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Mitra Pinasthika Mustika
21-06-2020, 12:40 PM. (This post was last modified: 21-06-2020, 12:41 PM by karlmarx.)
Post: #1
Mitra Pinasthika Mustika
A dealer of Honda cars and motorcycles, with 1/6 of the motorcycle market in Indonesia. Main competitor is Astra which distributes the bulk of Honda cars and motorcycles. About 75% of the motorcycles in Indonesia are Hondas.

An interesting story about Mitra Pinasthika Mustika (MPM) is that it is controlled by the Soeryadjaya clan, who once controlled Astra but patriach William was forced to sell in 1992 in order to bailout depositors of his son Edwin's then failing bank, Summa Bank. Edwin today runs MPM and other Soeryadjaya interests through Saratoga Investama.

MPM's FY20 results will obviously be bad, and next year's dividends will probably be slashed. But the company has a net cash balance sheet and a business that is likely to do okay if the Indonesian economy continues to grow. 

Presently, the company is selling at a nice discount to book value, and may warrant further investigation.

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21-06-2020, 03:33 PM.
Post: #2
Mitra Pinasthika Mustika
Just a small correction, the failed summa bank was under Edward's, Edwin's brother.

Edwin, from his track record, is a very savvy businessman and investor.

However, most if not all of his companies are highly leveraged.


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21-06-2020, 03:50 PM.
Post: #3
RE: Mitra Pinasthika Mustika
This is a small automotive conglo managed by a bunch of bankers. You can tell it just from their track record: getting into complicated currency swap, flipping out of various businesses/assets.

They had sold out of their Federal lubricant oil business. Rental and financing have been sluggish. Their motorcycle distribution is a decent cash cow but I don't expect it to grow in the future.

(21-06-2020, 12:40 PM)karlmarx Wrote: A dealer of Honda cars and motorcycles, with 1/6 of the motorcycle market in Indonesia. Main competitor is Astra which distributes the bulk of Honda cars and motorcycles. About 75% of the motorcycles in Indonesia are Hondas.

An interesting story about Mitra Pinasthika Mustika (MPM) is that it is controlled by the Soeryadjaya clan, who once controlled Astra but patriach William was forced to sell in 1992 in order to bailout depositors of his son Edwin's then failing bank, Summa Bank. Edwin today runs MPM and other Soeryadjaya interests through Saratoga Investama.

MPM's FY20 results will obviously be bad, and next year's dividends will probably be slashed. But the company has a net cash balance sheet and a business that is likely to do okay if the Indonesian economy continues to grow. 

Presently, the company is selling at a nice discount to book value, and may warrant further investigation.
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21-06-2020, 05:23 PM.
Post: #4
RE: Mitra Pinasthika Mustika
(21-06-2020, 12:40 PM)karlmarx Wrote: A dealer of Honda cars and motorcycles, with 1/6 of the motorcycle market in Indonesia. Main competitor is Astra which distributes the bulk of Honda cars and motorcycles. About 75% of the motorcycles in Indonesia are Hondas.

Just 1 small clarification here: Astra only manufacture/assemble/distribute Toyota cars and honda motorcycles in Indonesia. So it doesn't distribute Honda cars.

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22-06-2020, 04:30 AM.
Post: #5
RE: Mitra Pinasthika Mustika
(21-06-2020, 05:23 PM)weijian Wrote:
(21-06-2020, 12:40 PM)karlmarx Wrote: A dealer of Honda cars and motorcycles, with 1/6 of the motorcycle market in Indonesia. Main competitor is Astra which distributes the bulk of Honda cars and motorcycles. About 75% of the motorcycles in Indonesia are Hondas.

Just 1 small clarification here: Astra only manufacture/assemble/distribute Toyota cars and honda motorcycles in Indonesia. So it doesn't distribute Honda cars.

Since we are on the subject of Indonesia automotive industry, may I touch on Astra as a peer to peer comparison to Mitra Pinasthika Mustika?

Just to add more colors, Astra is BOTH a manufacturer/assembler AND distributer/dealer of all the vehicle brands in Indonesia listed below:
- Honda Motorcycle
- Toyota
- Daihatsu
- Lexus
- BMW
- Peugeot
- Isuzu
- UD Trucks

Astra commands a staggering market share of 52% for passenger cars and 76% for motorcycles. In Indonesia, almost half of the cars on road you will see are "Made in Indonesia" Toyota and Daihatsu (poor man's Toyota) SUV or MPV. On the other hand, Honda motorcycles are so ubiquitous that Indonesians actually refer and call all motorcycles as "Honda". 

Apart from the practical reasons why Toyota-Daihatsu cars and Honda motorcycles are so popular, is Indonesians' strong sense of national pride. It is almost like Malaysian-Proton relationship. Indonesians believe that these vehicles, made by their very own people, are definitely road-worthy and good enough. Having sat in Toyota and Daihatsu cars numerous times, I have to concur with them. 

In my opinion, it is hard to see Indonesians ditch their loyalty to Toyota-Daihatsu cars and Honda motorcycles en masse for the foreseeable future. As long as Astra don't screw up, there will be money to be made. Astra is involved in the production, distribution, retail, financing, after sales service, manufacturing and retailing of spare parts. They are the biggest player by far and enjoy the competitive advantage of economic of scale. I don't see Astra's strong moat in automotive business eroding in the near term. 

Astra contributes 80% of Jardine Cycle and Carriage underlying profit, 45% comes directly from the Indonesia automotive business. The rising middle class of 260 million Indonesians should bode well for Astra if investors take a long term view.

Jardine Cycle and Carriage has a weak balance sheet. Management recently has raised the possibility of a rights issue. However, with sale of Permata Bank, Astra will net in US$1.13 billion. This should buy them some time to weather the Covid storm. 

Disclaimer: I have bought both Jardine Cycle and Carriage, and Jardine Matheson shares recently. Not an inducement to buy or trade.

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