Multistrada Arah Sarana

Stock Quote Multistrada Arah Sarana - MASA:

Business Summary

After the Asian Financial Crisis had ravaged through Indonesia, all liabilities of Multistrada Arah Sarana were transferred to the Indonesian Bank Restructuring Agency (IBRA) in 1999. The IBRA was part of a series of strategic policies taken by the Indonesian government in response to the banking and economic crisis that emerged from 1997. In 2004, Multistrada Arah Sarana was taken over by the new management (PVP XVII Pte Ltd and PT Indokemika Jayatama), and restructuring, including debt-to-equity conversion and an initial public offering (IPO) soon followed.

The company stated that demand has started to exceed production capacity. Therefore, it places emphasis on increasing production capacity and expanding the distribution network in domestic and international markets.

Over 70 percent of Multistrada Arah Sarana's products are exported to the USA, Europe, Middle East, Africa and Australia. To enhance operation efficiency, it aims to control its supply chain by expanding into upstream rubber plantations and industrial estate development around the company's factories. By becoming vertically-integrated, it will secure future supplies of natural rubber. The company's expansion into rubber plantations started in 2012 and it is expected to take about four years to show results.

Originally the company produced Pirelli tires. Therefore, the layout, design and technological assistance and knowledge was transferred to Multistrada Arah Sarana by Pirelli (Italy).

Multistrada Arah Sarana's manufacturing plant is located in West Java, just outside Indonesia’s capital city of Jakarta. Multistrada Arah Sarana's production capacity of car tires and motorcycle tires were 10 million and 6 million respectively at end-2012.

Risks to the Performance of Multistrada Arah Sarana Include:

• Raw materials; these materials, which account for the largest costs of the company, include natural rubber, synthetic rubber, carbon black and several kinds of chemicals derived from crude oil derivative products. As such, the company is sensitive to price downswings of the global oil and rubber price. However, the company does not pass on these costs by increasing selling prices.

• Shortage of raw materials; for a number of reasons a shortage of raw materials can occur. Regarding natural rubber, the company aims to overcome this risk by entering the (upstream) rubber plantation industry.

• Rupiah depreciation; Multistrada Arah Sarana's long-term loans are in US dollars, hence, in case of serious rupiah depreciation this can balloon the interest. However, this is hedged by the company's USD-denominated export sales.

• Intense competition; increased domestic and international competition leads to the necessity to guarantee high quality at competitive prices.

Sales Volume Multistrada Arah Sarana:

	2010	2011	2012	2013	2014	2015
Car Tires in million units	5.50	6.58	6.72	7.21	7.74	6.80
Motorcycle Tires in million units	2.55	3.08	3.24	4.13	3.21	3.30

^{Source: Multistrada Arah Sarana, Annual Report 2015}

Sales Distribution in 2012:

	2012
Domestic	28%
USA	19%
Asia	16%
Middle East	13%
Europe	8%
Australia	8%
Africa	8%

^{Source: Multistrada Arah Sarana, Annual Report 2012}

Multistrada Arah Sarana's Financial Highlights:

	2010	2011	2012	2013	2014	2015
Net Sales	221.3	326.0	320.9	323.9	282.0	237.0
Gross Profit	44.1	54.1	47.8	48.7	42.9	17.7
Net Income (loss)	14.8	7.0	0.3	3.7	0.6	(26.8)
EBITDA				47.7	48.3	25.3
Total Assets	360.9	538.1	624.5	629.1	625.5	598.4
Total Liabilities	156.7	327.6	252.5	253.8	251.6	253.0
Earnings per Share¹	0.241	0.114	0.003	0.04	0.007	(0.30)
Cash Dividend per Share²	1	1	2	0	1	2

^{in million US dollar unless otherwise stated
per 1 January 2012, Multistrada Arah Sarana changed its working currency from IDR rupiah to US dollar as the company's functional currency due to the substantial revenue, expenditure and financing activities that are conducted in US dollars.
¹ in US dollar
² in IDR rupiah
Source: Multistrada Arah Sarana, Annual Report 2015}

Future business prospects of Multistrada Arah Sarana are positive as Indonesia's domestic car sales have reached record highs in recent years, thus supporting the need for tires (car tires account for about 80 percent of the company's net sales). Moreover, several foreign car manufacturers have invested in production facilities in Indonesia in 2013 due to strong Indonesian demand for cars as well as cheap production costs (although minimum wages have increased since 2013). Multistrada Arah Sarana also benefits from cheap labor as tire manufacturing is a labor-intensive industry. The company's proximity to upstream rubber plantations is also a positive factor.