4W industry FY18 sales volume growth reached three-years high. 4W industry managed to post 6.6% YoY growth to 1.2mn units. This is mostly driven by superior growth in the commercial segment which reached 17.8% YoY, while passenger segment posted 3.8% YoY growth.
Market share dynamics: Mitsubishi starts to lose momentum. Mitsubishi was the clear winner with 5.6ppts improvement in market share during 2018, driven by Xpander which posted 75k units sales volume in 2018, equivalent to 8.6% of total passenger cars sales and 6.5% of 4W sales in 2018. However, it is worth to note that Xpander sales volume in the 2nd half was on the downtrend, with five consecutive months declining sales. Worth to note that Xpander Dec-18 sales 3.9k units was only 58% of the 1H18 average monthly sales.
FY19 sales outlook: expecting flattish industry volume ahead. We maintain our assumption of industry sales volume at 1.1mn units, implying flattish volume growth in FY19F (-1.4% YoY). This is in line with the Gaikindo target as well as the historical trend during election years (2004/2009 sales volume: -20%/-2% YoY respectively). During 2017-18, 4W volume growth was mainly driven by robust commercial vehicle sales growth of 17% CAGR, while passenger cars grew marginally at 1% CAGR. Thus, as we expect slower business investment during presidential election, we foresee commercial vehicle sales growth to decelerate as well.
Outlook: maintain NEUTRAL rating with a BUY call on ASII. We maintain our NEUTRAL rating for the sector as we foresee flattish volume growth in 2019. Nevertheless, we reiterate our BUY call on ASII with unchanged TP of IDR9,800 (15.2x 2019F P/E) on the back of improving market share outlook. Key downside risks for the sector include lower-than-expected purchasing power and further Rupiah depreciation.
