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AmInvest Research Reports

Author: AmInvest   |   Latest post: Tue, 19 Nov 2019, 8:52 AM

 

AUTOMOBILE - Mazda’s shortfall expected to be temporary

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Investment Highlights

  • September 2019 TIV was down 13% MoM but up 43% YoY to 44.7K units. The drastic YoY increase in September this year was due to a low base effect as the 2018’s tax holiday ended in August. We believe that the lower TIV by 13% MoM in September 2019 was due to a shorter working month as well consumers’ adoption of a wait-and-see approach pending the announcement of Budget 2020. Cumulatively, 9M19 TIV was down 3% to 443.0K units from 454.9K units in 9M18.
  • We note the following for major car marques’ in September’s sales figures:

1) Perodua registered a total sales volume of 17.0K units (-15% MoM, +79% YoY). The Aruz SUV continued to be the most popular SUV in Malaysia with 1.9K units sold for the month. YTD 9M19, 22.2K units of the Aruz have been sold. The 2019 Perodua Axia facelift was launched on 20 September 2019. It has 6 variants priced from RM24.0K to RM43.2K. The Axia is currently the most affordable car domestically.

2) Proton delivered 8.7K units (-5% MoM, 92% YoY) in September, including 1.5K units for the X70. This was the lowest level of the X70 sold since 2019. Total 9M19 sales for Proton stood at 69.9K units, recording an outstanding YoY growth of 42%. Proton maintained its runner-up position in terms of YTD market share of TIV at 15.8%, ahead of Honda’s 14.7%. With the sustained momentum and deliveries from volume-oriented models i.e. the Persona, Iriz and Saga, we strongly believe that Proton will end 2019 in the second place, behind the national titan Perodua.

3) Honda sold a decent 5.8K units (-24% MoM, +16% YoY) in total sales. YTD, Honda sold a total of 65.1K units compared with 79.9K units in 9M18. Honda is ranked third with a YTD market share of 14.7% behind national carmakers Proton and Perodua. The Honda Civic 2019 facelift is currently open for bookings nationwide with a tentative launch in 4QCY2019.

4) Toyota sold 5.3K units (-2% MoM, +75% YoY) in September. The UMWH management highlighted that Toyota’s top three bestselling models for the month were the volume-driven Vios, Hilux and Yaris, comprising about 70% of its total sales. We continue to hold a cautious view on Toyota’s outlook in CY2020 due to our expectations of fewer new launches next year while we anticipate competition to heighten in the passenger vehicle space with the expected launch of the all-new Nissan N18 Almera and Honda City 2020. It is important to note that these two models are direct competitors to the Toyota Vios.

Bookings for the Toyota’s new C-segment Corolla opened on 12 September after it was officially launched on 9 October 2019. The model is officially called Corolla, but will still include the Altis badging on the car. The car has two variants priced at RM128.9K and RM136.9K respectively, both at a 1.8-litre capacity. This is comparatively more expensive than its predecessor models which were priced from RM120.0K to RM130.0K.

5) Mazda sold only 450 units in September (-55% MoM, -63% YoY) in September. The CX-5 and CX-8 were launched on 30 September and 1 October respectively. Upcoming launches this year for Mazda include the CX-30 (December) and possibly the CX-3 CBU. This should be supportive of Bermaz’s earnings in 2HFY20.

  • The approval rate for loans on passenger cars stood at 63.6% in August, an increase of 0.3% from July, and higher than the average rate of 59.6% in 2018.
  • We continue to be optimistic on national car marques Proton and Perodua for 2019, while we stay cautious on the foreign and premium car brands as consumers are more careful and conservative with their discretionary spending, indirectly benefitting cheaper and better value-for-money cars.
  • Our top picks for the sector are DRB-Hicom (FV: RM3.18) and MBM Resources (FV: RM5.54) as they ride on the strong sales of Proton and Perodua vehicles which command the bulk of the market share in terms of TIV sales.
  • We will also like to take the opportunity to upgrade APM Automotive to HOLD (Maintain FV: RM2.34) as we see the share price bottoming out. APM’s share price has plunged 32% since our downgrade on the stock in November 2018.

Source: AmInvest Research - 23 Oct 2019

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