Thursday, December 29, 2005



While early morning I am glancing at daily newspaper there is news from automotive industry stating one of automotive company succeeds in achieving one million productions on its line model. I am not very surprised for the news since the company performs its domination on the automotive local market. Yes, the company is PT Astra International Tbk (ASII).

Refer to its achievement let us see a little of the management of the company. ASII is a company that succeeds in combining Total Quality Management, Balanced Scorecard, and The Six Sigma into the system called Astra Management System (AMS). Within AMS, teamwork is quite important. It is no wonder that every decision that is executed by the Board of Director level will be conveyed down to the lowest section level. “ The decision will be applied down to section head level” claimed Mr. Budi Setiadharma, New President Director of the company who replaces the former officer of Mr. Theodore Permadi Rachmat. Moreover, by the employment numbers of 98,000 employees, it is not big deal to build such commitment in the company.
The appointment of Mr. Budi Setiadharma as President Director is intent to re-structure the remains debt of the company as of US$ 783 million and Indonesian Rupiah (IDR) 1,067 billion that has been established. This policy is adopted to consider the company ability to cover due date of debt amount in 2002 of amounting US$ 133 million and IDR 165 billion. The target of re-structure will be set up in the same year. While company short terms strategy is to liquid some assets that contribute less return. Concerning to PT. Astra Argo Lestari (AALI) that plans to liquid, Astra management considers of no any economic price in range while Crude Palm Oil (CPO) price shows increase of 69%, that is derived from IDR 1,703 per kg increase to IDR 2,875 per kg. “If then the company is necessary to liquid the price will be higher respectively” surprised Mr. Budi. While the decision to liquid its subordinate company of PT. Sumalindo Lestari Jaya (SULI) is already confirmed because of the wood price drastically falls down. So ASII determines two policies of keeping in the company that contribute high return and to liquid down the company that contribute less return or even suffers loss.

Performance of Q1 2002 shows the increase of the operating profit from IDR 531 billion in Q1 2001 into IDR 632 billion in Q1 2002. This increase is following after the sales increase 6% or equal to IDR 7.43 billion of net sales per Q1 2002. Improvement of company operating performance is supported by the strength of IDR rates against US$ of deriving from IDR 10,400 per 1 US$ in Q1 2001 becomes IDR 9,655 per 1 US$ in Q1 2002 is the consequence to increase net profit significantly. If in 2001 ASII still holds net loss of IDR 515 billion then for the same period the company books net profit of amounting IDR 1.114 billion.

Automotive division represents the biggest contributors of 84% against consolidated net revenue or increasing of 3.1%. As reporting in Q1 2001 automotive contribution is IDR 6.06 billion, while in the same period contributes of IDR 6.25 billion in Q1 2002. Market segment of vehicles increase in Q1 2002 from 43% becomes 46.7%. While motorbike record highest domestic sales of 75% for Q1 2002. In addition, company succeeds in achieving market sales from 49% into 57%.

Finance Division is mainly financed motor bike deploys significant increase of 86% or equal to 81,980 unit motorbikes in Q1 2002. While car financing does decrease 21% from 16,804 units in Q1 2001 into 13,299 units in Q1 2002. As we all know that local economic macro still faces the difficulties and power of purchase represents lower.

Information Technologies Division does increase its net revenue of 6% of IDR 159 billion into IDR 169 billion. Its agriculture increases its net revenue of 78% that equal to IDR 422 billion in Q1 2002. This increase of agriculture division is due to price increase of CPO of 11%. While its CPO production is also increasing from 105,228 ton into 116,386 ton.


The high performance of its first quarter blows such fresh wind into movement of the stocks in the market. At least, the movement of ASII stock since January up to June shows up trend. Even though from third week of June is getting down, however it is still little higher than its January 2002 stock price. In accordance to analyst, market is still waiting clarification from ASII management to confirm its debt payment scheme that is already overdue. There will be conveyed whether by right issue, devastation of its subordinates company or by debt re-schedules. This decline of stock price is due to the condition of regional market that decline as well.

Another analyst states that the strength of ASII performance will contribute positive sentiment to future. Beside confirmation of debt installment mechanism, the analyst stands that ASII management represents solid enough. The requirement will be how to pay off this debt. IDR currency rates that strengthen against US$ more or less contribute positive sentiment to the holding. One other analyst predicts this strength consequences the increase performance of first and second semester 2002. If re-scheduling is attained, performance will even be stronger. The investor that interest in ASII stock then is advised to buy on weakness at the first.


Stocks holders general meeting or “Rapat Umum Pemegang Saham (RUPS)” of PT Indomobil Sukses International Tbk (IMAS) promotes new president director of Mr. DR. Eng. Gunadi Sindhuwinata replaces its former officer of Mr. Subronto Laras. This new director has been involved along twenty years in the company. While its financial statement on March 2002 report negative equity of IDR 600 billion, loss accumulated of IDR 1.4 billion and debt amount of IDR 4.3 billion.

Mr. Gunadi targets in the end of 2002 negative equity of IDR 600 billion will reduce and remain one third and overall will be closed in the end of 2003. Debt amount of IDR 4.3 billion is targeted will be closed within next five years with better cash flow and smooth negotiation to its creditors. To compete in such tighter automotive business environment and more tightened by deploying Asian Free Trade Agreement (AFTA) of 2003, a set of business strategy will be designed of brand Suzuki, Mazda, Nissan, Hino and so forth.

The most stocks holder of IMAS has shifted away from the Salim Group into Consortium of PT Cipta Sara Duta Perkasa. To accompany along the owner switching, as above explanation there has been new president director replacement as well. Even though IMAS now managed by new owner but it seem still not able to push stock performance up in the market. There are some cases that not solve yet and debt restructure of IDR 4.3 billion still makes investor in doubt to invest by picking up IMAS stocks. Beside, automotive sector environment that is not conducive, fluctuate government policy still influence IMAS to suffers even lower.

But, it is lucky by the strengthening of IDR rates of currencies in the recent time and growing market also contribute positive impact into listing company performance that hold cost and debt in US$. Moreover, the jump of motorbike demand in local market that increase of 300 up to 400% makes IMAS performance running higher by increasing its demand from 120,000 unit into 500,000 unit, that even effect them to face over-capacity of production. The capacity of motorbike branding Suzuki only around 500,000 unit while demand is getting much higher.
Under Mr. Gunadi command IMAS plan to more focus on distribution than manufacture. In the distribution IMAS will keep on opening new outlet for its establishment brand like Suzuki, Hino, and Nissan but for other automotive products there has been import in completely built up (CBU). In order to widen the market IMAS will also develop subordinate company in financing of five companies. To stimulate market it is necessary to seriously facilitate consumers with financing company.

IMAS also succeed in inviting its principle of Suzuki Japan to invest more in order to set IMAS as Asian industry development base, especially in the vehicle category one, that plan to launch in Asian market at the end of 2003. Investment amount that planted by Suzuki Japan is US$ 70 up to 80 million or equal to IDR 750 billion.


Finance performance records its net revenue of holding in first trimester of 2002 does increase of 34.55% from its same period in the last year. In first trimester of 2002 holding net revenue achievement of amount IDR 2.134 trillion while in the same previous period is just IDR 1.586 billion. In general IMAS targets the increase of 20% in this post. This increase is really more affected by currency gap rather than by others. While net profit is increasing of IDR 7.775 billion into IDR 149.151 billion in first trimester 2002. IMAS also predicts the sales will achieve IDR 7 trillion in the end of 2002.

Meanwhile debt of holding is still US$ 4.3 trillion now and it is still under restructure process. IMAS has asked for creditors to solve the debt within next five years. In the moment holding also keeps on negotiating to creditors. Partial of the total debt is already due date this year but management is convinced to pay the debt because no fluctuation of the IDR rates in the recent time. Mr. Gunadi persuades negative equity of IMAS in the end of 2001 will gradually reduce the rest of amounting one-third in the end of 2002 and equity will be positive in 2004.
In the point of analyst view IMAS is even firstly stronger in assembly line and to build brand of Suzuki will be implemented afterwards. Even though IDR rates strengthen investor is still in doubt against IMAS stocks. Another analyst comments that IMAS stocks tend to stagnant and negative sentiment still covers along IMAS that makes investor avoid its stocks. For the investor concern, analyst suggests to be more careful and for existing stocks holder to keep on holding at the moment. Some analysts release their opinion between to hold and avoid the stocks.



Born 1957 1987 Born
IPO 4-Mar-90 15-Nov-93 IPO
Business Automotive and Automotive and Business
components Components
Underwriter PT Danareksa PT Makindo Underwriter
Astra Securities
Baring Securities
Employee 95,000 6,751 Employee
Market Capitalization 10,097
(IDR billion)
Stocks number Stocks number
Before IPO 212,198,000 16,000,000 Before IPO
IPO 242,198,000 22,000,000 IPO
Right Issue 1:5 290,637,600 24,912,568 Bond Conversion
Bonus Issue 3:1 1,162,550,400 124,562,840 Right Issue 4:1
Bond Conversion 1,162,831,237 498,251,340 Additional Listing
Stock Split 1:1 2,325,662,474 996,502,680 Stock Split 1:1
Option Conv. March 28, 02 2,558,216,160
Right & Option Conv. July 02 2,605,752,249
Stock price (IDR) Stock price (IDR)
IPO 14,850 3,800 IPO
Rights Dec 16, 1993 13,850 2,100 Rights, Jan 24, 1995
4-Jan-00 3,825 650 2-Jan-02
2-Jan-01 1,900 575 28-Mar-02
29-Jan-01 1,950 800 28-Jun-02
28-Mar-02 2,550
28-Jun-02 4,250
Dividen (IDR) Dividen (IDR)
6-Nov-90 100 100 28-Jul-94
3-May-91 250 40 19-Jul-95
13-Nov-91 250 30 17-Jul-96
25-Jul-92 125 10 22-Jul-97
9-Aug-93 100
14-Jun-94 225
23-Jun-95 80
26-Jun-96 90
1-Jul-97 120
Stock holder (%) Stock holder (%)
Cycle & carriage (Mauritius) Ltd 30.69 72.63 PT Cipta Sarana Duta Perkasa
Toyota Motor Corporation 7.56 20.47 PT Tritunggal Intipermata
Noarbax Inc. 5.74 1.20 Sharif Cicip Sutardjo
GSIS C. 5.44 1.00 PT Suantra Indah Suplai
PT Mitra Investdana Sekurindo 3.30 0.75 PT IMG Sejahtera Langgeng
Endang Lestari Pudjiastuti 3.28 3.95 Public
Int'l Finance Corp. 2.36
HSBC Bank PLC 1.96
China Develop. Indt. Bank 1.63
Others 38.04
Total 100.00 100.00 Total
Consolidated Net Income (%) Consolidated Net Income (%)
Automotive 84.88 89.00 Automotive
Finance 4.08 8.00 Component & Service
plantation 4.70 2.00 Finance
Wood 2.95 1.00 Others
Information Technology 2.37
Heavy Industry 0.97
Others 0.05
Total 100.00 100.00 Total

INVESTMENT NEWSPAPER, No. 35 July 15, 2002

From the graph we can draw in that stock price of ASII in the IPO is even higher of pricing IDR 14,850 then gradually tend to decline and down the lowest in January 2, 2001 of price IDR 1,900. Around one year stock price of ASII seems to little bit increase and the trend will be higher up of price IDR 4,250 in June 28, 2002. Let have a look at IMAS stock price trend, in the IPO the price is IDR 3,800 then decline into IDR 2,100 in January 24, 1995 and down the lowest in March 28, 2002 of pricing IDR 575. Three months later the stocks increase into IDR 800 in June 28, 2002.

Dividend trend of IMAS starts at good one in July 28, 1994 of IDR 100 but afterward tend to decline and sharply jump into the lowest at IDR 10 in July 22, 1997. While ASSI starts the same dividend rates at IDR 100 in November 6, 1990 and fluctuate up and down, getting highest at IDR 250 in May 3 and November 13, 1991, down the lowest at IDR 80 in June 23, 1995 and little increase one year after and last dividend records at the rates IDR 120 in July 1, 1997.


Since market risk is impossible to sweep off, investor need to determine the number of company specific risk that measured by beta of concern stocks. Beta is a measure to figure out volatility of stock price in relative percentage against movement of stock price index also in percentage. Beta is a risk measure of stock price against market index. The higher beta, the higher risk or the more volatile of stocks will be. If one stock has beta equal to 1 (beta = 1), it means stock price will strengthen the same to movement of market index. Say, market index increase or decrease of 10%, then the stock having beta equal to 1 will follow increase or decrease of 10%. Beta of market equal to 1.0, then if beta equal to 0.5, the price of stock follows to increase or decrease a half of market index movements.

On the other hand, while beta equal to negative, then stock price movement will be reversed to the stock price index. Negative beta is difficult to determine, because almost all the influenced factors of the market will affect every stock at the same consequence. But it does not mean there is no negative beta in the market. By that consideration, investor will be more realistic to respond the market fluctuation. At least while it occurs suddenly the increase and decline of index not to surprise investors and not to judge contrary productive on their investments. Beta is able to support investor to determine which stock has chance and not influenced by index movements. At least, investor is still able to manage the profit when index suddenly drops down.

One analyst from BNI Securitas, Mr. Adrian Rusmana suggests some tips on analyzing the stocks movement in the market. While the market in the condition of decline trend or bearish, investor prefers to select the stocks that has smallest beta or even under 1 (<1).>1) if they intend to beat the market average profit. When the market is bullish, then the higher beta is, the higher volatility movements of stock price relative against market index will be.
Within period of July 1 to July 25, 2002 Jakarta Stock Exchange (JSE) informs the beta of listing company. We can then see the beta of ASII is 1.27 (>1) and expected return of 0.07 %. So from the description above this ASII stock will be right if we pick up when market tends to increase or market in its bullish condition. The beta of IMAS, as JSE information reports equal to 0.46 (<1) with expected return of (0.95)%. This below 1 of beta signals investor to pick up the IMAS stock when market index tend to decline or market shows bearish condition.


In 2000 listing company that pass grade of the requirement of investor award is 148 listing companies or equal to 52.5% of total listing companies in Jakarta Stock Exchange. Then in 2001, the number of listing company that pass grade is decrease down to 114 listing companies or equal to only 38% of total listing companies. While in 2002, the numbers of listing company that pass from drop dad test only 99 listing companies or equal to 30.5% of total listing companies.
Some criteria are implemented to test the drop dad test like return one year, sales growth in one year, sales growth in three years, net operating margin, return on equity, asset turn over, volatility return, stock liquid, operating profit growth in one year and the number of stock holders.

Let us have a look at the result between both companies listing of ASII and IMAS. The best 100 listed companies 2002, ASII succeed in placing best twelve (#12) while IMAS drop down beyond best hundred (#100) listing companies. Investor award set up some category to rank listing companies. Let us see first category of best ten listing company based on assets. ASII places its asset on rank six (#6) with its assets of IDR 26.57 trillion while IMAS gets place beyond best ten.

The second category that measure best ten of listing company on the basis of equity both ASII and IMAS place at no best ten. Then category of best listing company that based on net sales ASII achieves its best place (#1) with its net sales of IDR 30.12 trillion while IMAS gets its place on nine best (#9) with its net sales of IDR 7.47 trillion. The fourth category that measure the operating profit, in best ten ASII places itself on rank four (#4) with its operating profit of IDR 2.68 trillion, while IMAS records no place in best ten.

The last two category will cover best ten listing company in the basis of its net profit and market value. For best ten net profit both ASII and IMAS have no rank in best ten listing company. While best ten listing company of market value, ASII gets the nine (#9) rank with its market value of IDR 10.00 trillion and IMAS is again getting no place within best ten.
One note is to add to ASII performance that the investor award also categorizes the listing company by its sector. For the sectors of industrial kind ASII again perform best (#1) and get this best listing company by sector.

While the detailed of hundred (#100) best performance of listing company, as mentioned before ASII places on twelve rank (#12) in 2002, rank forty three (#43) in 2001 and rank nine (#9) in 2000. This fluctuate rank signals there has been tighter competition involved among listing companies. IMAS is unfortunately place no rank within hundred best listing company and has no record for the previous before. Based upon investor award disclaimer there are several things that make IMAS not to pass grade of the minimum requirement. IMAS is late to submit its financial statements, having lower than 300 varieties of stocks holders, having equity below IDR 30 billion and the stocks are inactive in the market.

Further for ASII in connection to place rank twelve (#12) by ten of measure ASII gets A for return one year, D for one year sales, A for three years of sales, C for net margin, A for ROE, B for ATO, C for volatility, A for liquidity, C for one year operating profit growth and at last gets A for the numbers of stock holders.
Now it comes to the explanation of the listing company grading. Return one year means the yield that is attained by stocks holders for one year from capital gain and dividend yield. To figure out dividend yield is based on yearly dividend that is received for the period May 1, 2001 up to April 30, 2002.

One year sales growth means the growth of sales or revenue within one year (in percentage). The intent of sales is the sales for last twelve years that ends up in December 31, 2001. Example for the insurance company, the intention of sales means revenue of underwriting and investment yield.
Three years sales growth means the yearly average sales growth for last three years (in percentage).
Net operating margin (NM) means ratio between companies operating profit with yield net sales. Example for multi-finance company, operating profit is profit before taxes.
Return on equity (ROE) means ratio of net sales against equity, while Asset turn over (ATO) means ratio of net sales with its asset.
Return volatility is measured by its weekly return standard deviation, while stock liquidity means ratio of volume transaction that relates to transaction frequency and the day numbers of trading in the market.

One year operating profit growth is clear enough while the stocks holder number intend to explain and differentiate between public company and not public company by its number of stocks holders. Stock market regulation No. 8 year 1995 mentioned that company public is at least owned 300 sides of owners. Since one aim of company going public is owner distribution, then the company with the most stocks holders will be the first level in this category.
Let us further have a look at grading by sector. As mentioned before ASII places its best on the first level. The detailed of its values is one-year return of 155% compares to IMAS of not available record. One year sales growth and three years sales growth respectively recorded by ASII of 6.05% and 47.6% compares to IMAS of 48.21% and 77.44% also respectively.
Net operating margin of ASII is 8.89% compares to IMAS of 4.36%. Return on equity of ASII is 32.9% compares to IMAS of no available record. Asset turn over of ASII is 113.36% compares to IMAS of 178.83%. Volatility of ASII is 6.77 compares to no record of IMAS. Liquidity of ASII is 1,993.19 compares to IMAS of 0.01.

The number of stocks holders of ASII is 2,935 compares to IMAS of 100. Price stock per April 30, 2002 of ASII of IDR 3,900 compares to IMAS of IDR 700. Market value per April 30, 2002 of ASII is IDR 10.0 trillion compares to IMAS of IDR 697 billion. Stock price highest and lowest of period May 1, 2001 to April 30, 2002 of ASII is IDR 4,200 and IDR 1,375 compares to IMAS of IDR 1,000 and IDR 575.
Last two measures will be dividend yield and earning per share (EPS). While dividend yield of both ASII and IMAS are not available yet, earning per share of ASII is IDR 335 compares to IMAS of IDR (53).


ASII is one of blue chips stock in Jakarta Stock Exchange. Investor tends to glance at this stock first before IMAS stock. But the ASII performance is not really outstanding. ASII has a huge of debt of US$ 760 and IDR 878 billion. This is still added by interest expense of IDR 2.7 trillion.
Management of ASII seems to have strategy to manage debt through two choices. Those are asset liquidation or implement negotiation to creditors. The most important is also to stabilize company operating.

How is about the performance of IMAS. As mentioned before, company holds negative equity of IDR 600 billion and loss accumulated of IDR 1.4 trillion and still there is the debt of amounting IDR 4.3 trillion.

Now let us see the automotive industry in Indonesia that populated more than 200 million people, that really becomes very potential market to automotive industry, components and assembly. From the Gaikindo record, there have been market share of overall automotive industry are as follows. In 1992 until 2001 the market share (in unit of car) are 171,898 (1992), 214,298 (1993), 326,471 (1994), 384,448 (1995), 337,399 (1996), 392,285 (1997), 68,809 (1998), 125,469 (1999), 347,965 (2000) and 349,122 (2001).

It is necessary to both companies to maximize the market share while finance manager of the company should more focus on minimizing Weighted Average Cost of Capital (WACC) in order to get the optimal of market value added (MVA) and further to optimally achieve economic value added (EVA). From the performance both companies we can see they hold high amount of debt, so it should be signaled to finance manager to analyze the cost of capital that already utilized probably not optimal. There might be policy to always distribute dividend and not to concern to debt installments. ASII record best performance at net sales and IMAS also perform high net sales, it can support them to keep their debt in scheme and it may improve WACC. Anyway since both company hold high debt then it should be first priority to focus on and keep on maintaining high net sales.

Now let see the recent record in November 2003 of both company performance on the market. As we all know that ASII is one of blue chip stock of listing company in Jakarta Stock Exchange its price of stock is first of IDR 4,600, highest of IDR 4,600, lowest of IDR 4,475 and closing of IDR 4,475. It means the stock suffers decline down of 125 points. Let us see IMAS performance as of the first of IDR 950 and closing in IDR 950 that means no points of change.

The transaction of volume and value of ASII will be 4,726,500 and value of IDR 21.41 billion compares to IMAS performance of transaction volume of no records. Then price earnings ratio of ASII will be 3.18 compares to IMAS of 4.08. Then the sales and volume of ASII is IDR 4,500 and volume of 635,000 matches to its buy of IDR 4,475 and volume of 54,000. This compares to sales and volume of IMAS of IDR 1,000 and volume of 6,500 matches to its buy of IDR 825 and volume of 3,000.