Indonesia Sector Update

12 November 2021 Consumer Cyclical | Auto & Autoparts

Indonesia Auto Overweight (Maintained)

Stocks Covered 2
Ground Checks: GIIAS 2021; Greener Development
Rating (Buy/Neutral/Sell): 2/0/0
Last 12m Earnings Revision Trend: Neutral
 Maintain OVERWEIGHT; Top Pick Astra International (ASII). The 2021 Top Pick Target Price
Indonesia International Auto Show 2021 (GIIAS 2021) should see greater Astra International (ASII IJ) – BUY IDR7,650
commitment towards greener four-wheeler (4W) development. The All-New
Avanza and Veloz should support ASII’s domination – the new models claim
to be c.15% more fuel efficient despite having a similar engine to its Analysts
predecessor – with competition from existing and new players ie Honda’s Andrey Wijaya
low-SUV BR-V, Suzuki Ertiga, and Hyundai’s SUV Creta. Electric vehicle
+6221 5093 9846
(EV) and hybrid sales resulted in 9M21 wholesales rising 66% YTD to 2,382
[email protected]
units despite its still nascent market share of 0.4%.
 Greener development in 4W market. The Association of Indonesia
Fauzan Luthfi Djamal
Automotive Industries (Gaikindo) hopes the officially opening of GIIAS 2021
– 11-21 Nov 2021 – will see greater commitment from domestic automotive +6221 5093 9888
[email protected]
players towards greener 4W development (through the introduction of new
EV products), while supporting the ongoing recovery in wholesales trend,
in general.
Indonesia’s 4W sales trend
 All-New Avanza and Veloz should strengthen ASII’s domination. ASII’s (units)
124,000
stable 4x2 segment market share in the long term will be supported by its 106,079

complete re-modelling of the All-New Avanza and Veloz (Figure 1) – the

108,500 3-years average monthly 4W
84,113
wholesales 69,677 units
93,000
brand has secured the top position since 2004. The new models claim to be 77,500
c.15% more fuel efficient despite having similar engines to the 62,000
predecessors. Based on our examination, the overhauled model of Avanza 46,500

is more appealing to its value (price range at IDR206-264m and IDR251- 31,000
3,551

292m for Veloz), compared to the facelift upgrade of its closest rival, 15,500

Mitsubishi Xpander (IDR228-291m). -

Sep-18

Nov-18

May-19

Jul-19

Sep-19

Nov-19

Jul-20

Sep-20
May-20

Nov-20

Jul-21

Sep-21
May-21
Jan-19

Mar-19

Jan-20

Mar-20

Jan-21

Mar-21
 Heavy competition from existing and new players ie new robust design
of Honda’s low-SUV BR-V (IDR276-340m), economically yet tough Suzuki Source: Company data, RHB
Ertiga (IDR201-255m), and long-awaited domestically produced Hyundai’s
SUV, Creta (IDR279-399m; to be sold in Jan 2022), will pose a challenge
Previous reports:
to ASII’s dominance (9M21 wholesales market share: 55%), which is mostly
exposed to the 4x2 1,500 cc segment. We see competition in the 5-7 seater  ASII’s Sep Market Share At 14-Year High; O/W
4W remaining fierce in the future.  Tax Incentive Extension An Upside Surprise; O/W
 Small traction on EV and Hybrid sales. As per 9M21, a total of 2,382 of  ASII’s Market Share Surges In August; Stay O/W
EV and hybrid units were sold (0.4% to total wholesales), fairly improved  Strict PPKM Has Limited Impact On Auto Sales; O/W
compared to FY20’s achievement at 1,432 units (0.3% market share).
Challenges remain to increase its consumer penetration given the higher
 4W Sales Gain Traction In June; Keep O/W
cost in development translating to more expensive selling price. However,  May Sales Numbers Still On Track; Keep O/W
few players are still striving to set an initial foothold – Hyundai is currently  Wholesales Still Robust In April; OVERWEIGHT
leading on EV sales in Indonesia (through Ioniq & Kona; 542 units combined
per 9M21 vs FY20’s 119 units), while Toyota (through Altis, Camry, Corolla
 Robust March Likely To Sustain In 2Q; O/W
Cross variants; 1,207 units vs FY20’s 823 units) and Nissan (Kicks E-  March Sales Off To Strong Start; OVERWEIGHT
POWER; 377 units vs FY20’s 133) now tailing to increase more exposure  ASII’s Market Share Increases; Still OVERWEIGHT
on hybrid sales. Furthermore, some introduction from more affordable EV’s
are slated in the near term – Wuling’s GSEV (Global Small Electric Vehicle;
 December Sales Point To Continuous Recovery
IDR60-120m) and Toyota C+POD (c.IDR200m) are among the choices for  Higher November 4W Wholesale; Keep O/W
short-range EVs.  Starting Growth Engines; Keep OVERWEIGHT
 Key downside risks: i) Tougher competition in the MPV and SUV
segments, and ii) risk of increased daily new COVID-19 cases.

Target % Upside P/E (x) P/B (x) ROAE (%) Yield (%)
Company Name Rating
(IDR) (Downside) Dec-21F Dec-21F Dec-21F Dec-21F
Astra International Buy 7,650 23.9 14.5 1.5 11.6 4.5
Astra Otoparts Buy 1,580 25.9 11.5 0.6 5.4 3.6
Source: Company data, RHB

See important disclosures at the end of this report

1
Indonesia Auto Indonesia Sector Update
12 November 2021 Consumer Cyclical | Auto & Autoparts

Figure 1: Some of re-model/uplifts introduced at GIIAS 2021

Brands Toyota Toyota
Model All-New Avanza/Veloz New Kijang Innova
Type MPV MPV
Dimension (L x W x H m) 4.4 x 1.7 x 1.7 4.7 x 1.8 x 1.8
4-cylinder gasoline engine (2,000 cc)
Engine 4-cylinder gasoline engine (1,500 cc)
4-cylinder gasoline engine (c.2,400 cc)
Gasoline: 139 @ 3,400 rpm
Output (HP) 106 @ 6,000 rpm
Diesel: 149 @ 3,400 rpm
Gasoline: 183 @ 4,000 rpm
Torque (Nm) 140 @ 4,300 rpm
Diesel: 359 @ 2,600 rpm
Seat capacity 7 7
On-the-road price Avanza: IDR206-264m, Veloz: IDR251-292m IDR326-468m
CKD/CBU CKD CKD
9M21 units sold* 46,271 units (c.16% of 4x2 c.1,500 cc market share) 33,375 units (c.44% of 4x2 c.2,000 cc market share)

Brands Honda Mitsubishi

Model New BR-V New Xpander
Type SUV MPV
Dimension (L x W x H m) 4.5 x 1.7 x 1.7 4.5 x 1.8 x 1.7
Engine 4-cylinder gasoline engine (1,500 cc) 4-cylinder gasoline engine (1,500 cc)
Output (HP) 119 @ 6,600 rpm 103 @ 6,000 rpm
Torque (Nm) 145 @ 4,300 rpm 141 @ 4,000 rpm
Seat capacity 7 7
On-the-road price IDR276-340m IDR228-291m
CKD/CBU CKD CKD
9M21 units sold* 1,826 units (0.7% of 4x2 c.1,500 cc market share) 38,096 units (c.14% of 4x2 c.1,500 cc market share)

Note: *Based on Gaikindo wholesales data, all variants

Source: RHB

See important disclosures at the end of this report

2
Indonesia Auto Indonesia Sector Update
12 November 2021 Consumer Cyclical | Auto & Autoparts

Figure 2: Some of re-model/uplifts introduced at GIIAS 2021 (continued)

Brands Suzuki Hyundai
Model All-New Ertiga Creta
Type MPV SUV
Dimension (L x W x H m) 4.4 x 1.7 x 1.7 4.3 x 1.7 x 1.6
Engine 4-cylinder gasoline engine (1,500 cc) 4-cylinder gasoline engine (1,500 cc)
Output (HP) 105 @ 6,000 rpm 115 @ 6,300 rpm
Torque (Nm) 138 @ 4,400 rpm 144 @ 4,500 rpm
Seat capacity 7 5
On-the-road price IDR201-255m IDR279-399m
CKD/CBU CKD CKD
9M21 units sold* 8,531 units (c.3% of 4x2 c.1,500 cc market share) Sales to be started in January 2022

Note: *Based on Gaikindo wholesales data, all variants

Source: RHB

Figure 3: Some of EV and hybrid introduced at GIIAS 2021

Brands Nissan Nissan
Model Leaf Electric Kicks e-Power
Type Full-EV Hybrid
Dimension (L x W x H m) 4.5 x 1.8 x 1.5 4.3 x 1.8 x 1.6
3-cylinder gasoline engine (1,198 cc) with 1.5 kWh 296 V
Engine / Battery 40 kWh 350 V lithium-ion, 378km of range
lithium-ion
Output (HP) 148 @ 3,300-9,800 rpm 129 @ 5,800 rpm
Torque (Nm) 320 @ 0-3,300 rpm 260 @ 4,800 rpm
Seat capacity 5 5
On-the-road price IDR650m IDR479m
CKD/CBU CBU (Japan) CKD (Thailand)
9M21 units sold* 20 units 377 units

Note: *Based on Gaikindo wholesales data, all variants

Source: RHB

See important disclosures at the end of this report

3
Indonesia Auto Indonesia Sector Update
12 November 2021 Consumer Cyclical | Auto & Autoparts

Figure 4: Some of EV and hybrid introduced at GIIAS 2021

Brands Hyundai Wuling
Model Kona Electric GSEV
Type Full-EV Full-EV
Dimension (L x W x H m) 4.2 x 1.8 x 1.6 -
Engine / Battery 39.2 kWh 327 V lithium polymer, 380km of range -
Output (HP) 201 @ 3,600 rpm -
Torque (Nm) 395 @ 0-3,600 rpm -
Seat capacity 5 2
On-the-road price IDR697m IDR60-120m
CKD/CBU CBU (South Korea) -
9M21 units sold* 315 units -

Brands Toyota
Model C+POD
Type Full-EV
Dimension (L x W x H m) 2.5 x 1.3 x 1.6
Engine 9.1 kWh 177 V lithium-ion, 150km of range
Seat capacity 2
On-the-road price c.IDR200m
CKD/CBU CBU (Japan)
9M21 units sold* 7 units

Note: *Based on Gaikindo wholesales data, all variants

Source: RHB

Figure 5: World Premiere of Honda SUV RS Concept

 The model is a SUV concept which has

been developed from collaboration
between Honda R&D Asia Pacific Co., Ltd
and Honda Team Indonesia

Source: RHB

See important disclosures at the end of this report

4
Indonesia Auto Indonesia Sector Update
12 November 2021 Consumer Cyclical | Auto & Autoparts

Figure 6: Details on luxury tax cuts

Engine size and
Period Tax incentives Luxury tax rate imposed
segment

≤1,500 cc (4x2 and  The implementation of the PPnBM

March-December 100% discount 0% for 4x2 and sedans incentive should boost national 4W
sedans)
vehicle sales this year to 750,000 units
1,501-2,500 cc (4x2) April-December 50% discount 10% for 4x2 (+41% YoY)
1,501-2,500 cc (4x4) April-December 25% discount 30% for 4x4

Source: Ministry of Industry, RHB

Figure 7: List of 4W vehicles that are eligible to receive PPnBM discounts (local
content ranging 60-70%)
≤ 1,500 cc engine size
% market share to sub-segment % market share to national wholesales
Sedan
Toyota Vios 21.9% 0.1%

4x2
Toyota Avanza 16.0% 5.1%
Mitsubishi Xpander 13.8% 4.7%
Toyota Rush 10.8% 3.7%
Honda HR-V 6.6% 2.2%
Honda Brio RS 5.6% 1.9%
Daihatsu Terios 5.6% 1.9%
Daihatsu Gran Max
5.2% 1.8%
Minibus
Suzuki XL7 4.8% 1.6%
Honda Mobilio 3.3% 1.1%
Daihatsu Xenia 3.3% 1.1%
Suzuki Ertiga 3.1% 1.0%  Toyota Astra Motor revealed that the
Wuling Confero 1.8% 0.6% implementation of a lower PPnBM
Honda CR-V 1.8% 0.6% significantly boosted 4W vehicle sales in
Toyota Yaris 1.4% 0.5%
early March
Honda BRV 0.7% 0.2%
Daihatsu Luxio 0.3% 0.1%
Toyota Sienta 0.2% 0.1%
Nissan Livina 0.1% 0.0%
Toyota Raize 0.1% 0.0%
Daihatsu Rocky 0.1% 0.0%
Honda City Hatchback 0.1% 0.0%

1,501 - 2,500 cc engine size*

% market share to sub-segment % market share to national wholesales
4x2
Toyota Innova 44.4% 6.1%
Toyota Fortuner 19.2% 2.4%
Honda H-RV 2.2% 0.3%
Honda C-RV 0.3% 0.0%

4x4
Toyota Fortuner 20.4% 0.1%
Note 2: *4W list for 1,501-2,500 cc engine size might subject to further changes from the Government
Source: GAIKINDO, RHB

See important disclosures at the end of this report

5
Indonesia Auto Indonesia Sector Update
12 November 2021 Consumer Cyclical | Auto & Autoparts

Figure 8: Government proposition on the PPnBM increase for HEVs

Previous Revised Luxury tax rate to

Electric vehicle type Remarks
tax base* tax base* tax base amount

For < 3,000 cc ICE with

15% 15.5 km/litre fuel mileage
or 150g CO2 emission/km

For < 3,000 cc ICE with

11.5 - 15.5 km/litre fuel
20%
mileage or 150-200g CO2
emission/km

For < 3,000 cc ICE with

Internal Combustion 5–40% 9.3 - 11.5 km/litre fuel
25%
Engine (ICE) vehicle mileage or 200-250g CO2
emission/km

For < 3,000 cc ICE with <

9.3 km/litre fuel mileage or
40%
more than 250g CO2
emission/km
 The policy was signed by President
Joko Widodo on 2 Jul, and will be
40-70% For 3,000 – 4,000 cc ICE
enforced from 16 Oct
95% For above 4,000 cc ICE  Based on this policy, 4W vehicles with
Battery Electric low emissions will fall under a lower
0% 0% 15% Luxury tax remains free tax rate
Vehicle (BEV)
For engines with > 28
Plug-in Hybrid Electric
0% 33.33% 15% km/litre fuel mileage or
Vehicle (PHEV)
100g CO2 emission/km
 for 3,000 cc gasoline
engine with > 23 km/litre
fuel mileage or 100g
CO2 emission/km
13.33% 40% 15%
 for 3,000 cc diesel
engine with > 26 km/litre
fuel mileage or 100g
CO2 emission/km
Hybrid Electric Vehicle  for 3,000 cc gasoline
(HEV) engine with 18.4 to 23
km/litre fuel mileage or
100-125g CO2
emission/km
33.33% 46.66% 15%
 for 3,000 cc diesel
engine with 20 to 26
km/litre fuel mileage or
100-125g CO2
emission/km
Note: The amount of tax based (DPP) varies. A sample calculation is production price * (1+DPP%)
Source: CNBC Indonesia, Tempo, CNN, RHB

See important disclosures at the end of this report

6
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broker-dealer during the issuance of this report. This report is confidential and not c) Being bound or required to buy the remaining securities that are not
intended for distribution to, or use by, persons other than the recipient and its subscribed/placed out pursuant to an Initial Public Offering*.
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distributed via Electronic Service Provider, the analysts whose names appear in this (a), (b) or (c) above.
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not associated persons of any registered U.S. broker-dealer as appointed by RHB market products of the subject company(ies) covered in this report.
from time to time and therefore may not be subject to any applicable restrictions under 3. None of PT RHB Sekuritas Indonesia’s staff** or associated person serve as a
Financial Industry Regulatory Authority (“FINRA”) rules on communications with a director or board member* of the subject company(ies) covered in this report.
subject company, public appearances and personal trading. Investing in any non-U.S. 4. PT RHB Sekuritas Indonesia did not receive compensation for investment banking
securities or related financial instruments discussed in this research report may or corporate finance services from the subject company in the past 12 months.
present certain risks. The securities of non-U.S. issuers may not be registered with, or 5. PT RHB Sekuritas Indonesia** did not receive compensation or benefit (including
be subject to the regulations of, the U.S. Securities and Exchange Commission. gift and special cost arrangement e.g. company/issuer-sponsored and paid trip) in
Information on non-U.S. securities or related financial instruments may be limited. relation to the production of this report:
Foreign companies may not be subject to audit and reporting standards and regulatory Notes:
requirements comparable to those in the United States. The financial instruments *The overall disclosure is limited to information pertaining to PT RHB Sekuritas
discussed in this report may not be suitable for all investors. Transactions in foreign Indonesia only.
markets may be subject to regulations that differ from or offer less protection than **The disclosure is limited to Research staff of PT RHB Sekuritas Indonesia only.
those in the United States.
Singapore
DISCLOSURE OF CONFLICTS OF INTEREST Save as disclosed in the following link RHB Research conflict disclosures – Nov 2021
and to the best of our knowledge, the Singapore Research department of RHB Bank
RHB Investment Bank Berhad, its subsidiaries (including its regional offices) and Berhad (through its Singapore branch) hereby declares that:
associated companies, (“RHBIB Group”) form a diversified financial group, 1. RHB Bank Berhad, its subsidiaries and/or associated companies do not make a
undertaking various investment banking activities which include, amongst others, market in any issuer covered by the Singapore research analysts in this report.
underwriting, securities trading, market making and corporate finance advisory. 2. RHB Bank Berhad, its subsidiaries and/or its associated companies and its
analysts do not have a financial interest (including a shareholding of 1% or more)
As a result of the same, in the ordinary course of its business, any member of the in the issuer covered by the Singapore research analysts in this report.
RHBIB Group, may, from time to time, have business relationships with, hold any 3. RHB Bank Berhad’s Singapore research staff or connected persons do not serve
positions in the securities and/or capital market products (including but not limited to on the board or trustee positions of the issuer covered by the Singapore research
shares, warrants, and/or derivatives), trade or otherwise effect transactions for its own analysts in this report.
account or the account of its customers or perform and/or solicit investment, advisory 4. RHB Bank Berhad, its subsidiaries and/or its associated companies do not have
or other services from any of the subject company(ies) covered in this research report. and have not within the last 12 months had any corporate finance advisory
relationship with the issuer covered by the Singapore research analysts in this
While the RHBIB Group will ensure that there are sufficient information barriers and report or any other relationship that may create a potential conflict of interest.
internal controls in place where necessary, to prevent/manage any conflicts of interest 5. RHB Bank Berhad’s Singapore research analysts, or person associated or
to ensure the independence of this report, investors should also be aware that such connected to it do not have any interest in the acquisition or disposal of, the
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before making any investment decisions. 6. RHB Bank Berhad’s Singapore research analysts do not receive any
compensation or benefit in connection with the production of this research report
In Singapore, investment research activities are conducted under RHB Bank Berhad or recommendation on the issuer covered by the Singapore research analysts.
(through its Singapore branch), and the disclaimers above similarly apply.
Analyst Certification
Malaysia The analyst(s) who prepared this report, and their associates hereby, certify that:
Save as disclosed in the following link RHB Research conflict disclosures – Nov 2021 (1) they do not have any financial interest in the securities or other capital market
and to the best of our knowledge, RHBIB hereby declares that: products of the subject companies mentioned in this report, except for:
1. RHBIB does not have a financial interest in the securities or other capital market
products of the subject company(ies) covered in this report. Analyst Company
2. RHBIB is not a market maker in the securities or capital market products of the - -
subject company(ies) covered in this report.

8
(2) no part of his or her compensation was, is or will be directly or indirectly related to
the specific recommendations or views expressed in this report.

KUALA LUMPUR JAKARTA

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BANGKOK SINGAPORE
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