 05/11/15 the spot exchange rate was Rp13580./US$1

Performance over 1M 3M 12M Absolute (%) 9.7 -1.5 -6.5 — Relative (%) 6.7 2.5 3.2 —

Financial and valuation metrics

Year 12/14A 12/15E 12/16E 12/17E Revenue (Rp bn) 201,701.0 188,538.3 213,926.2 240,898.9 EBITDA (Rp bn) 27,957.0 23,201.0 26,026.8 30,431.9 EBIT (Rp bn) 20,163.0 16,154.6 17,581.5 21,595.7 Net profit (Rp bn) 19,582.0 17,283.7 20,093.3 23,699.9 EPS (CS adj.) (Rp) 483.70 426.93 496.33 585.42 Change from previous EPS (%) n.a. 0 0 0 Consensus EPS (Rp) n.a. 425 476 523 EPS growth (%) 0.9 -11.7 16.3 17.9 P/E (x) 13.4 15.2 13.1 11.1 Dividend yield (%) 3.9 4.4 3.9 4.6 EV/EBITDA (x) 11.2 13.7 12.2 10.7 P/B (x) 2.8 2.7 2.4 2.2 ROE (%) 21.8 17.8 19.5 20.8 Net debt/equity (%) 40.9 44.6 40.4 43.0

Source: Company data, Thomson Reuters, Credit Suisse estimates.

Rating OUTPERFORM* Price (05 Nov 15, Rp) 6,500.00 Target price (Rp) 7,600.00¹ Upside/downside (%) 16.9 Mkt cap (Rp bn) 263,143.1 (US$ 19.4) Enterprise value (Rp bn) 318,494 Number of shares (mn) 40,483.55 Free float (%) 45.2 52-week price range 8,575.0 - 5,125.0 ADTO - 6M (US$ mn) 12.7

*Stock ratings are relative to the coverage universe in each

analyst's or each team's respective sector.

¹Target price is for 12 months.

Research Analysts

Jahanzeb Naseer

62 21 2553 7977

[email protected]

Benny Kurniawan

06 November 2015

Astra International

(ASII.JK / ASII IJ) 2

Focus charts Figure 2: Sales volume recovery lasted for two months Figure 3: EBIT margin recovers after bottoming in 1Q

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4W YoY 2W YoY

0.4%

1.4%

0%

1%

2%

3%

4%

5%

6%

Auto EBIT margin

Source: Gaikindo, AISI Source: Company data

Figure 4: New models should improve margins even

without a recovery

Figure 5: Market share has improved on the back of the

new Avanza and Xenia Margin sensitivity to discount levels old vs new models

Old models

Discount level 10% 0% 5% 10%

Avanza ASP (Rpmn) 173 205 194 184

% change from old models 18% 12% 6%

% of Astra's volume 30%

Innova ASP (Rpmn) 263.5 346.0 328.7 311.4



Current EBIT Margin 1.4%

Historical EBIT Margin 3 - 4%

Estimated new EBIT

margin when new model

launched

2.0% 1.7% 1.6%

New Models

51%

11%

11%

15%

2%0%

10%

20%

30%

40%

50%

60%

70%

May

-11

Jul-1

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Astra 4W Mitsubishi Suzuki Honda Nissan

Source: Company Data, Credit Suisse Estimates Source: Gaikindo

Figure 6: Financing division likely bottom in 2015 Figure 7: Astra's SOTP

0%

10%

20%

30%

40%

50%

60%

70%

2010 2011 2012 2013 2014 2015E 2016E 2017E

Gross Margin EBIT margin Net Margin (rhs)

Market cap

Segments Rp bn 16E P/E

Automotive 130,121 15.0

Financing 100,091 16.5

Heavy Equipment 40,559 14.0

Agricultural 25,611 17.0

Others 7,934 11.0

Astra International 304,317 15.3

Target price (Rp/share) 7,600

Source: Company Data, Credit Suisse Estimate Source: Credit Suisse Estimates

06 November 2015

Astra International


Are we just past the worst point in the cycle?

The Indonesian auto sector, in general, and Astra, in particular, is going through the

toughest down cycle in the past 15 years. The question is—are we past the worst point? If

so, the lows of around Rp5,000 that we saw for Astra would mark the low for this cycle.

As in any cyclical sector, the signal of a bottom is never clear. For Astra, we have seen

some improvement from a very depressed level in volumes and margins, while a number

of questions still remain, we believe the worst of this cycle is now behind.

What has improved at the industry level?

As seen in figure 2, we saw volumes for both four wheelers and two wheelers improve for

two months now. However, this improvement is from very depressed levels and the market

is sceptical as to whether this will sustain. Our industry model indicates that volumes tend

to be most sensitive to two variables, GDP growth rate and interest rates.

Figure 8: Policy rate and GDP is the most sensitive variable to our industry model

Coefficients Standard Error t Stat P-value

Intercept 1.54 0.47 3.31 0.00

Goods Export YoY lag 1Q 0.44 0.19 2.31 0.03

Policy rate (12.53) 2.10 (5.96) 0.00

real GDP YoY 14.28 4.32 3.30 0.00

CCI (0.01) 0.00 (3.97) 0.00

Cons LDR chg QoQ 11.29 5.11 2.21 0.03

Source: Credit Suisse estimates

GDP, in our view, bottomed in 2Q/3Q and we expect 4Q15 and 1Q16 to register 50 bp

sequential increase. Interest rates are also likely to start getting cut in early 2016 as we

are now running at a decade high real rate of about 3%. Both of these factors indicate to

us that the auto volume bottom that we just saw in July, likely marked the bottom of this

cycle. In addition, private consumption, which contributes 50% to Indonesia's GDP, saw a

30 bp increase QoQ to 5% from 4.7% in 2Q15.

Figure 9: BI rate vs inflation Figure 10: Real rates—one of the highest

in the region

0.0%

0.5%

1.0%

1.5%

2.0%

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3.0%

3.5%

Indo*

India

Ch

ina

Th

ai

Mala

ysia

Ta

iwa

n

Ko

rea

Sin

ga

po

re

Au

str

alia

Source: Bloomberg Source: Bloomberg

For the remainder of the year, we can expect further increase in government capex

disbursement. As figure 11 shows, government capex disbursement is seasonally low in

1H and picks up in 2H.

06 November 2015

Astra International


Figure 11: Govt capex improves in 2H15 Figure 12: Real GDP to recover in 4Q15 and 2016

24.8% 21.6% 22.1% 24.5%29.4% 16.8%

91% 91% 91%96% 98%

85%

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2010 2011 2012 2013 2014 2015*

Rp

tn

1H public works spending 2H public works spending

1H realization FY realization

Source: Ministry of public works and housing, Credit Suisse estimates Source: Bloomberg

Company level changes will also help margins

At the company level, there are developments that could help support margins as volumes

recover next year. There have been new model launches this year, and we expect the

premium priced Innova's new model to be launched in the coming weeks. The sticker price

for the new Avanza which accounts for 30% of Astra's volume is on average 7% higher

than the previous models (assuming no discount). If there is no change in the overall

discount environment in 2016, this should still lead to an improvement in margins.

However, we believe that if there is even a modest volume recovery, discounts are likely to

narrow. This should support the Auto division's margins. We also expect the new Fortuner

to be launched early next year.

Figure 13: Sensitivities of distribution margin with the launch of Avanza and Innova

Margin sensitivity to discount levels old vs new models

Old models New models

Discount level 10% 0% 5% 10%

Avanza ASP (Rp mn) 173 205 194 184



Innova ASP (Rp mn) 263.5 346.0 328.7 311.4



Current EBIT margin 1.4%

Historical EBIT margin 3 - 4%

Estimated new EBIT margin when

new model launched

2.0% 1.7% 1.6%

Source: Company data, Credit Suisse estimates

We expect the launch of

new models to support ASP

and margins, even if

discount stays the same

We believe EBIT

(distribution) margin can

recover from the current

level of 1.4% even if

discounts stood at the same

level. The recovery can

even be greater if discounts

are cut (2% assuming no

discount on new models)

06 November 2015

Astra International


Figure 14: New Fortuner launched in Thailand Figure 15: Brochure on new Innova (available on auto

forums)

Source: Toyota Thailand Source: Various Online newspaper

Avanza/Xenia face lift helped market share recovery

One of the big threats for Astra has been the worry that its market share is depleting to

Honda. Astra's market share fell from a high of 57% to 42%, losing the difference to

Honda as the latter added capacity for the launch of new models (Mobilio, HRV and BRV)

and generally picked up its game in Indonesia. This has forced Astra to re-think its model

line-up, and we believe this is one the reasons behind its urgency to launch new models

after a hiatus of nearly six to seven years.

The good news is that on the launch of these new models there has been a recovery in

market share. We were somewhat disappointed with the new models but the recovery in

share has been higher than what we would have expected. This probably demonstrates

that Avanza and Xenia still command significant brand loyalty due to their after-sales

service and excellent resale. Astra also continues to have a significant advantage over

Honda in its distribution network and after-sales service. A gap which is hard to close in

the short term, in our view

Figure 16: Only four major players in Indonesia Figure 17: Astra has superior distribution network…

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China India Korea Indonesia

263

206

145

10179

0

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150

200

250

300

Toyota Daihatsu Suzuki Honda Nissan

Source: Credit Suisse estimates Source: Company data, Credit Suisse estimates

Honda has been gaining

market share through the

launch of its new models,

while Astra has been

dormant in launching for the

past six to seven years

06 November 2015

Astra International


Figure 18: …and better resale value Figure 19: Market share rebounds after a steep decline in

July-15

30%

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80%

90%

100%

New 1 yr old 2 yr old 3 yr old 4 yr old 5 yr old 6 yr old 7 yr old 8 yr old

Toyota Avanza Honda MobilioHonda Jazz Suzuki ErtigaNissan Livina

51%

11%

11%

15%

2%0%

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May

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Astra 4W Mitsubishi Suzuki Honda Nissan

Source: Credit Suisse estimates Source: Company data, Credit Suisse estimates

The financing division could also get a fillip from

lower rates and better economic growth

The finance division's margins have been declining now for three years. This, we believe,

is largely due to the rising cost of funds and higher credit costs. We expect to start seeing

a cut next year which should bring the overall cost of funds lower. Further, a lower rate

and a turn in the economic cycle should also improve the credit cost for the business. We

expect a 160 bp recovery in margins for the finance division in 2016.

Figure 20: Financing margins to improve in 2016

0%

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30%

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50%

60%

70%

2010 2011 2012 2013 2014 2015E 2016E 2017E

Gross Margin EBIT margin Net Margin (rhs)

Source: Company data, Credit Suisse estimates

What about Agri and Heavy Equipment

Heavy Equipment is likely to be a drag in the coming quarters. Some of the FX gains in 3Q

could be reversed and the mining contracting business is likely to be under pressure from

falling volumes. Some of this slack is likely to be picked up by Astra Agro where we expect

CPO price to recover.

The overall importance of heavy equipment has increased to 22% of net income, as it has

benefited from smaller players going out of business and a depreciating rupiah. We expect

this to contribute about 15% in 2016. The Agri division, on the other hand, is expected to

contribute 7.6% in 2016 up from 4.6% this year.

The main driver in the coming quarters will be the Auto and Financing divisions.

We expect the cut in rates to

decrease cost of funds and

increase in economic cycle

to improve credit cost

We expect some of the FX

gains booked by the heavy

equipment division in 3Q to

reverse and the mining

contracting business to be

under pressure from falling

volumes

06 November 2015

Astra International


Figure 21: EBIT contribution by category—we expect Auto

to rebound in 2016/17

Figure 22: Net income contribution by category—Agri

business hit by forex losses this year

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Will the excess industry capacity short circuit any

margin recovery?

This is and continues to be a big drag on the industry. Even with a recovery, the industry

will be operating at 65-70% capacity. This should put pressure on the key players to keep

raising discounts to push through volumes.

That is why we do not expect discounts to drop to the levels seen in the 2010-12 recovery,

nor are we expecting margins to go back to those levels anytime soon. However,

discounts, like any other economic measure, work on the change in marginal supply and

marginal demand. The excess capacity has been in place in 2015—this is not changing

much. But if demand starts to improve that should improve the discount situation.

The other factor to consider is the overall competitive environment in the industry. There

are only two major players in the Indonesian auto market. Astra (Toyota and Daihatsu),

Honda, and two minor players Suzuki and Mitsubishi. This is the most benign competitive

environment amongst the four markets in Asia that sell over 1 mn units a year. It is unlikely

that the two main players will permanently damage their margins by keeping discounts

very high even in a recovery cycle. We have already seen evidence of this in 2015.

Whenever inventories have fallen below eight weeks, we have seen discounts reduce.

Long-term potential vs short-term cyclical pain

We believe that for longer-term investors, the current environment offers an interesting

opportunity. Indonesia remains one of the most under-penetrated markets in the region for

4W with 5% penetration. Coupled with the lack of an adequate public transportation

system, the potential for an increase in 4W penetration is high. This is an addition to what

we believe is a cyclical downturn in volumes. As this cycle recovers, the focus will once

again move to the structural story.

Indonesia remains one of

the most under-penetrated

markets in the region for 4W

with 5% penetration

06 November 2015

Astra International


Figure 23: 4W penetration Figure 24: 2W penetration

35%

30%

27%

10%

5%2%

1%

0%

5%

10%

15%

20%

25%

30%

35%

40%

MY KR TW TH ID IN PH

MY KR TW TH ID IN PH

61%

37%34%

31%

9%4% 4%

0%

10%

20%

30%

40%

50%

60%

70%

TW MY ID TH IN KR PH

TW MY ID TH IN KR PH

Source: CEIC, Credit Suisse Estimates Source: CEIC, Credit Suisse Estimates

Valuation still looks attractive

Despite the recent recovery, Astra trades at below mean valuations. Keep in mind that this

is on earnings that do not reflect a full recovery from the trough. We believe that the risk to

our and consensus' numbers is on the upside as the street is only building a modest

recovery in volumes and there is hardly any margin improvement. In a normal cycle, bulk

of the profit recovery is driven by an improvement in margin. If volumes grow faster than

our expectations as shown in the bull-case on the next page and margins recover, we

could see further upside to our TP of Rp7,600.

Figure 25: Astra currently trades at -0.2 sd below mean Figure 26: Astra's SOTP breakdown

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Forward P/E Average +1 sd +2 sd -1 sd -2 sd

Market cap

Segments Rp bn 16E P/E

Automotive 130,121 15.0

Financing 100,091 16.5

Heavy Equipment 40,559 14.0

Agricultural 25,611 17.0

Others 7,934 11.0

Astra International 304,317 15.3

Target price (Rp/share) 7,600

Source: IBES, Credit Suisse estimates Source: Credit Suisse estimates

Figure 27: Auto division's PE trading below mean

5

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30

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-1 sd +1 sd Mean 12M Fwd Auto PE

Source: Credit Suisse estimates

06 November 2015

Astra International


Astra International ASII.JK / ASII IJ Price (05 Nov 15): Rp6,500.00, Rating:: OUTPERFORM, Target Price: Rp7,600.00, Analyst: Jahanzeb Naseer

Target price scenario

Scenario TP %Up/Dwn Assumptions

Upside 9,000.0

0 38.46

based on strong recovery on auto volumes in 16/17

Central Case 7,600.0

0 16.92 SOTP

Downside 5,500.0

0 (15.38) due to delay in economic recovery

Key earnings drivers 12/14A 12/15E 12/16E 12/17E

4W sales volume 614,171 504,954 557,784 632,533 LCGC sales volume 107,849 93,600 106,470 137,592 4W ASP 164.4 172.7 184.8 188.4 Policy rate 0.08 0.07 0.07 0.07 — — — —

Income statement (Rp bn) 12/14A 12/15E 12/16E 12/17E

Sales revenue 201,701 188,538 213,926 240,899 Cost of goods sold 162,892 152,567 174,375 195,254 SG&A 18,646 19,816 21,970 24,049 Other operating exp./(inc.) (7,794) (7,046) (8,445) (8,836) EBITDA 27,957 23,201 26,027 30,432 Depreciation & amortisation 7,794 7,046 8,445 8,836 EBIT 20,163 16,155 17,582 21,596 Net interest expense/(inc.) (151.0) 88.2 180.8 169.5 Non-operating inc./(exp.) 7,439 9,077 10,730 11,800 Associates/JV — — — — Recurring PBT 27,753 25,144 28,131 33,226

Exceptionals/extraordinaries — — — — Taxes 5,227 4,736 5,298 6,258 Profit after tax 22,526 20,408 22,833 26,969 Other after tax income — — — — Minority interests 2,944 3,124 2,739 3,269 Preferred dividends — — — — Reported net profit 19,582 17,284 20,093 23,700 Analyst adjustments — — — — Net profit (Credit Suisse) 19,582 17,284 20,093 23,700

Cash flow (Rp bn) 12/14A 12/15E 12/16E 12/17E

EBIT 20,163 16,155 17,582 21,596 Net interest — — — — Tax paid — — — — Working capital (7,877) (2,906) (11,306) (13,937) Other cash & non-cash items 2,677 5,741 8,340 8,289 Operating cash flow 14,963 18,990 14,615 15,948 Capex (13,235) (13,162) (14,149) (14,331) Free cash flow to the firm 1,728 5,828 466 1,617 Disposals of fixed assets — — — — Acquisitions — — — — Divestments — — — — Associate investments — — — — Other investment/(outflows) 3,671 4,985 8,509 (1,534) Investing cash flow (9,564) (8,176) (5,639) (15,865) Equity raised — — — — Dividends paid (10,201) (11,509) (10,370) (12,056) Net borrowings 7,996 (8,128) 10,374 10,487 Other financing cash flow (1,840) (3,261) 281 361 Financing cash flow (4,045) (22,897) 284 (1,208) Total cash flow 1,354 (12,084) 9,260 (1,126) Adjustments 1,013 (22) — — Net change in cash 2,367 (12,106) 9,260 (1,126)

Balance sheet (Rp bn) 12/14A 12/15E 12/16E 12/17E

Cash & cash equivalents 20,902 8,818 18,078 16,952 Current receivables 24,462 19,428 21,016 23,330 Inventories 16,986 13,808 14,818 16,286 Other current assets 34,891 42,421 49,394 57,247 Current assets 97,241 84,476 103,306 113,815 Property, plant & equip. 47,257 50,937 54,023 56,867 Investments 27,250 30,184 33,798 37,937 Intangibles — — 1.00 1.00 Other non-current assets 64,281 62,444 61,249 70,380 Total assets 236,029 228,041 252,377 279,000 Accounts payable 18,839 18,050 19,756 21,719 Short-term debt 37,421 31,207 35,896 39,914 Current provisions 430.0 421.1 491.8 571.8 Other current liabilities 16,833 15,257 17,437 19,525 Current liabilities 73,523 64,934 73,581 81,730 Long-term debt 32,651 32,963 36,813 40,904 Non-current provisions 3,402 3,116 3,639 4,232 Other non-current liab. 6,129 2,828 3,209 3,613 Total liabilities 115,705 103,841 117,241 130,479 Shareholders' equity 95,611 98,125 108,130 120,134 Minority interests 24,713 26,075 27,005 28,385 Total liabilities & equity 236,029 228,041 252,376 278,999

Per share data 12/14A 12/15E 12/16E 12/17E

Shares (wtd avg.) (mn) 40,484 40,484 40,484 40,484 EPS (Credit Suisse) (Rp) 484 427 496 585 DPS (Rp) 252 284 256 298 BVPS (Rp) 2,362 2,424 2,671 2,967 Operating CFPS (Rp) 370 469 361 394

Key ratios and valuation

12/14A 12/15E 12/16E 12/17E

Growth(%) Sales revenue 4.0 (6.5) 13.5 12.6 EBIT 8.4 (19.9) 8.8 22.8 Net profit 0.9 (11.7) 16.3 17.9 EPS 0.9 (11.7) 16.3 17.9 Margins (%) EBITDA 13.9 12.3 12.2 12.6 EBIT 10.0 8.6 8.2 9.0 Pre-tax profit 13.8 13.3 13.1 13.8 Net profit 9.7 9.2 9.4 9.8 Valuation metrics (x) P/E 13.4 15.2 13.1 11.1 P/B 2.75 2.68 2.43 2.19 Dividend yield (%) 3.88 4.37 3.94 4.58 P/CF 17.6 13.9 18.0 16.5 EV/sales 1.55 1.69 1.49 1.36 EV/EBITDA 11.2 13.7 12.2 10.7 EV/EBIT 15.5 19.7 18.1 15.1 ROE analysis (%) ROE 21.8 17.8 19.5 20.8 ROIC 10.2 7.5 7.7 8.7 Asset turnover (x) 0.85 0.83 0.85 0.86 Interest burden (x) 1.38 1.56 1.60 1.54 Tax burden (x) 0.81 0.81 0.81 0.81 Financial leverage (x) 1.96 1.84 1.87 1.88 Credit ratios Net debt/equity (%) 40.9 44.6 40.4 43.0 Net debt/EBITDA (x) 1.76 2.39 2.10 2.10 Interest cover (x) (134) 183 97 127

Source: Company data, Thomson Reuters, Credit Suisse estimates.

0

2

4

6

8

10

12

14

16

18

2010 2011 2012 2013 2014 2015

12MF P/E multiple

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2010 2011 2012 2013 2014 2015

12MF P/B multiple

Source: IBES

06 November 2015

Astra International


Companies Mentioned (Price as of 05-Nov-2015)

Astra International (ASII.JK, Rp6,500, OUTPERFORM, TP Rp7,600) Daihatsu Motor (7262.T, ¥1,486) Isuzu Motors (7202.T, ¥1,419) PT Astra Agro Lestari Tbk (AALI.JK, Rp19,950) PT United Tractors Tbk (UNTR.JK, Rp18,700) Toyota Motor (7203.T, ¥7,495)

Disclosure Appendix

Important Global Disclosures

I, Jahanzeb Naseer, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for Astra International (ASII.JK)

ASII.JK Closing Price Target Price

Date (Rp) (Rp) Rating

01-Mar-13 8,100 9,502 O

25-Apr-13 7,350 9,000

24-Sep-13 6,400 8,370

25-Feb-14 6,700 8,370 *

16-Jun-14 7,250 9,000

30-Oct-14 6,900 8,000

01-Apr-15 8,175 9,800

15-Jul-15 6,825 8,400

21-Aug-15 6,050 7,500

30-Oct-15 5,900 7,600

* Asterisk signifies initiation or assumption of coverage.

O U T PERFO RM

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

As of December 10, 2012 Analysts’ stock rating are defined as follows:

Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months.

Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.

Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months.

*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock ’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 1 2-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, wh ich was in operation from 7 July 2011.

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Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:

Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.

Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.

06 November 2015

Astra International


Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months.

*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe (%) Of which banking clients (%)

Outperform/Buy* 59% (34% banking clients)

Neutral/Hold* 26% (35% banking clients)

Underperform/Sell* 13% (23% banking clients)

Restricted 2%

*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.

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Price Target: (12 months) for Astra International (ASII.JK)

Method: Our Rp7,600/share target price for Astra International is based on our sum-of-the-parts valuation analysis. Our TP implies 15.5x FY16E PE

Risk: Potential risks to our Rp7,600/share target price for Astra International include: competition risk, regulatory risk in the form of import duties, plus a significant deterioration in the macro economy, particularly at the consumer confidence level, which has a high correlation with car sales, and liquidity in auto financing, which has a high correlation with motorcycle sales volume.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names

The subject company (UNTR.JK, AALI.JK) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (7202.T, 7203.T, UNTR.JK, AALI.JK, 7262.T) within the next 3 months.

As of the date of this report, Credit Suisse makes a market in the following subject companies (7203.T).

Credit Suisse may have interest in (ASII.JK, UNTR.JK, AALI.JK)

For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.

The analyst(s) involved in the preparation of this report may participate in events hosted by the subject company, including site visits. Credit Suisse does not accept or permit analysts to accept payment or reimbursement for travel expenses associated with these events.

Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.

Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.

For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit https://www.credit-suisse.com/sites/disclaimers-ib/en/canada-research-policy.html.

Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (7203.T, 7262.T) within the past 3 years.

06 November 2015

Astra International


As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

Principal is not guaranteed in the case of equities because equity prices are variable.

Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that.

To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

PT Credit Suisse Securities Indonesia .......................................................................................................................................... Jahanzeb Naseer

For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit-suisse.com/disclosures or call +1 (877) 291-2683.

06 November 2015

Astra International


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