JAKARTA -- Indonesia's auto giant PT Astra International on Friday recorded a sharp increase in its 2002 net profit from the previous year which it said was largely due to foreign exchange gains and lower borrowing costs.
Astra, 35.05 percent owned by Singapore's car dealer Cycle & Carriage, said net profit jumped to 3.64 trillion rupiah ($409 million) from 844.5 billion in 2001.
It said revenue in 2002 increased slightly to 30.27 trillion rupiah from 29.24 trillion the previous year and operating profit grew seven percent to 2.88 trillion in the same period.
But analysts were divided on the company's outlook, some recommending a sell on Astra shares in anticipation of fiercer competition and falling distribution margins while others said the valuation is attractive due to a better risk profile after a rights issue late last year.
"The auto industry is still good but competition will be tougher. The question is whether Astra can come up with a competitive and profitable strategy which I think will be very difficult," said Erwan Teguh Teh, analyst at Danareksa Sekuritas.
He recommended a sell on Astra shares.
The distribution margin for Astra will become important in the future as the company plans to sell its manufacturing division under its unit PT Toyota Astra Motor to Japan's principal Toyota Motor Corp.
Astra, the manufacturer and distributor of the ubiquitous Toyota car in Indonesia, has said it wants to focus on distribution which is its competitive edge.
One analyst at a foreign securities firm said Astra's valuation is still cheap at around four times the price over 2003 earnings forecast. He said Astra's balance sheet has improved especially after it raised some $158 million from a rights issue partly to help retire debt.
"My target price on Astra is 3,500 rupiah," he said. By the midday break on Friday, Astra was down 25 rupiah at 2,550 rupiah.
Astra, in its statement, said foreign exchange gains were 940 billion rupiah last year compared to a 857 billion loss in 2001 while interest expenses were down to 840.4 billion from 1.16 trillion in the same period.
The company is sensitive to exchange rate movements because most of its debts are in foreign currencies.