PETALING JAYA: The native automotive sector’s complete business quantity (TIV) is projected to report between 555,000 and 600,000 models this yr, say analysts.
This displays potential enchancment in gross sales development by 9% to 17.9% year-on-year (yoy).
“Since most corporations throughout the sector depend on home demand, earnings could be considerably shielded from the affect of geopolitical conflicts,” stated AmInvestment Financial institution Analysis which remained constructive on the sector’s prospects.
The belief of a stronger 2022 TIV relies on the normalization of the availability chain and a gradual restoration of customers’ confidence, the analysis home stated in its newest report.
AmInvestment Financial institution, which is sustaining an “obese” name on the sector, forecasts a TIV of 555,000 models for 2022, which means a 9% yoy development.
The analysis home’s prime picks are Bermaz Auto Bhd and UMW Holdings Bhd, It additionally has a “purchase” name on MBM Sources Bhd,
Nevertheless, automobile makers may very well be dealing with margin strain, given the rising costs of supplies and the prices of operating a enterprise.
The analysis home identified that ought to the pattern persists, carmakers could be pressured to cross the extra price alongside the availability chain, affecting distributors, elements suppliers, sellers, and finish customers.
The Malaysian Automotive Association (MAA) recently reported that February’s industry volume of 43,722 units rebounded 8% sequentially as Honda and Proton sales recovered from January’s low.
This brings the TIV for first two months of this year to 84,303 units, up by 10% yoy.
Meanwhile, Hong Leong Investment Bank (HLIB) Research maintained its TIV expectation at 600,000 units, which is a 17.9% growth yoy.
“We expect continued sales growth till June, driven by the extended sales and service tax (SST) exemption measures to June 2022 and the various, newly launched exciting models in 2021 and early 2022,” said the research house in its latest report.
HLIB Research noted that the overall TIV which rose by 9.7% year-to-date, was mainly due to the low base effect.
“At this juncture, we expect pent-up deliveries in coming months driven by the extension of SST exemption and the large order backlogs for the key original equipment manufacturers (OEMs) such as Proton, Perodua, Honda and Toyota.
Despite the expected strong TIV recovery until mid-2022, HLIB Research maintained a “neutral” rating on the sector, as it expects the TIV to drop post the SST exemption expiry, alongside the current ongoing global supply chain issues.
Its top pick “buy” stocks include DRB-Hicom Bhd with a target price (TP) of RM2.30, MBM Resources (TP: 4.80) and Sime Darby (TP: 2.60) respectively.
“We advise investors to accumulate MBM Resources and DRB-Hicom as we expect national OEMs to triumph over the longer term with potential growth from new export markets.“We also like Sime Darby for its strong balance sheet and earnings sustainability in the industrial segment in Australia, as well as the robust demand for automotive across the group’s geographical operations,” added HLIB Research.
Meanwhile, TA Securities has maintained an “overweight” recommendation on the sector.
It projected that the automotive sector’s TIV is set to grow by 17.9% yoy at 600,000 units in 2022.
The research house also has a “buy” call on Bermaz Auto with a TP of RM1.96, MBM Resources (TP: RM4.19), Sime Darby Bhd (TP: RM3.02) and UMW Holdings Bhd (TP: RM3.79) respectively.
However, it has a “sell” call for Pecca Group Bhd given its stretched valuation, with a TP of RM2.22.