Projecting the prospect of Astra Group shares

December 29, 2016, 11.06 AM  | Reporter: Narita Indrastiti
Projecting the prospect of Astra Group shares


JAKARTA. Along this year, the shares of Astra Group have been showing positive performance. The shares of Astra Group have greater opportunities to grow significantly in 2017, thanks to the improving financial performance.

During this year, the shares of PT Astra International Tbk (ASII) have generated returns as much as 33.56%. Meanwhile, the shares of Astra Group’s issuers in heavy equipment and mining sectors PT United Tractors Tbk (UNTR) recorded 27.26% returns in this year.

Meanwhile, the shares of PT Astra Agro Lestari Tbk (AALI) have recorded 14.14% returns along this year. The returns have included the revenues from dividends.

The increase in ASII shares also contributed significantly to the Jakarta Composite Index (JCI) rise on year to date (ytd) basis as much as 69.3 points.

Analyst at Samuel Sekuritas Indonesia Akhmad Nurcahyadi said, the macro improvements are expected to boost the sales volume of automotive sector. The continuing new variants and revamped old model launchings, as well as the continuing LCGC growth have become positive catalysts for ASII.

Director of Investa Saran Mandiri Hans Kwee said, the vehicles sales will increase in the next year, as the interest rate of consumption credits is expected to decline.
Commodities prices

In the other hands, the increase in coal price will boost the sales of Komatsu heavy equipment, which are distributed by UNTR. Akhmad said, the growing coal sales and the absence of impairment loss will drive the fair value of UNTR stocks.

Hans predicts that the coal price in the next year will be stable at the ranging of US$ 70-US$ 90 per ton. In other words, the coal producers will gain better revenues in the next year.

Meanwhile, the financial service business unit of Astra, PT Bank Permata Tbk (BNLI) is predicted to maintain its business performance in 2017 so that the Astra Group shares will have more positive prospects. “The ASII strategy to penetrate to property business will be the incentive of growth in a long term,” Akhmad said, Wednesday (28/12).

Hans said that the improvement in crude palm oil (CPO) price will enhance the performance of Astra plantation companies. “The CPO price will not continuously increase, but tends to stable,” he added.

Analyst at Danareksa Sekuritas Lucky Bayu Purnomo said that the performance of Astra Group is in line with the economic growth performance. The 2017 economic growth, which is expected to be 5%, is potentially to give greater chances for Astra Group to secure a higher growth. “Rupiah exchange rate tend to strengthen, while inflation rate will decrease," he said.

According to Lucky, the shares of UNTR, ASII, and AALI are likely to grow by around 19%-22% in 2017. Therefore Lucky recommends ‘buy’ for the shares of those companies.

Hans recommends ‘buy’ for UNTR and AALI shares with the price target of Rp 24,792 and RP 19,664 per a share, respectively. Subsequently, Akhmad recommends ‘buy’ for ASII with the target price of Rp 9,000 per a share. (Muhammad Farid/Translator)

Editor: Barratut Taqiyyah Rafie

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