Jardine C&C

Jardine C&C: CLSA has applied its new Indonesian Rupiah forecasts on its Jardine C&C model. At USDIDR 12,500 in FY15E and 14,900 FY16E, its earnings forecasts have taken a 4-8% hit over the next three years. Despite this, it maintains its Outperform rating on the stock.

The research house notes that Indonesian automobile sales continue to remain soft with Jul sales slowing 20% YoY to 585.4k units. Despite the lacklustre Indon auto sales, Singapore and Vietnam have shown considerable strength.

CLSA points out that the counter is currently trading in line with its long term average forward PE of 10.3x. However, it is also trading at a 21% and 14% discount to its long term average P/B value and long term NAV. That being said, if the Rupiah continues to decline, or if Astra’s share price falls, the NAV valuation could continue to decline.

With the uncertainty surrounding Indonesia and the Rupiah, CLSA opines that the wider than average discount is warranted. It applies 20% discount to its forward NAV to result in its $33 target price.