Jardine Cycle & Carriage

Jardine Cycle & Carriage (JCC): 1H12 results, below expectations. Net profit was US$511m (+5% yoy), 44% of Bloomberg consensus FY12 estimates. Key takeaways: (1) Despite Astra’s in-line 1H12 results (Astra contributes 94% of JCC’s total profits), JCC’s 1H12 Astra profits of US$518m (+6% yoy) missed expectations due to the translation impact from the weaker than expected rupiah (JCC reports in US$ and Astra reports in Rp). JCC expects Astra’s 2H12 auto sales outlook to be more challenging given the weaker rupiah and new auto loan down-payment rules introduced in Jun. Goldman estimates Indonesia 2H12 industry-wide 4W/2W (4 wheel / 2 wheel) sales volume to decline 5%/10% yoy. (2) Non-Astra auto net profit of US$31mn (+12% yoy) was also slightly below expectations as broader auto market conditions continue to weaken, especially for Vietnam. Goldman remains Neutral, but reduces 2012-14e EPS by 2-9%, primarily to factor in new rupiah assumptions. The house’s 12-month SOTP-based TP for JCC falls to $44.50 (from $48.50 previously). This is despite JCC being expected to report a one-off gain of US$56m in 3Q12 for the sale of investments on 25 July.