Mitra Pinasthika Mustika Full-Fledged Auto Player

Company Profile
Mitra Pinasthika Mustika (MPMX) was established in 1987 with initial operations in the motorcycle distribution business. It subsequently expanded into related areas such as motorcycle retail sales and consumer parts. In 2011, it expanded its business by acquiring a car rental and financing business. The company is 29%-owned by Saratoga Investama Sedaya (majority owned by Edwin Soeryadjaya and Sandiaga Uno) and 14%-owned by Rasi Unggul Bestari (owned by several former top Astra officers).

Highlights
2W distribution performance trumps industry
MPMX is the main dealer for Honda motorcycles in East Java and East Nusa Tenggara through wholly-owned subsidiary PT Mitra Pinasthika Mulia (Mulia), which had recorded a strong 10.4% sales volume CAGR in the last four years, above Honda’s nationwide 9.2% and 3.3% for all brands.

Management attributes East Java’s 2W market potential to: i) its population density, given that it is the second most populated area in Indonesia, ii) its relatively stable mix of income sources compared to that of outer Java, iii) relatively low 2W penetration rate (~20%, vs ~80% in Jakarta), and iv) the recent 22% increase in minimum wage. In addition to its main dealership, MPMX also owns 41 retail dealers, 29 of which are located in East Java and East Nusa Tenggara.

2W lubricant manufacturing and sales
A lucrative business with 27% gross margin (FY12), 65% segment ROA (FY12), and 8% sales volume CAGR (four years). MPMX owns the well known Federal Oil brand which prior to 2010, was used as an original replacement part for Honda motorcycles. It also produces AHM lubricants, currently sold as an original replacement part for Honda motorcycles.

Gross margin for MPMX’s lubricant business has been expanding from 22.8% in FY10 to 27.1% in FY12, driven by the gradual increase in its selling prices, which was previously relatively lower than those of its competitors.

Car rental main growth booster
MPMX’s car rental business is managed by wholly-owned subsidiary MPM Rent (acquired in 2012), currently the third largest car rental company in Indonesia. Since its inception in 2009, MPM Rent’s fleet has been growing by 31% CAGR to 7,991 units at end-2012, driven by the increase in domestic business activities and rising tendency of business players to outsource non-core supporting assets.

MPM plans to aggressively expand its fleet of rental cars by 6,000 units this year and 5,000 in the next (net addition, after deducting the used cars sold) either by purchasing new cars or by acquiring smaller rivals.