We keep staying out of ASII irrespective of the hype from a few institutional buyers. Lacking fundamental justification to keep this stock on the high ground, we tend to believe that a bubble is just in progress and ready to burst anytime soon. With much reduced expectation on increasing earnings at 9 to 13% on remaining quarters of 2011 and the full fiscal year 2011 and 2012, we do not see any value and/or growth which can be advantageous foresight with ASII ahead, other than solid trading liquidity which may seems the main driver to attract a few institutional buyers. For retail investor, this type of low price leverage stock with high level price is definitely not a wise choice of investment when market average is still riding late stages of primary bullish cycle.
The recent upsurge lacking fundamental pretext is a clear sign of crowd behavior in trading/investing by hope rather than by fact. Meanwhile, clear set of facts including ASII management admission show a down beat view on this company prospect for next two years on the road.
We second to Goldman Sachs which cut ASII to "sell" from "neutral" since March 28, 2011, and yet we see any fundamental changes on ASII business prospect for the next 2 years which may soon warrant adjustment on the recommendation. And, we think reasonable to maintain ASII target price at Rp49,000 as Goldman Sachs mapped out in the following chart.
Along with this ASII "bubble", we anticipate a further pressure into IDX as "Selling in May" seasonal pattern pressure is still intact everywhere. However, we do not see any deep swing as we had May last year. Once this little ASII bubble gets break, it may bring along most likely financial sector to go down along.
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