KUALA LUMPUR (Mar 20): Maybank IB Research has maintained its ‘overweight’ rating on the automotive sector, despite the total industry volume (TIV) for February falling to a seasonal low of 44,976 units.
In a note today, the research house said the two-month average TIV was within our expectations, staying healthy at the 50,000-unit level.
“The month-on-month contraction in TIV was expected, with all major marques reporting lower vehicle sales in February. The biggest loser was VW, followed by Nissan and Toyota,†it said.
“Perodua suffered the least impact and retained its top spot with a 30% market share, while Toyota remained the best-selling marque in the nonnational segment with a 12% market share,†it said.
Maybank IB Research said it also expects vehicle sales to pick up in March boosted by new price-competitive launches from Perodua.
“We expect 2Q13 vehicle sales to soften as consumers hold off purchases on uncertainties surrounding the 13th General Election and the forthcoming revised National Automotive Policy (NAP),†it said.
In light of imminent market liberalisation in 2015, the revised NAP would offer incentives to more foreign original equipment manufacturers (OEMs) to enter the Malaysian market to further strengthen the domestic auto industry in terms of capacity and TECHNOLOGY, especially the manufacturing of energy efficient vehicles (EEVs).
“We expect competition to intensify as a result, but this would equip the domestic auto players with greater competency for the global market post liberalisation in 2015. We also expect the revised NAP to address structural issues including the much-debated high excise duties on imported vehicles,†it added.
For the auto sector, TAN CHONG MOTOR HOLDINGS BHD is Maybank’s top pick with a ‘buy’ rating, on the back of its earnings growth potential.
“MBM Resources remains a buy as its capacity growth in the alloy wheel and commercial vehicle segment offers potential for earnings upgrades going forward. We remain HOLDers of UMW with valuations fair at current levels, but investors may eventually gain from the final valuations of the listing of its core O&G business,†said the research house.
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