Highlights

Affin Hwang Capital Research Highlights

Author: kltrader   |   Latest post: Thu, 18 Apr 2019, 9:16 AM

 

Auto & Autoparts - Taking a Breather in Feb19

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Taking a Breather in Feb19

Feb19 Total Industry Volume (TIV) decreased marginally by 1.8% yoy to 39.8k units, dragged by weaker sales from foreign carmakers (except Toyota and BMW). Meanwhile, the 17.8% mom decline was expected, attributed to a shorter working month, in conjunction with the Chinese New Year festive holidays. All in, the 2M19 TIV of 88.3k units (+3.7% yoy) is broadly within our 2019 full year estimates of 603k units (+0.7% yoy). Maintain OVERWEIGHT rating for the sector.

Proton and Perodua Riding High on SUV Wave

Proton registered sales of 5.3k units (-23.0% mom, +37.0% yoy) in Feb19; 2M19-market share rose to 12.1% (2M18 at 8.6%). We expect Proton sales to remain robust in the coming months, spurred by the deliveries of its maiden Sports Utility Vehicle (SUV), X70 and refreshed models in the pipeline (ie. facelifted Iriz and facelifted Persona). Elsewhere, Perodua‘s Feb19 sales came in at 17.2k units (-14.3% mom,+0.7% yoy), bringing cumulative 2M19 sales to 37.4k units (+7.3% yoy); maintaining its dominant position with 2M19 market share of 42.3% (2M18 at 40.9%). Both local carmakers continued to receive favourable response for their maiden SUV, with bookings climbing up to 20k units (Proton X70) and 14k units (Perodua Aruz) respectively.

Non-national Carmakers Losing Its Grip

On the other side of the coin, the non-national carmakers 2M19 market share declined to 43.9% (2M18 at 49%). The yoy weakness was experienced across most foreign brands with the exception of Toyota (+18% yoy) and BMW (+6.2% yoy), driven by new model line-ups - the Toyota Vios, Toyota Camry, Toyota Rush, BMW X5 and BMW 7 Series. The expected launch of the all-new Toyota Yaris (2Q19) and the all-new BMW 3 series (3Q19) will invigorate 2019 sales for these two brands, we believe. In addition, the lower Mazda sales of 0.7k units in Feb19 (-56.6% mom, -31.4% yoy) should be temporary, in our view, considering the existing bookings of 2k units and upcoming model launches (ie. Mazda 3 and CX-8).

Maintain OVERWEIGHT, Top Picks/ Key Risks

We maintain our OVERWEIGHT rating; sector top pick include Bermaz Auto (BAUTO MK) and MBM Resources (MBM MK). Downside risks could come from: i) a prolonged tightening of auto financing hindering the borrowing ability of car buyers; ii) exchange rate risk; and iii) a slowdown in the economy.

Source: Affin Hwang Research - 20 Mar 2019

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