Highlights

Automotive - 2H22 TIV Supported by Over 500k Backlogs

Date: 22/07/2022

Source  :  HLG
Stock  :  MBMR       Price Target  :  5.00      |      Price Call  :  BUY
        Last Price  :  3.42      |      Upside/Downside  :  +1.58 (46.20%)
 
Source  :  HLG
Stock  :  DRBHCOM       Price Target  :  2.00      |      Price Call  :  BUY
        Last Price  :  1.38      |      Upside/Downside  :  +0.62 (44.93%)
 
Source  :  HLG
Stock  :  BAUTO       Price Target  :  2.05      |      Price Call  :  BUY
        Last Price  :  2.31      |      Upside/Downside  :  -0.26 (11.26%)
 


Jun 2022 TIV improved +21.0% MoM to 62.1k units (not comparable YoY), due to a longer working month and improved supply chain and inventory. YTD TIV achieved 331.4k units, +34.0% YoY, mainly due to low base effect. There is potential upside risk to our 2022 TIV expectation of 600k units (+17.9% YoY), as we expect sustained sales volume till year end. We estimate the current industry order backlogs have surged to over 500k units (from 267k units) post MOF announcement of SST exemption ending for new bookings by 30 Jun 2022 (still applicable for vehicle deliveries by 31 Mar 2023). We reaffirm our NEUTRAL call on the automotive sector with top picks: DRB (BUY; RM2.00), MBMR (BUY; TP: RM5.00) and BAuto (BUY; TP: RM2.05).

Malaysian Automotive Association (MAA) reported TIV for Jun 2022 at 62.1k units, a +21.0% MoM improvements, due to a longer working month and improved supply chain and inventory level. It was not comparable YoY as Jun 2021 was affected by strict lockdowns (i.e. Phase 1). Nevertheless, YTD TIV reported a growth of +34.0% YoY to 331.4k units mainly due to low base effect with a somewhat improved chip shortage situation. We expect potential upside risk to our TIV expectation of 600k units for 2022 (+17.9% YoY), as we expect continued high order deliveries in coming months, backed by the large order backlogs for key OEMs i.e. Proton, Perodua, Honda, Toyota, etc. MAA has increased its expectation of TIV to 630k units (from 600k) for 2022. With SST exemption applicable for vehicles booked by end 30 Jun 2022 and registered by end 31 Mar 2023, many OEMs have disclosed huge jump in orders for the last 10 days of Jun 2022. We believe current order backlogs for industry to be over 500k units (from 267k units revealed by MOF on 20 Jun 2022).

Despite the expected sustained TIV recovery until year end (backed by the high order backlogs), we still maintain our NEUTRAL rating on the sector, as we expect TIV to slowdown in 2023. We advise investors to accumulate MBMR (BUY; TP: RM5.00) and DRB (BUY; TP: RM2.00), as we expect national OEMs to triumph over the longer term with potential growth from new export markets. We also like BAuto (BUY; TP: RM2.05) for its strong balance sheet with high order backlogs lasting for more than 6 months.

For the Period of April-Jun 2022, There Was No Data Available for Peugeot and Kia.

Perodua (UMW and MBMR) recorded a sales of 21.2k units in Jun, a growth of +12.0% MoM due to higher working days and better inventory level. YTD, sales improved by +32.3% YoY to 127.3k units, in line with market +34.0%. Perodua managed to maintain its top position in the market with market share at 38.4%. Perodua has revealed its latest order backlog of over 243k units, an exceptional achievement, and CEO Datuk Zainal Abidin guided to revise up the current sales target of 247.8k units for 2022 as Perodua is likely to reach a higher level. The newly launched Alza replacement model at RM63-76k, has received overwhelming 30k units of bookings. Perodua is committed to fulfil the backlogs by 31 Mar 2023.

Proton (DRB) sales recovered to 14.2k units in Jun (+52.5% MoM), best month for the year, almost matching its record month of 14.8k units in Apr 2021, reflecting improvement in its supply chain. However, YTD sales only increased slightly by +2.8% YoY to 57.4k units, behind market’s +34.0%, affected by supply chain issue in the first 5 months. Proton retained its second position with 17.3% market share. Including export volume, YTD sales was 60.1k units (+3.9% YoY). As supply issues are easing, Proton expects to improve its delivery in 2H22, enabling the national OEM to achieve its sales target of 136-150k units (+18.6%-30.8% YoY). Proton has indicated its order backlogs of over 150k units, driven by the overwhelming demand. Management will continue focusing on fulfilling its high order backlogs for existing models before introducing new Geely-based models in 2023.

Toyota (UMW) maintained its top position within the foreign segment with 8.9k units (+19.2% MoM) in Jun. YTD sales was 45.4k units, +35.2% YoY, slightly outperformed the market’s +34.0% and the OEM’s market share was 13.7%. We understand that Toyota has outstanding orders lasting for 5-6 months. Toyota is currently ahead of its sales target of 73k units, potentially achieving 90k units for 2022. Toyota has recently revealed new MPV Veloz (sister to new Perodua Alza) to be launched at RM95k. Other upcoming exciting new launch would be a new EV model (likely by year end).

Honda (DRB) recorded sales of 7.7k units (+39.8% MoM), affected by ongoing supply chain woes as well as discontinuation of old HR-V model. YTD sales was 39.7k units (+58.9% YoY), with 12.0% market share, trailing behind Toyota. Honda is targeting sales of 80k units for 2022, which will likely remain behind Toyota within the foreign segment. Honda has revealed its current order backlogs of over 50k units, including over 20k units for its newly launched HR-V replacement model with pricing at RM115-141k. Upcoming new launch include the new BR-V model.

Nissan (TCM) sales surprisingly dropped -25.0% MoM to 1.1k units in Jun. YTD sales increased by +35.6% to 7.8k units, slightly outperformed the market. The OEM’s market share was 2.3%. The sales remained relatively weak as Nissan maintained its strategy to avoid stiff market competition, while leveraging onto its core models: Almera, Serena and Navara. Nissan has recently launched the Serena facelift with price ranging RM150-163k.

Mazda (BAuto) sales also slowed down MoM in Jun with 0.5k units (-60.9% MoM). YTD sales was up by +34.7% YoY to 7.2k units, with market share of 2.2%. We understand Mazda order backlogs currently stand at over 10k units. Mazda has recently launched MX- 30 EV at RM199k and CX-8 facelift model at RM178-212k. Upcoming new model launch include CX-30 CKD by year end/early 2023.

BMW (Sime Darby) sales improved +13.7% MoM to 1.0k units in Jun. YTD sales improved by +101.1% YoY to 6.0k units, mainly due to low base effect. The premium OEM registered a market share of 1.8%. BMW has been one of the leading premium OEMs in aggressively introducing new EV models into Malaysia market since the start of the year. New EV models include iX, iX3, i4 and upcoming i7.

 

Source: Hong Leong Investment Bank Research - 22 Jul 2022

Share this
Labels: MBMR, DRBHCOM, BAUTO

Related Stocks

Chart Stock Name Last Change Volume 
MBMR 3.42 +0.02 (0.59%) 246,400 
DRBHCOM 1.38 -0.02 (1.43%) 676,500 
BAUTO 2.31 +0.03 (1.32%) 5,269,800 

  Be the first to like this.
 


APPS
I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
Stock Screener using Technical and Fundamental criteria
MQ Affiliate
Join the MQ Affiliate Program today to earn rewards
 
 

374  338  561  1000 

ActiveGainersLosers
Top 10 Active Counters
 NameLastChange 
 MMAG 0.020.00 
 MYEG 0.765+0.035 
 VINVEST 0.20-0.03 
 BSLCORP-WB 0.0150.00 
 HSI-HKX 0.09-0.02 
 CFM 0.215-0.01 
 FITTERS 0.080.00 
 HONGSENG 0.115+0.005 
 SAPNRG 0.0350.00 
 PERMAJU 0.065+0.005 
PARTNERS & BROKERS