What the Business Does
PT Astra International Tbk operates in the industrials sector, specifically within the conglomerates industry. The company has a diverse portfolio that includes automotive, financial services, and construction. This diversification allows Astra to leverage multiple revenue streams, providing a buffer against sector-specific downturns.
The Buffett-Framework Verdict
According to the Buffett-framework, PT Astra International scores a 62 out of 100, earning a grade of B. The overall verdict is "unclear," indicating a mix of strengths and concerns. Here’s a breakdown of the pillar scores:
- Moat: 31 - This score suggests vulnerability to competitive pressures.
- Durability: 75 - Indicates reasonable long-term stability.
- Management: 66 - Reflects decent management effectiveness.
- Valuation: 100 - Astra shows an attractive valuation relative to earnings.
- Financial Health: 55 - Indicates some concerns regarding financial stability.
The headline verdict states that Astra's diverse operations yield solid earnings. However, its profitability metrics and moat strength raise concerns about long-term durability.
Valuation and Margin of Safety
PT Astra International's price is currently at IDR 4,810, with a market capitalization of IDR 192.71 trillion. The company has a trailing twelve-month (TTM) price-to-earnings (P/E) ratio of approximately 5.75, suggesting that the stock is undervalued relative to its earnings. With a return on invested capital (ROIC) of 12.19%, Astra is slightly below the Buffett benchmark of 15%, which raises concerns about its long-term profitability.
The gross margin of 22.1% and operating margin of 12.0% are below the top-quintile sector averages, which may affect its competitive edge.
The Bull Case
- Diverse Revenue Streams: Astra's broad operational segments help mitigate risks associated with market fluctuations in any single sector.
- Strong Capital Efficiency: The company's 5-year average ROIC of 14.33% reflects solid capital efficiency, which is a positive indicator for long-term investors.
- Adequate Liquidity: A current ratio of 1.24 suggests that Astra can meet its short-term obligations comfortably.
- Interest Coverage: With an interest coverage ratio of 14.2, Astra demonstrates a strong ability to manage its debt obligations.
- Attractive Valuation: The owner earnings yield of 14.47% indicates that the stock may be undervalued compared to its earnings potential.
The Bear Case
- Profitability Concerns: The gross and operating margins are significantly below the sector's top-quintile cutoffs of 43.4% and 17.8%, respectively.
- Weak Moat: A moat strength score of 31 indicates that Astra may struggle against competitive pressures, which could impact its long-term profitability.
- Limited Returns to Shareholders: The absence of buyback or dividend yields suggests that capital returns to shareholders are currently limited, which may deter some investors.
- Financial Health Risks: A financial health score of 55 indicates some vulnerability, which could pose risks if market conditions worsen.
The Bottom Line
PT Astra International Tbk presents a mixed investment case. The company benefits from diversification and attractive valuation metrics, but faces challenges in profitability and competitive positioning. Investors should weigh these factors carefully.
This is educational, not financial advice. For more information, you can explore the Buffett verdict and check the stock page.