CLSA Asia Pacific Markets downgraded PT Astra International Tbk to 'underperform' from 'outperform', saying the company's earnings are at a risk due to uncertainty in coal prices and the shares are expensive compared with peers.
"Astra's auto business is flourishing; more so with LCGC's potential boost to sales. Other automakers might follow suit, but Astra looks most ready... However, 28% of its earnings are at risk, mainly UT with much uncertainty in coal price direction," analysts Sarina Lesmina and Edward Tanuwijaya said in a note on Monday.
Astra's commodity related businesses such United Tractors and palm oil company Astra Agro Lestari are at risk due to the drop in coal prices and lower crude palm oil demand.
"Long term story intact, but at 15.9x PE13, Astra is expensive amidst the headwinds," the analysts said.
CLSA trimmed its full-year earnings forecast for Astra by 7-8 percent for the years 2012-2014 and slashed its target price for the company's shares to 7,750 rupiah from 8,000.
At 12.20 am (0520 GMT) shares of the car maker were down 0.63 percent at 7,900 rupiah. The broader index was down 0.22 percent.
1221 (0521 GMT) (Reporting by Andjarsari Paramaditha, Editing by Anupama Dwivedi)