Astra Rises Most in One Month After JPMorgan Upgrades Rating

By Berni Moestafa and Shiyin Chen

March 11 (Bloomberg) -- PT Astra International, Indonesia’s biggest auto retailer, rose the most in more than a month after its rating and target price were raised by JPMorgan Chase & Co. on higher domestic sales.

JPMorgan upgraded Astra to “neutral” from “underweight” and raised its target price 43 percent to 11,000 rupiah, citing the company’s indication of an improved February performance. Indonesia’s auto sales gained for the first time in seven months in February.

“While we do not yet have confidence that the February stability is a precursor to a recovery, we opt to upgrade the stock to ‘neutral’ believing that from here the risk-reward no longer favors selling,” JPMorgan’s Jakarta-based analyst Aditya Srinath wrote in a report today. “Longer-term investors could even consider positioning themselves over the next quarter or so for an eventually cyclical recovery.”

Monthly vehicle sales had fallen since July after the central bank raised interest rates six times up to October, making the auto loans most Indonesians need costlier. As rates were since cut to a near four-year low, February sales may have risen 7.5 percent to 34,000, Freddy Sutrisno, secretary general of the Indonesian Automotive Industries Association, said today.

The stock rose 4.4 percent to 11,800 rupiah at the midday break, the biggest gain since Jan. 27.

JPMorgan also raised Astra’s target price after the stock underperformed shares of the company’s plantation and heavy equipment units, PT Astra Agro Lestari and PT United Tractors. Shares of Astra has risen 12 percent so far this year, compared with a gain of 29 percent and 30 percent at Astra Agro and United Tractor respectively over the same period.

To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.netBerni Moestafa in Jakarta at bmoestafa@bloomberg.net