Aug 12, 2010

MASA target price at Rp335-Rp430

Stellar rating agency in Indonesia PT Pefindo has set a target price for tire maker PT Multistrada Arah Sarana Tbk (MASA) at the range of Rp335-Rp430 per share.
In a research report submitted to Indonesia Stock Exchange (IDX) yesterday, the report said the price target is based on several considerations such as Multistrada's sales increse by 26.8% yean on year (YoY) in 2009 to Rp1.69 trillion from Rp1.33 trilion. "The increase was in line our previous estimation," the report said.
Multistrada continually upgrades its production capacity to meet increasing demand of tires in domestic market and export market as better global economic growth. The tire producer also plans to have annual shutdown maintenance in the third quarter of 2010.
Multistrada, producer of Achilles and Strada brands, continues to expand installed capacity of car tires from 13,000 units per day in 2008 to 16,000 units per day in 2009. 
In addition, the company also extends an installed capacity of motorcycles tires from 2,500 units per day to 8,000 units in the same period.
Buoyed by high demand of tires in both domestic and export market, Multistrada plans to boost installed capacity of cars tires to achieve 28,500 units per day in 2013 as well as motorcycle tires to 16,000 units per day.
In 2009, Indonesia car sales dropped about 20% year on year but Multistrada's domestic sales still rose 11.5% because the company focused in replacement market which demand keep increasing.
For export market, Indonesia recorded a 3.7% increase in tires export but Multistrada booked a 21.9% increase in its exports as a result of low price with international quality standard.
Supportted by additional installed capacity for both car and motorcycle tires are expected to generate sales growth and value to the company.
"We estimate Multistrada to post sales growth of compounded annual growth rate 22.4% in 2009-2014.

Disclosure: No position at the stock mentioned above. 

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