Invest at Future Bluechip Stock, Auto is the one

Jakarta, 11 October 2012 When I grew-up first thing I dreamed was to own a car…. Car is the top consumption list in humanity. Not just because of lack of public transportation but flexibility to go anywhere is essential by having our own car. This is why most of Auto Companies led the country’s largest corporation, GM in US, Toyota in Japan, and Astra in Indonesia. I believe Auto Company will continue to lead Indonesia Top Corporation list by looking at Indonesia penetration rate below 5% versus Malaysia 30%. We recommend investing at potential small cap auto companies. To increase the penetration rate we need purchasing power to increase and/or price of goods to decease. By providing affordable car will create new market segment and certainly with bigger market. This is what we called as pyramid economy. What new and what start to leveraging Indonesia auto-car is LCGC (Low Cost Green Car). This is car that will get incentive by government as it has specification such as; Price to below Rp100mn Fuel consumption of 20-22km/liter (avanza 12km/liter) Car’s component must have minimum 40% of local content at 1st year and increase to 80% over the five years. LCGC will get incentive from lower tax. Astra made his first step, introducing Toyota Agya and Daihatsu Ayla. Price to range at Rp75mn-Rp100mn. This implied to Rp22-30mn down payment and Rp1-1.5mn monthly instalment. I believe motorbike owner will buy one. In summary: LCGC will create new low and bigger market segment, pyramid economy apply. Low fuel consumption will attract existing car user, since subsidy fuel is getting serious of being cut. The most leverage is pure auto player. My Top-pick is TURI ASII’s shareholder also shareholder of TURI 44% TURI is the second largest dealer after AUTO 2000 (Own by ASII) Toyota and Daihatsu contribute 72% of 1H12 total sales. Currently TURI is trade at 11x annualised P/E 2012 vs ASII 17x and IMAS 13x. During the boom on Nissan sales. IMAS is trade above 17x P/E Looking at potential growth in LCGC and potential re-rating TURI still has potential to double from current share price. Looking at TURI shareholder, and business potential TURI is definitely a future Bluechip Stock. Suryadi Candra Kasih Institutional Sales - ECM suryadick@gmail.com