Adi Sarana Armada BUY (Maintain)

PT Trimegah Sekuritas Indonesia Tbk – www.trimegah.com 1

COMPANY FOCUS │ 7 May, 2019

Company Data

Year end Dec 2018 2019F 2020F 2021F 2022F

Revenue (IDR bn) 1,863 2,384 3,387 4,525 6,832 Net Profit (IDR bn) 144 145 172 205 323 EPS Growth (%) 39.1 1.4 17.9 19.6 57.6 P/E (x) 18.8 18.6 15.7 13.2 8.3 P/BV (X) 2.4 1.8 1.4 1.3 1.0 EBITDA (IDR bn) 787 983 1,242 1,487 1,906 EV/EBITDA 6.1 5.6 4.8 4.3 3.5 Div Yield (%) 1.5 1.4 1.4 1.6 2.0

Adi Sarana Armada Embarking on multiple-year growth phase

On the verge of being the largest courier company in the next 5 years

We expect ASSA to be the largest courier express (Anteraja) in the next 5 years,

delivering ~2m parcels/day by 2023 following the rising trend in e-commerce.

This is not mission impossible in our view given its digital technology adoption

thanks to its cooperation with SF Express. SF Express is the 2nd largest courier

company in China with advanced technology being its backbone (>4000 IT

employees). Indonesia’s last-mile delivery industry is still at infancy stage our

view. China’s online transaction to retail size is ~13%, significantly larger

compared to Indonesia (~2.7%).

Breaking the stigma of viewing car rental as a sunset industry

There is a big difference in business opportunities between corporate car rental

(large opportunity) vs consumer car rental (very fragmented). One should not

underestimate the potential growth of corporate car rental. There are still plenty

of large corporates that are still using internal fleet management which we see as

inefficient. It is just a matter of time corporates would outsource their vehicle

management to professional 3rd parties such as ASSA. ASSA is just at a blink of

an eye to be the largest corporate car rental fleet with ~24k units in possession

currently (Trac ~25k, Indorent ~13k, MPM Rent 13k). We see its large base car

fleet is still relatively low compared to Indonesia’s total ~3m vehicle rental

opportunities that ASSA can grab. We estimate ASSA to almost double its fleet by

2024 (23.6k units in 2018 to 43.4k units in 2024).

Upside potential from car auction business

ASSA recently acquired 51% of JBA (car auction), making ASSA the largest car

auction company as it will be able to sell ~40k of auctioned cars per year. Before

acquisition, ASSA through Bidwin sells only ~17k per year. We believe there

would be strong synergy between JBA and ASSA given the combination of

technology and strong fleet management skills. The car auction industry is still at

infancy stage in our view should we compare to the likes of Japan’s USS where

there are ~3m transactions on an annual basis.

Repeating its remarkable sustainable financial growth since IPO

We estimate strong 2019-24 CAGR EBITDA of 27% after they just recorded

compelling 5-years CAGR EBITDA of 11% from 2013 to 2018. We expect courier

business growth to stand out amongst all, contributing 44% of earnings by 2023

from barely making any profit yet this year.

Upgrade TP to Rp1,000 using SOP method

We upgrade TP to Rp1,000 (from Rp700), implying 6.3x 2019 EV/EBITDA (17%

discount to global rental peers), as we apply an SOP based TP (from DCF), which

partially unlocks the value of ASSA’s courier business & car auction. Key risks: 1)

Continuous increase in cost funds, 2) Decline in used car market value.

BUY (Maintain) Current TP IDR1,000 (+25.8%) Previous TP IDR700

Current Price IDR795

Willinoy Sitorus [email protected] 021 - 2924 9107 Jeffrey, CFA [email protected] 021 - 2924 9018

Stock Data & Indices

Bloomberg Code ASSA.IJ

JCI Member JAKINFR

MSCI Indonesia No

JII No

LQ45 No

Kompas 100 No

Key Data

Issued Shares (mn) 3,397.5

Free Float (est) 35.9

Mkt. Cap (IDRbn) 2,701.0

Mkt. Cap (USDmn) 189.0

ADTV 6 months (USDmn) 9.1

52 Wk-range 940 / 250

Performance (%)

YTD 1m 3m 12m

Absolute 118.4 -0.6 15.2 172.3

Relative to

JCI 117.4 2.7 19.5 166.0


Cash Flow

Year end Dec (IDR bn) 2018 2019F 2020F 2021F 2022F

Net Profit 144 145 172 205 323

Depr / Amort 431 536 658 802 962

Chg in Working Cap 188 (340) (323) (100) (346)

Others (297) 24 29 34 40

CF's from oprs 123 (8) 201 648 686

Capex (736) (852) (973) (1,114) (1,183)

Others 623 (5) (6) (7) (7)

CF's from investing (113) (857) (979) (1,120) (1,190)

Net change in debt 348 600 500 350 350

Others (215) 198 253 33 249

CF's from financing 133 798 753 383 599

Net cash flow 143 (66) (24) (89) 94

Cash at BoY 85 228 161 137 48

Cash at EoY 228 161 137 48 143

Income Statement


Revenue 1,863 2,384 3,387 4,525 6,832

Gross Profit 599 737 954 1,179 1,595

Opr. Profit 357 446 584 685 944

EBITDA 787 983 1,242 1,487 1,906

Net Int Inc/(Exp) (173) (246) (312) (337) (368)

Earnings From Subsidiary - - - - -

Other Income (Expense) - - - - -

Pre-tax Profit 182 201 272 348 576

Income Tax Expense (40) (50) (68) (87) (144)

Minority Interest 1 (5) (32) (56) (108)

Net Profit 144 145 172 205 323

Dividend payout ratio (%) 28.4 25.7 25.7 25.7 25.7

Balance Sheet


Cash and equivalents 228 161 137 48 143

Other curr asset 309 645 1,003 1,116 1,538

Net fixed asset 3,412 4,101 4,750 5,354 5,868

Other non-current assets 114 119 125 132 139

Total Asset 4,063 5,027 6,015 6,650 7,688

ST debt 20 20 20 20 20

Other curr liab 1,130 1,126 1,161 1,174 1,050

LT debt 1,604 2,204 2,704 3,054 3,604

Other LT Liab 170 195 223 257 297

Minority interest 52 129 260 295 431

Total Liabilities 2,924 3,544 4,107 4,505 4,970

Shareholders’ Equity 1,086 1,353 1,647 1,850 2,287

Net debt / (cash) 2,123 2,789 3,313 3,752 4,008

Total cap employed 2,912 3,880 4,834 5,456 6,618

Net Working capital (613) (340) (41) (30) 611

Ratio Analysis

Year end Dec 2018 2019F 2020F 2021F 2022F

Profitability

Gross Margin (%) 32.1 30.9 28.2 26.0 23.3

Opr Margin (%) 19.1 18.7 17.2 15.1 13.8

EBITDA Margin (%) 42.2 41.2 36.7 32.9 27.9

Core Net Margin (%) 7.1 6.1 5.1 4.5 4.7

ROE (%) 13.9 11.9 11.4 11.7 15.6

ROA (%) 3.9 3.2 3.1 3.2 4.5

Stability

Current ratio (x) 0.5 0.7 1.0 1.0 1.6

Net Debt to Equity (x) 2.0 2.1 2.0 2.0 1.8

Net Debt to EBITDA (x) 2.7 2.8 2.7 2.5 2.1

Interest Coverage (x) 2.1 1.8 1.9 2.0 2.6

Efficiency

Account Payable (days) 10 10 10 10 10

Account Receivable (days) 42 40 39 39 38 Inventory Day (days) 10 9 6 5 3

Major Shareholders

Permata Bank (ASII owns 44.56%)

booked a -IDR376bn earnings loss

in 1Q16 due to large IDR1.9trn

impairment on loans. However, our

2016 income portion from Permata

is positive figure of IDR133bn (-

20.0% YoY) as we assume the

provision expense to normalize in

subsequent quarters. Our sensitivity

analysis suggest that zero profits for

Permata Bank in 2016, would

provide additional 1% consolidated

earnings cut

Major Shareholders

PT Adi Sarana Armada Tbk (ASSA) is

one of the largest car rental

company with >20k rental units and

44 branch & service points. It

entered the car auction business

back in 2014.

Company Background

PT Adi Dinamika Investindo 25.1%

PT Daya Adicipta Mustika 19.2%

Drs. Prodjo Sunarjanto SP 9.9%

Public 45.8%

SWOT Analysis

Threat - Increase in

cost of funds.

- High discount

for new car.

Strength - Strong

customer base

(corporate)

-Lower car

acquisition price

- Synergy within

business units

- Technology

driven

Weakness -Exposure to

change in interest

rates.

Opportunity - Increase in

second hand

car price

- Trend to

outsource

transportation

needs

(increase in

potential

customer base)

- Monetize

technology to

make

businesses

more efficient

Major Shareholders


Investment Thesis

Company background; a well-run company with solid reputation

Founded by a well-respected businessman, Mr. TP Rachmat (one of the prominent figure in Astra International’s milestone),

Adi Sarana Armada (ASSA) is soon to be the largest rental company in Indonesia (non-short-term rental). ASSA is managed

mostly by ex-Astra professionals. ASSA’s president director (Mr. Prodjo Sunarjanto) was one of the founders of Trac (Serasi

Auto Raya; the largest car rental company owned by Astra International). Back in 2012, Mr. Prodjo joined forces in ASSA.

Mr. Prodjo and his solid team managed to grow ASSA’s rental fleet double since 2012 without having to sacrifice fleet

utilization. ASSA has ~23,600 leasing fleets as per end of 2018 serving mostly corporate customers with long-term

contracts. ASSA is a rental company that has strong operational and financial skills proved by its ability to boost its number

of fleets (+13% CAGR from from 2013 to 2018) whilst maintaining its fleet utilization rate at the ~93% level consistently

since IPO back in 2012. In 2014, ASSA established BidWin, an automotive auction business unit that provide a platform to

liquidate its fleets at good market value and more efficiently. Early this year, ASSA established a last-mile delivery (LMD)

company, PT. Tri Adi Bersama (Anter Aja; TAB) with 55% stake (Semangat Bambung Runcing has 25% and Time Prestige

Investment has 20%). Also, ASSA acquired 51% of JBA (Japanese based car auction) in March 2019.

Episode 1 (2013-18): From little to becoming almost the largest car rental company

In the 1st episode (2013-18), Mr. Prodjo Sunarjanto and team expanded its bread and butter car rental business of which

many non-believers thought it was a sunset industry. This is definitely not true. ASSA were able to double its fleet since IPO

back in 2012 and booked EBITDA and net profit CAGR of both 11% respectively from 2013 to 2018 while its competitors

were losing market share. This year, we expect ASSA Rent to reach its milestone in surpassing TRAC as the largest rental

company (non-short term).

Episode 2 (2019-24): Expanding to new businesses via technology disruption

ASSA is venturing into last mile delivery business under Tri Adi Bersama (TAB; 55% stake) with its brand, Anteraja.

Although ASSA is not a first-mover in this business should we compare to the likes of JNE and JNT, we view that Anteraja is

a first-mover in implementing full-technology in the courier business thanks to its synergy with SF Express (~20% stake in

TAB). SF Express is one of the largest couriers in China. Furthermore, we think the courier business cycle is still at early

stage. China’s current total parcel delivery is ~132mn delivery per day (according to State Post Bureau) while Indonesia’s

parcel per day currently is only ~4m. Also, Indonesia’s online transaction size to retail size is only 2.7%, which is lower to

the likes of China (13.4%) and India (4.0%) based on our research.

ASSA recently acquired 51% stake in JBA (a Japanese-owned car auction company) in March 2019 worth ~Rp140bn, making

ASSA the largest car auction with +/- 40k cars sold per year. The rational of this deal is that ASSA has the fleet

management skills while JBA has the technology. We think it is just a matter of time that car auction in the future will be

online; this would definitely enhance auction traffics (not in our estimate yet). The car auction industry is still at infancy

stage in our view should we compare to the likes of Japan’s USS where there are ~3m transactions on an annual basis.

Earnings growth both driven by light asset and heavy asset base businesses

We expect earnings growth to be driven by light asset base (car auction, last-mile delivery) and heavy asset base (car

rental). We expect ASSA to book 5-years CAGR earnings of 31% from 2018 to 2023 with a net debt to equity maintaining at

the ~2x level. Note that ASSA’s rental business is highly leveraged in nature as there is continuous fleet replacement capex

cycle after the 4th or 5th year of a car’s life-cycle. We expect 2019 earnings to be relatively flat due to initial start-up from

Anteraja and initial M&A cost from JBA acquisition.

Valuation: 26% upside to TP 1,000/share, 89% upside to blue sky scenario

We upgrade TP to Rp1,000/share (from Rp700/share), implying 6.3x 2019 EV/EBITDA, as we apply an SOP based TP (from

DCF), which partially unlocks the true value of ASSA’s courier business and car auction. Note that our last mile delivery

segment is relatively conservative should we taken into account the future prospects. Last-mile delivery (courier business)

only contributes 38% (Rp1.3trn) of our SOP valuation of Rp3.45trn. Our blue-sky scenario analysis suggests that ASSA’s fair

value can reach Rp1,500/share once we see its courier business has increasing visibility for further room to grow even when

Anteraja’s parcel delivery reaches ~2m per day in 2023. Indonesia’s online to retail size is still very low (~2.7%) should we

compare to the likes of China (~13%). Key risks are 1) Increase in cost funds, 2) Decline in used car market value as it

determines the scrap value of the car rental assets.


Logistics Supported With Technology

Tri Adi Bersama (Anteraja) background

Established in 2018, Tri Adi Bersama (TAB) is a technology based company focusing on logistics and express courier

services. ASSA has 55% stake in TAB, Semangat Bambu Runcing has 25% and Time Prestige Investments (SF Express) has

20%. Several large courier express companies are JNE, J&T, Sicepat, Tiki, Ninja Express. What differs Anteraja (TAB’s

courier express brand) against competitors are its emphasize in technology.

The benefits of having a reliable, trustworthy and technology savvy courier delivery

Given the increasing habits of customers purchasing via online, a reliable/trustworthy and technology savvy last-mile

delivery service is becoming increasingly important. This would later gain the trust of on-line purchasers. As trust increases,

customers would gradually be willing to spend on more expensive items via on-line. This would of course have a positive

impact to courier services as they would be able to charge higher delivery tariffs as well. Anteraja trains their drivers (known

as Satria) very seriously as they have to make sure that sellers and customers gain the trust of the Satrias.

With technology, Anteraja is able to provide strong customer experience. For example, there is no handwriting involved

during delivery process which means less hassle and errors. Anteraja is able to provide real-time tracking visibility as

customers can start to track stages of delivery started just when the drivers (known as Satria) leave the customers’ doors.

Also stage boxes parcel management are mostly controlled by an app system ensuring errors are minimal and reduce labour

costs as well. We believe Anteraja provides the most efficient logistic last-mile delivery service.

Anteraja business model

The business model of Anteraja is basically delivering a package order from a customer. The process is the seller gives the

package to Satria. Satria deliver it to stage store then picked up by a truck to the sorting warehouse. From there, the truck

delivers to staging store. Satria picks up from staging store to buyer. The radius of the driver’s trips should be no more than

4km so that the drivers are familiar with the routes. This delivery process is the most efficient way to do.

Figure 1. Anteraja’s business model

Source: Tri Adi Bersama, Trimegah research


Figure 2. Partnering with Satrias Figure 3. Anteraja network development plan

Source: Anteraja’s official instagram Source: Tri Adi Bersama, Trimegah research

Figure 4. One of Anteraja’s hubs

Source: Tri Adi Bersama, Trimegah research

Figure 5. PT. Tri Adi Bersama shareholder structure (Anteraja)

Source: Tri Adi Bersama

2019 2020 2021

Jakarta Surabaya Pekanbaru

Bodetabek Semarang Aceh

Bandung Makassar Manado

Palembang Pontianak

Medan Lampung

Malang Padang

Balikpapan Banjarmasin

Denpasar

Yogyakarta

Solo

Tegal

55% 25% 20%

PT. Adi Sarana ArmadaPT. Semangat Bambu

Runcing

Time Prestige

Investments Ltd (SF

Express)

PT. Tri Adi Bersama


Who is SF Express?

Established in 1993 in Shunde (Guangdong) by the visionary founder Mr. Wang Wei, SF Express is now a giant

comprehensive logistics solution provider with emphasize in technology. It is currently listed with a USD market cap

equivalent $21bn. Mr. Wang Wei is a rare case where a logistic player can be one of the wealthiest man in China (net worth

of $12.5bn according to Forbes). We believe Anteraja is with the right partner in order to pursue growth in the last mile

delivery business.

Figure 6. Last-mile delivery demand will continue to grow along with the increase in e-commerce transactions

Source: Frost & Sullivan

Part of ASSA’s financial backbone

Anteraja will penetrate to Jabodatabek and Bandung this year before expanding regionally 2020 onwards. We expect

Anteraja to deliver ~2m parcels/day by 2023. To reach a healthy ~2m parcels per day target, Anteraja will develop network

based on e-commerce platform transaction big data analytics. They will calculate all the possible routing, days travel, market

price as to ensure optimum and cost effective network. Furthermore, Anteraja will have to invest in hubs, staging stores in

order to reach ~2m parcels/day scale. We estimate Anteraja will need ~Rp1trn capex over the next 5 years (2019-23),

which is relatively small vs ASSA’s historical capex requirement. Some meaningful profits would be gradually seen 2020

onwards. We expect Anteraja to contribute 17%/29%/44% of 2021, 2022 and 2023 net profit respectively.

Figure 7. TAB (Anteraja) net profit contribution, 2019-23

Source: Trimegah research

814

22

33

48

65

83

100

37%

49%56%

73% 77% 79% 80% 81%

00%

10%

20%

30%

40%

50%

60%

70%

80%

90%

-

20.0

40.0

60.0

80.0

100.0

120.0

2015 2016 2017 2018F 2019F 2020F 2021F 2022F

Indonesia e-commerce ($ bn) Smartphone penetration (RHS)

($ bn)

-03%

07%

17%

29%

44%

-10%

00%

10%

20%

30%

40%

50%

-50.0

.0

50.0

100.0

150.0

200.0

250.0

300.0

2019F 2020F 2021F 2022F 2023F

Courier (Anteraja) net profit - 55% stake adjusted Net profit contribution (RHS)

(Rp bn)


Indonesia’s last mile delivery still at early stage

Based on our analysis, Indonesia’s last-mile delivery industry is still at early stage our view. China’s online transaction to

retail size is ~13%, significantly larger compared to Indonesia (~2.7%). Meanwhile Indonesia’s smartphone penetration is

already at ~80% level. We think it is only a matter of time consumers would develop their spending habits to online

purchases and would gradually gain trust in online transactions especially for higher-price items.

Figure 8. Online sales to total retail size

Source: Mckinsey, Kontan, Economist, Intelligence Units, Trimegah research

13.4%

4.7%4.0%

2.7%1.8% 1.6%

0.5%

00%

02%

04%

06%

08%

10%

12%

14%

16%

China Singapore India Indonesia Thailand Malaysia Philippines

2018F


Corporate Rental Business Remains Attractive

Breaking the stigma of viewing car rental as a sunset industry

There is a big difference in business opportunities between corporate car rental (large opportunity) vs consumer car rental

(very fragmented). One should not underestimate the potential growth of corporate car rental. There are still plenty of large

corporates that are still using internal fleet management which is inefficient in our view. It is just a matter of time corporates

would outsource their vehicle management to 3rd parties. ASSA as the largest corporate car rental fleet with ~24k units in

possession (Trac ~24k, Indorent ~13k, MPM Rent 13k) does not hinder them in booking strong sustainable fleet growth. We

estimate ASSA to almost double its fleet by 2024 (23.6k units in 2018 to 43.6k units in 2024). Note that ASSA’s fleet growth

booked +12.8% CAGR from 2013 to 2018.

How big is the car rental market opportunity?

There are ~15m registered cars in Indonesia of which ~20% of it is commercial vehicles and passenger cars that are used

for corporate purposes/usages. This means that there are ~ 3m car market opportunities that ASSA can grab. Trac,

Indorent, MPM Rent and ASSA Rent combined only possess 74k car rental units. Our channel-check suggests that there are

sufficient multi-national companies that have used 3rd party car rental services. However, there are still plenty of local giant

private companies that are still managing fully their own internal vehicles. Note that ~25% of ASSA’s fleet is commercial

cars, 7.5% trucks and ~59% passenger cars.

Figure 9. ASSA’s rental fleet, 2014-24

Source: Company, Trimegah research

Car rental business model—How it works?

A car rental business requires large capital spending initially as to acquire fleets. After acquiring the fleets, ASSA rents out

the cars to corporate customers and sells the rental vehicles after 4-5 years for passenger cars and after 7 years for

commercial cars. After that, management will do an internal review and decide wisely whether to expand, maintain, or

reduce its fleet size. In the car rental business, the disposal value highly determines the internal rate of return (IRR) for a

particular cycle of a car investment.

Figure 10. Car rental business model


15.018.0 19.2 20.9

23.626.6

29.633.1

36.640.1

43.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2023F 2024F

Car rental units

('000)


Why do corporates prefer to rent?

Several reasons are: 1.) Light asset investment, 2.) corporates can focus on its core business, 3.) risk transfer for insurance,

vehicle maintenance, human resources, and free from depreciation. With these justifications, we believe corporates’

preference to rent cars will continue to grow in the long-run.

Figure 11. Top customers

Source: Company

Strong competitive edge

ASSA has a strong competitive advantage compared to individual car rental businesses in terms of: 1.) Larger discounts in

new fleet purchases, and 2.) Ability to efficiently scrap old fleets at attractive market value through its auction business unit.

Figure 12. Rental fleet composition by type, 9M18 Figure 13. Rental fleet composition by model, 9M18

Source: Company Source: Company

4x41%

Motorcycle8%

Passenger59%

Truck7%

Commercial car25% Daihatsu

34%

Honda9%

Isuzu1%

Mitsubishi11%

Nissan0%

Suzuki5%

Toyota40%

Others1%


Financials

Figure 14. Revenue breakdown, 2017-21 Figure 15. Revenue contribution, 2017-21

Source: Company, Trimegah research Source: Company, Trimegah research

Figure 16. Op. profit breakdown, 2017-21 Figure 17. Op. profit contribution, 2017-21


Figure 18. EBITDA and EBITDA margin, 2017-21 Figure 19. Net profit and net margin, 2017-21


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2017 2018 2019F 2020F 2021F

Vehicle Lease Sale of Used Vehicle Logistics Auction Courier

(Rp bn)

70% 71% 66%55%

48%

14% 16%15%

11%

6%

13% 10%9%

8%

08%

2% 3%5%

4%

4%

5%21%

34%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2017 2018 2019F 2020F 2021F


-100

0

100

200

300

400

500

600

700

2017 2018 2019F 2020F 2021F


(Rp bn)

84% 78% 75% 70% 67%

14%20% 17%

14%6%

01% 01%9%

8%02%

2% 3%5%

4%4%

5%

6%14%

-20%

0%

20%

40%

60%

80%

100%

2017 2018 2019F 2020F 2021F


711787

983

1,242

1,487

42.1% 42.2% 41.2%36.7%

32.9%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0

400

800

1,200

1,600

2,000

2017 2018 2019F 2020F 2021F

EBITDA EBITDA margin (RHS)

(Rp bn)

103

144 145172

205

6.1%7.7%

6.1% 5.1% 4.5%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

0

40

80

120

160

200

240

280

320

360

400

2017 2018 2019F 2020F 2021F

Net profit Net margin (RHS)

(Rp bn)


Figure 20. EBITDA to interest expense, 2017-21 Figure 21. ROAE and ROAA, 2017-21


Figure 22. Net debt to equity, 2017-21 Figure 23. Net debt to EBITDA


Figure 24. Earnings revision

New Old Change

2019F 2020F 2021F 2019F 2020F 2021F 2019F 2020F 2021F

Revenue 2,384 3,387 4,525

2,555 3,730 4,445

-7% -9% 2%

Gross profit 737 954 1,179

772 1,066 1,263

-5% -10% -7%

Gross margin 30.9% 28.2% 26.0%

30.2% 28.6% 28.4% Operating profit 446 584 685

435 632 721 # 3% -8% -5%

Op. profit margin 18.7% 17.2% 15.1%

17.0% 16.9% 16.2% Pre-tax profit 201 272 348

224 371 466

-10% -27% -25%

Pre-tax margin 8.4% 8.0% 7.7%

8.8% 9.9% 10.5% Net profit 145 172 205

154 263 332

-6% -35% -38%

Net margin 6.1% 5.1% 4.5%

6.0% 7.0% 7.5%


4.0

4.4

3.9 3.9

4.3

3.6

3.8

4.0

4.2

4.4

4.6

4.8

2017 2018 2019F 2020F 2021F

EBITDA to interest expense (x)

(x)

11%

14%

11%

10% 10%

3%4%

3% 3% 3%

2%

4%

6%

8%

10%

12%

14%

2017 2018 2019F 2020F 2021F

ROAE ROAA

1.9

1.9 1.9

1.7 1.7

1.5

1.6

1.7

1.8

1.9

2.0

2017 2018 2019F 2020F 2021F

Net debt to equity

(x)

2.7 2.7

2.8

2.7

2.5

2.4

2.5

2.6

2.7

2.8

2.9

3.0

2017 2018 2019F 2020F 2021F

Net debt to EBITDA

(x)


Valuation and Peers Comparison

Figure 25. SOP method

Rental, used vehicle, and logistic

Auction Courier Total

Valuation method DCF Target PE DCF

Enterprise value Rp bn 4,393 2,411

Net debt Rp bn -2,789 0

2020 earnings Rp bn 51

Target PE (x) 20

Equity value Rp bn 1,604 1,024 2,411

ASSA's stake % 100% 51% 55%

ASSA FV of Equity Rp bn 1,604 522 1,326 3,452

ASSA shares bn shares 3.4 3.4 3.4

ASSA fair share price Rp/share 470 155 390 1,000


Figure 26. Peers comparison

Auction

Country Market

cap PER (x) EV/EBITDA (x) PBV (x) ROE (%)

(USDMn) 2019Y 2020Y 2019Y 2020Y 2019Y 2020Y 2019Y 2020Y

Car auction

KAR Auction Services US 7,572 19.0 17.4 10.5 9.8 5.2 4.9 22.3 N/A

Non-car auction Ritchie Bros Auctioneers US 3,774 27.1 23.1 14.7 14.5 4.4 3.8 16.3 18.4

Simple average 23.1 20.3 12.6 12.2 4.8 4.4 19.3 18.4

Auto rental Market


Country (USDMn) 2019Y 2020Y 2019Y 2020Y 2019Y 2020Y 2019Y 2020Y

Avis Budget Group US 2,820 9.3 8.4 6.7 5.8 4.2 3.0 56.0 3.0

Hertz Global Holdings US 1,649 28.5 12.1 5.3 5.6 1.6 1.5 5.6 1.5

Europcar Mobility Europe 1,323 7.2 6.1 12.7 11.5 1.2 1.1 16.5 1.1

Car Inc Hong Kong 1,656 14.8 13.2 5.9 5.2 1.3 1.2 9.5 1.2

Cia De Locacao Brazil 1,599 17.6 14.2 7.2 6.1 2.2 2.0 12.1 2.0

Simple average 15.5 10.8 7.6 6.8 2.1 1.8 19.9 1.8

Courier Market


Country (USDMn) 2019Y 2020Y 2019Y 2020Y 2019Y 2020Y 2019Y 2020Y

SF Holdings China 20,571 27.0 22.9 14.6 11.3 3.4 3.0 12.3 13.5

ZTO Express Cayman US 15,743 21.3 17.8 13.0 10.4 2.8 2.5 13.9 14.8

Yamato Holdings Japan 8,968 26.4 19.7 7.9 6.7 1.7 1.6 6.4 8.2

SG Holdings Japan 8,608 21.5 20.1 10.9 10.1 2.6 2.4 12.8 12.6

Bpost SA SA 2,369 10.2 9.6 5.3 5.1 2.8 2.7 28.5 28.9

Simple average 21.3 18.0 10.3 8.7 2.7 2.4 14.8 15.6

Source: Trimegah research, Bloomberg


Figure 27. ASSA’s 5-year average forward P/E

Source: Company, Trimegah Research, Bloomberg

Figure 28. ASSA’s 5-year average forward P/BV


Figure 29. ASSA’s 5-year average forward EV/EBITDA


-

5.0

10.0

15.0

20.0

25.0

30.0

35.0

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

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

Forward P/BV Average SDV -2 SDV -1 SDV +1 SDV +2

1.0

1.50

2.0

2.50

3.0

3.50

4.0

4.50

5.0

5.50

6.0

Forward EV/EBITDA Average SDV -2 SDV -1 SDV +1 SDV +2


Research Team

Sebastian Tobing, CFA Strategy, Digital, Telecom, and Media [email protected] +62-21 2924 9105

Angga Aditya Assaf FIG (Financial Institutions Group) [email protected] +62-21 2924 9103

Fakhrul Fulvian Economics, Fixed Income [email protected] +62-21 2924 9097

Christy Halim Consumer, Healthcare, and Cement [email protected] +62-21 3043 6322

Darien Sanusi Retail [email protected] +62-21 2924 9106

Willinoy Sitorus Commodities, Automotive, Small caps [email protected] +62-21 2924 9107

Jeffrey, CFA Digital, Telecom, Media, Automotive [email protected] +62-21 2924 9018

Sandro Hanaehan Sirait Commodities, Small caps [email protected] +62-21 2924 9099

Wisnu Budhiargo Property and Infrastructure [email protected] +62-21 2924 9098

Yeni Simanjuntak On-the-ground, Politics [email protected] +62-21 2924 9104

Rovandi, CTA Technical analysis [email protected] +62-21 2924 9096

Novianty Corporate relations [email protected] +62-21 2924 9037

Adi Prabowo Property and Infrastructure [email protected] +62-21 2924 9136

Farah Rahmi Oktaviani Economics, Fixed Income, FIG [email protected] +62-21 3043 6325

Heribertus Ariando Strategy, Plantations [email protected] +62-21 2924 9060

Fedro Christian Small caps [email protected] +62-21 2924 9098

Institutional Sales Team

Daniel Dwi Seputro Head of Equity Trading [email protected] +62-21 2924 9075

Dewi Yusnita Equity Institutional Sales [email protected] +62-21 2924 9082

Meitawati Equity Institutional Sales [email protected] +62-21 2924 9081

Beatrix Susanto Equity Institutional Sales [email protected] +62-21 2924 9086

Calvina Karmoko Equity Institutional Sales [email protected] +62-21 2924 9080

Raditya Andyono Equity Institutional Sales [email protected] +62-21 2924 9146

Retail Sales Team

Henry Sidarta, CFTe Head of Retail Equity Sales [email protected] +62-21 3043 6309

Hasbie Sukaton Vice of Retail Equity Sales [email protected] +62-21 2924 9088

Jakarta Area

Musji Hartanto Artha Graha, Jakarta [email protected] +62-21 2924 9021

Windra Djulnaily Pluit, Jakarta [email protected] +62-21 6660 1456

Untung Wijaya Kelapa Gading, Jakarta [email protected] +62-21 4503 345

Ignatius Candra Perwira BSD, Tangerang [email protected] +62-21 5386 700

Sumatera

Juliana Effendy Medan, Sumatera Utara [email protected] +62-61 4520336

East Indonesia

Pandu Wibisono Surabaya, Jawa Timur [email protected] +62-31-5623720

Carlo Ernest Frits Coutrier Makasar, Sulawesi Selatan [email protected] +62-411-850222

Central Java, Area

Mariana Kusuma Wati Semarang, Jawa Tengah [email protected] +62-24-8452333

Jogi Huxany Fatah Ng Solo, Jawa Tengah [email protected] +62-271-733 328

West Java

Asep Saepudin Bandung, Jawa Barat [email protected] +62-22-4267929

Ariffianto Cirebon, Jawa Barat [email protected] +62-231-8291155


Disclaimer

This report has been prepared by PT Trimegah Sekuritas Indonesia Tbk on behalf of itself and its affiliated

companies and is provided for information purposes only. Under no circumstances is it to be used or

considered as an offer to sell, or a solicitation of any offer to buy. This report has been produced

independently and the forecasts, opinions and expectations contained herein are entirely those of PT

Trimegah Sekuritas Indonesia Tbk.

While all reasonable care has been taken to ensure that information contained herein is not untrue or

misleading at the time of publication, PT Trimegah Sekuritas Indonesia Tbk makes no representation as to

its accuracy or completeness and it should not be relied upon as such. This report is provided solely for

the information of clients of PT Trimegah Sekuritas Indonesia Tbk who are expected to make their own

investment decisions without reliance on this report. Neither PT Trimegah Sekuritas Indonesia Tbk nor any

officer or employee of PT Trimegah Sekuritas Indonesia Tbk accept any liability whatsoever for any direct

or consequential loss arising from any use of this report or its contents. PT Trimegah Sekuritas Indonesia

Tbk and/or persons connected with it may have acted upon or used the information herein contained, or

the research or analysis on which it is based, before publication. PT Trimegah Sekuritas Indonesia Tbk

may in future participate in an offering of the company’s equity securities.

This report is not intended for media publication. The media is not allowed to quote this report in any

article whether in full or in parts without permission from PT Trimegah Sekuritas Indonesia Tbk. For

further information, the media can contact the head of research of PT Trimegah Sekuritas Indonesia Tbk.

This report was prepared, approved, published and distributed by PT Trimegah Sekuritas Indonesia Tbk

located outside of the United States (a “non-US Group Company”). Neither the report nor any analyst who

prepared or approved the report is subject to U.S. legal requirements or the Financial Industry Regulatory

Authority, Inc. (“FINRA”) or other regulatory requirements pertaining to research reports or research

analysts. No non-US Group Company is registered as a broker-dealer under the Exchange Act or is a

member of the Financial Industry Regulatory Authority, Inc. or any other U.S. self-regulatory

organization.

INVESTMENT RATING RULE:

Buy : Share price is expected to exceed more than 10% over the next 12 months

Neutral : Share price is expected to trade within the range of 0%-10% over the next 12 months

Sell : Share price is expected to trade below 0% over the next 12 months

Not Rated : The company is not within Trimegah research coverage


Analysts Certification

The research analyst(s) of PT Trimegah Sekuritas Indonesia Tbk. primarily responsible for the content of

this research report, in whole or in part, certifies that with respect to the companies or relevant securities

that the analyst(s) covered in this report: (1) all of the views expressed accurately reflect his or her

personal views on the company or relevant securities mentioned herein; (2) no part of his or her

remuneration was, is, or will be, directly or indirectly, connected with his or her specific recommendations

or views expressed in the research report; and (3) the report does not contain any material non-public

information.

The disclosure column in the following table lists the important disclosures applicable to each company

that has been rated and/or recommended in this report:

Company Ticker Disclosure (as applicable)

ASSA -

Trimegah Disclosure Data

Trimegah represents that:

1. Within the past year, it has managed or co-managed a public offering for this company, for which

it received fees.

2. It had an investment banking relationship with this company in the last 12 months.

3. It received compensation for investment banking services from this company in the last 12

months.

4. It expects to receive or intends to seek compensation for investment banking services from the

subject company/ies in the next 3 months.

5. It beneficially owns 1% or more of any class of common equity securities of the subject company.

6. It makes a market in securities in respect of this company.

7. The analyst(s) or an individual who assisted in the preparation of this report (or a member of

his/her household) has a financial interest position in securities issued by this company. The

financial interest is in the common stock of the subject company, unless otherwise noted.

8. The analyst (or a member of his/her household) is an officer, director, employee or advisory board

member of this company or has received compensation from the company.

Adi Sarana Armada BUY (Maintain)

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