Kenanga Research & Investment

Author: kiasutrader   |   Latest post: Wed, 27 May 2020, 10:40 AM


UMW Holdings Bhd - 1Q19 Within Our Expectation

Author:   |    Publish date:

1Q19 core PATAMI of RM78.7m (+17% YoY, +14% QoQ) came in within our expectation at 20%, but below consensus expectation at 16%, of the full-year estimate. For 1Q19, UMW Toyota Motor sales was at 13,722 units (+8% YoY, +6% QoQ), whereas, Perodua’s sales were at 60,659 units (+9% YoY, +3% QoQ). No changes to our FY19-20E CNP and our TP of RM5.80 based on 17x FY19E EPS. Maintain MP.

1Q19 within our expectation. 1Q19 core PATAMI of RM78.7m (+17% YoY, +14% QoQ) came in within our expectation at 20%, but below consensus expectation at 16%, of the full-year estimate. No dividend was declared for the quarter as opposed to 5.0 sen in 1Q18.

YoY, 1Q19 core PATAMI rose 17% buoyed by: (i) higher Automotive revenue (+15%) from UMW Toyota Motor sales at 13,722 units (+8% YoY), (ii) better performance of associate and joint-venture company (+17%) especially from 38%-owned Perodua, which recorded higher unit sales at 60,659 units (+9% YoY), (iii) higher Equipment revenue (+3%) with the strong export sales for Komatsu equipment and industrials old fleet renewal, and (iv) higher M&E segment revenue (+40%), with higher sales of auto component and improved sales from aerospace business. This was despite lower PBT margin by 1.3ppt to 5.1% from 6.4% in 1Q18 due to higher depreciation (+59%) largely from the new Bukit Raja Plant. Note that, the top three selling models in 1Q19 were Vios, Hilux and Rush, which accounted for 68% of Toyota’s (excluding Lexus) sales, whereas, Perodua’s consists of Myvi, Axia and Aruz.

QoQ. 1Q19 core PATAMI increased by 14% mainly from: (i) the stronger UMW Toyota Motor’s 1Q19 sales unit (+6%) boosted by the roll-out of the all-new Toyota Vios (RM78-88k) on 24th January 2019, (ii) favourable sales mix under equipment segment (higher margin sales), (iii) lower finance costs (-40%) from lower borrowings, and (iv) lower effective tax rate of 20.9% (4Q18:28.7%). This was despite the higher depreciation (+70%) largely from the new Bukit Raja Plant affecting its Automotive segment margin as well as lower contribution from associates and JV companies largely due to Perodua’s investment cost on all-new Perodua ARUZ platform.

Outlook. UMW Toyota is targeting a better year for 2019 at 75k units (+15%) for Toyota and Lexus models. UMW has launched the all-new Toyota Vios (RM78-88k) on 24th January 2019, all-New Toyota Yaris (RM72-84k) on 19th April 2019 and will be launching the A90 Toyota GR Supra (CBU by 2H19). Elsewhere, 38%-owned Perodua is targeting higher 2019 sales of 231k (+1.7%), from the all-new ARUZ (bookings at 20k units, 9.8k delivered) and MyVi (bookings at 150k, with c.130k units delivered). For Equipment, the group will continue to leverage on its partners (KOMATSU & TICO)’ strength to boost product range and market penetration while, expanding total solutions services. UMW Aerospace, under the M&E segment, is expected to trim its losses to c.RM20m level in FY18/FY19 before reaching breakeven level in FY20 considering that some front-loaded investments need to be amortised.

Maintain MARKET PERFORM with an unchanged Target Price of RM5.80 based on 17x FY19E EPS, which is the 5-year historical mean PER, or implying 14.3x FY20E EPS. Risks to our call include: (i) lowerthan-expected car sales volume, and (ii) unfavourable forex.

Source: Kenanga Research - 23 May 2019

Share this
Labels: UMW

Related Stocks

Chart Stock Name Last Change Volume 
UMW 2.12 +0.02 (0.95%) 138,400 

  Be the first to like this.

I3 Messenger
Individual or Group chat with anyone on I3investor
MQ Trader
Stock Screener using Technical and Fundamental criteria
MQ Affiliate
Join the MQ Affiliate Program today to earn rewards

325  330  566  971 

Top 10 Active Counters
 KGROUP 0.085+0.01 
 DSONIC-WA 0.65+0.065 
 GDEX 0.42+0.05 
 VELESTO 0.165+0.005 
 EKOVEST 0.58+0.03 
 EAH 0.015+0.005 
 IRIS 0.15+0.015 
 CAREPLS 0.98+0.045 
 MYEG 1.32-0.16 
 PA 0.06+0.005 


1. MQ Trader - Introduction to MQ Trader Affiliate Program MQ Trader Announcement!
2. MQ Affiliate – A smarter way to earn more rewards MQ Trader Affiliate Program
3. MQ Affiliate – How to become an effective affiliate MQ Trader Affiliate Program
4. MQ Affiliate – Upgrading to Affiliate Partner MQ Trader Affiliate Program
Partners & Brokers