HLBank Research Highlights

Author: HLInvest   |   Latest post: Fri, 17 Jan 2020, 9:25 AM


Automotive - Oct 2019 TIV Rebounded

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Oct 2019 TIV rebounded to 53.9k units (+14.0% YoY; +20.6% MoM) following strong demand for Perodua Axia facelift model as well as starting of year-end sales campaigns by some OEMs. However, YTD TIV dropped by 1.1% YoY to 496.9k units mainly due to high base effect of GST exemption period last year. We expect continued strong demand for Proton, Perodua and Toyota new models to sustain TIV for remaining months of the year. We see upside potential to our conservative 596.6k units (-0.35% YoY) for 2019 TIV forecast, as we expect encouraging sales volume in Nov-Dec 2019. We maintain OVERWEIGHT on automotive sector with top picks of DRB (BUY; TP: RM3.50) and MBMR (BUY; TP: RM5.50).

Malaysian Automotive Association (MAA) reported Oct 2019 TIV at 53.9k units, a growth of +14.0% YoY due to low base effect post SST implementation (1 Sept 2018). TIV also increased by 20.6% MoM, due to low base in Sept on shorter working days coupled with attractive facelift model launch (Axia) and starting of year-end sales campaigns by some OEMs. YTD TIV declined by 1.1% YoY to 496.9k units, mainly due to strong demand during GST exemption period in Jun-Aug 2018. We see upside potential to our 2019 TIV forecast at 596.6k units (-0.35% YoY) as we expect encouraging monthly sales volume in Nov-Dec 2019, supported by continued strong demand for new model launches by Proton, Perodua and Toyota.

We maintain our OVERWEIGHT rating on the sector with a stock selective approach with 5 BUY and 2 HOLD recommendations. Our top picks include DRB (BUY; TP: RM3.50) and MBMR (BUY; TP: RM5.50).

Perodua (UMW and MBMR) registered sales volume of 22.8k units in Oct (+16.8% YoY; +34.3% MoM) driven mainly by strong demand for newly launched Axia facelift model. YTD sales increased +7.4% YoY to 201.6k units, outperformed the market of -1.1% YoY, driven mainly by strong demand for new Aruz SUV model and Axia facelift model. The newly launched Axia facelift model (Sep 2019) has received over 20k bookings with 10.4k units delivered. Perodua is expected to surpass its target of 235k units in 2019. Upcoming anticipated new model launches in 2020 include a new compact SUV and MPV Alza replacement.

Proton (DRB) continued its growth momentum with sales volume of 9.5k units in Oct (+86.6% YoY; +9.4% MoM) and 79.4k units YTD (+46.2% YTD), driven mainly by strong demand for new X70 as well as ongoing facelift model launches for Iriz, Persona, Ezora and Saga. Proton retained its second position with 17.6% market share in Oct and 16.0% YTD. Management is confident of achieving 100k unit sales in 2019. Upcoming new line up launches include the highly anticipated X70 CKD in Dec 19 and X50 in 2020.

Honda (DRB) sales volume improved +10.7% MoM to 6.4k units in tandem with the market. However, sales volume dropped 12.1% YoY and 18.0% YTD (to 71.5k units) due to high base effect as well as competitive new launches by major OEMs namely Toyota, Perodua and Proton. Honda is currently behind its sales target of 95k units for 2019. Upcoming new models include Accord and potentially BR-V facelift. Honda is also expected to launch new City and Jazz in 2020.

Toyota (UMW) registered encouraging sales volume of 6.5k units (+36.2% YoY; +22.7% MoM) following starting of year-end sales campaign and new Corolla launch during the month. However YTD sales declined 5.8% to 54.1k units, dragged by production start-up at new Toyota Bukit Raja Plant at the beginning of the year and high base in 2018. Similarly, Toyota is currently behind its sales target of 75k units for 2019.

Nissan (TCM) continued to record weak Oct sales at 1.7k units (-31.6% YoY; +8.0% MoM) and YTD sales at 17.4k units (-25.2% YoY). Nissan will maintain its strategy not to compete aggressively with others. Management has indicated new attractive models line up post 2020, including the all new Kicks, Almera and Sylphy.

Mazda (BAuto) sales in Oct improved 122.4% MoM to 1.0k units, following launch of CX-5 facelift. However, sales declined 39.4% YoY and 21.7% YTD (to 9.9k units) due to high base effect of strong demand during GST free period. We expect stronger sales volume in Nov following recent launch of CX-5 facelift and new CX-8. Upcoming launches include new CX-30 and CX-3 facelift by year end as well as another new model in 2020 (potentially MX- 30).

Others. BMW (Sime) Oct sales were at 0.7k units (-24.2% YoY; -11.9% MoM) while YTD sales stood at 8.1k units (-18.6% YoY). Similarly, Mercedes (DRB and C&C) posted Oct sales at 0.7k units (-22.8% YoY; +6.6% MoM), while YTD sales at 8.5k units (-25.4% YoY).


Source: Hong Leong Investment Bank Research - 4 Dec 2019

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