Macquarie Equity Research downgraded PT Indomobil Sukses International Tbk to 'neutral' from 'outperform', saying the automaker could face pressure on margins and could miss market expectations in the fourth quarter.
"We believe IMAS is on the cusp of an upcoming margin crunch, and believe market FY12-13E earnings expectations remain much too high," analyst Lyall Taylor said in a note.
Three out of four of the company's key Nissan models are underperforming in a booming car market, Taylor said.
"With no major product launches slated for FY13E, and with competitive pressures rapidly increasing, it is difficult to be optimistic about a swift turnaround," Macquarie said.
The research house also lowered its target price on Indomobil's shares to 5,425 rupiah from 6,400, while cutting its full year 2012 and 2013 earnings estimates by 14 percent and 32 percent, respectively.
"IMAS is partnered with strong principals, and will likely make a comeback at some stage, but we believe now is still too early to buy into the turnaround story," Taylor said.
Indomobil's shares were unchanged at 5,150 rupiah, while the broader index was up 0.12 percent. 1453 (0753 GMT) (Reporting by Andjarsari Paramaditha; Editing by Anand Basu)