Sep 22, 2010

Multistrada targeted to reach Rp520

PT Mandiri Sekuritas today releases a research report about tire maker PT Multistrada Arah Sarana Tbk (MASA).
In the report, the brokerage comes with buy recommendation and DCF-based share price target of Rp520, offering 48.6% upside. MASA now jumps 8.33% to Rp390 per share. 
"We estimate that the company's net profit to grow by 25% CAGR over the next 2 years on the back of strong domestic and exports market," the report said.
To meet strong demand and anticipate higher demand, the company will expand its production capacity to 28,500 per tire per day by 2012 compared with 14,200 in 2009.
"We expect that robust domestic automotive sales will lead to strong demand in tire replacement as around 70% of total Multistrada's tire sales come from replacement market," the report said.
By end 2010, outstanding cars in Indonesia may reach 19 million units with around 60 million of motorcycles. Gaikindo estimates that car sales will grew by 15.8% CAGR ober the next 5 years. MUltistrada plans to expand its passenger car radial (PCR) and motorcycle tire with total investment of US$182 million.
PCR tire production capacity is targetted to become 28,500 tire a day in 2012 from 14,000 tire/day by end 2009. Meanwhile, motorcycle tire capacity is aimed to rise to 16,000 tire a day in 2012 from 4,900 in 2009.
"We forecast its revenue will grow by 33.9% CAGR in the next 2 years to Rp3.7 trillion in 2012, generating Rp381 billion net profit in 2012 compared to Rp230 billion in 2009."
Multistrada booked 1H 2010 revenue of Rp1 trillion (+23% yoy) and net profit at Rp89 billion due to 18.9% yoy increase in PCR tire sales volume. 

Disclosure: No position at the stock mentioned above. Print This Article

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