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HLBank Research Highlights

Author: HLInvest   |   Latest post: Tue, 12 Nov 2019, 9:06 AM

 

Automotive - Sep 2019 TIV: 2018’s Low Base Effect

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Sep 2019 TIV was 44.7k units, dropped 12.7% MoM, mainly due to consumer withholding purchases prior to Budget 2020 announcements and shorter working days in the month. However, TIV improved by +43.0% YoY due to low base effect post effective SST implementation in Sep 2018. YTD TIV dropped by 2.6% YoY to 443.0k units mainly due to high base effect of GST exemption period. We expect continued strong demand for Proton, Perodua and Toyota new models to sustain TIV for remaining months of the year. We are maintaining at 596.6k units (-0.35% YoY) for 2019 TIV forecast, as we expect reversal to positive growth in Oct-Dec 2019. We maintain OVERWEIGHT on automotive sector with top picks of DRB (BUY; TP: RM3.50) and BAuto (BUY; TP: RM2.85).

Malaysian Automotive Association (MAA) reported Sep 2019 TIV at 44.7k units, a strong growth of +43.0% YoY due to low base effect post effective SST implementation in Sep 2018. However, TIV dropped 12.7% MoM, due to ending of Merdeka Day sales campaigns, combined with consumer withholding purchases in anticipation of potential goodies from Budget 2020 and the shorter working days effect in the month. YTD TIV declined by 2.6% YoY to 443.0k units, mainly due to strong demand during GST exemption period in Jun-Aug 2018. We maintain our 2019 TIV forecast at 596.6k units (-0.35% YoY) as we expect sustainable monthly sales volume of 50k units in 4Q19, 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 BAuto (BUY; TP: RM2.85).


 

Source: Hong Leong Investment Bank Research - 23 Oct 2019

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