Automobile - YTD TIV on track to meet our 610,000-unit target

Date: 22/08/2022

Source  :  AmInvest
Stock  :  BAUTO       Price Target  :  2.25      |      Price Call  :  BUY
        Last Price  :  2.16      |      Upside/Downside  :  +0.09 (4.17%)
Source  :  AmInvest
Stock  :  MBMR       Price Target  :  5.00      |      Price Call  :  BUY
        Last Price  :  3.46      |      Upside/Downside  :  +1.54 (44.51%)

Investment Highlights

  • We retain our OVERWEIGHT recommendation. We believe the underlying demand for cars remains healthy, backed by a pick-up in broad economic activities. Due to the lack of good alternatives, private vehicles will remain as Malaysians’ primary mode of transportation, which will help to sustain demand for passenger vehicles over the longer term. Our channel checks suggest that distributors’ booking rate is having a rather soft landing after the end of the SST exemption booking period in end-June. Even so, total industry volume is expected to remain robust moving forward, bolstered by strong industry order book coupled with the easing of inventory shortages amid supply chain readjustments.
  • The Malaysian Automotive Association’s (MAA) July TIV normalised to 48,922 units (-23% MoM) after exceptionally stronger deliveries last month. Automobile firms were rushing to deliver as many vehicles as possible in June on the anticipation that the sales tax exemption will end. In July, both passenger (-24%) and commercial (-16%) vehicles reported sequentially weaker sales volume. However, YTD 7M22 TIV surged 48% YoY to 380,592 units, on track to meet our fullyear 2022 forecast of 610,000 units, which implies a strong 20% YoY growth (MAA: 630,000 units).
  • Mazda sales volume recovered to 1,120 units (+1.2x MoM) as production normalised from supply disruptions caused by China’s lockdowns. The marque’s sales are expected to maintain at the 1,000–1,100-unit level in upcoming months as production could be capped due to inventory shortage. Bermaz Auto’s (BAUTO) order book of Mazda marque now stands at a favourable 10,000 units, which covers sales of 9–10 months.
  • Perodua recorded 18,346 units (-13% MoM) of new vehicle registrations during the month under review. The all-new Perodua Alza made a stunning debut with 4,016 units delivered since its launch on 20 July. The model has received 39,000 bookings to date. Assuming a monthly production capacity of 3,500 units, the waiting period for Perodua’s latest best-seller is around 10 months. Meanwhile, Toyota/Lexus sales shrank 26% MoM to 6,637 units. UMW Toyota has started to take orders for the Toyota Veloz, Alza’s upmarket sibling. Word has it that the model will be priced at RM95,000 which is RM20,000 more than the Alza’s top variant.
  • Proton’s sales declined 22% MoM in July to 11,097 units as registrations for the recently facelifted Proton Persona and Iriz were temporarily halted due to approval delays. On the other hand, the Proton X50 was crowned as the best-selling passenger car in July with 4,763 registered units. The national automaker launched the Proton Exora facelift in August, the sixth update for the multipurpose vehicle since its initial launch in 2009. The model is priced RM62,800–RM69,800, which is a 4–5% price hike compared to the previous variant.
  • Honda clocked 5,298 units of sales (-31% MoM) during the month. The marque’s 4WD/SUV sales jumped 16% MoM after the inclusion of the newly launched Honda HR-V deliveries. Honda Malaysia delivered 1,300 units of the new Bsegment sport utility vehicle in its first month between mid-July and mid-August. The lower monthly sales were predominantly due to a 51% MoM fall in passenger car deliveries i.e. the Honda City, City Hatchback, Civic, and Accord. Separately, Nissan/Renault’s sales volume grew 8% to 1,138 units from the low base in the previous month.
  • Our top picks are BAUTO (fair value RM2.25) and MBM Resources (FV RM5.00) given their high sales visibility and product updates which have garnered an encouraging customer reception.


Source: AmInvest Research - 22 Aug 2022

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