• May 2019 TIV rose 22% MoM and 41% YoY, recording a new high after the tax holiday period in 2018 to 60.8K units. Cumulatively, 5M19 TIV was up 13% YoY to 253.8K units compared with 225.1K units in 5M18. YTD TIV was within our forecast of 603K units for 2019, accounting for 42% of our full-year estimate.

• The exceptionally robust sales in May 2019 was lifted by the Hari Raya promotional campaigns, where dealerships throughout the country gave out attractive rebates, free gifts and other incentives to increase their car sales. We should also expect to see decent June 2019 TIV sales figures (albeit lower than May 2019’s) as there will be delayed car deliveries and last-minute bookings throughout the nation.

• According to a recent local news report, Proton sold a total of 10.6K units in May 2019, breaking the 10.0K mark in 46 months. This chalked up a whopping 51% MoM and 159% YoY growth for Proton. As at 5M19, Proton has sold a total of 35.9K units. However, we noticed that the sales of the X70 dropped slightly to 2.4K units. This is the first time that the famed SUV has recorded a monthly sales volume lower than the 2.5K mark in 2019.

• Proton’s splendid performance in May 2019 has placed the group as the runner-up in the market share for the month, behind the other national titan Perodua. Proton managed to capture 17% of the market share in May 2019. We believe this was due to three reasons: (1) the Hari Raya festive rebates and discounts, (2) the first full-month delivery of the new Persona and Iriz facelifts; and (3) a higher-than-expected sales from the Saga, raking in over 3.6K units for the month.

• We believe that the national marques’ sales volume will continue to be robust and compelling throughout 2019. We reckon that there will be a radical change in the sector for the first time since 2014, where national marques’ market shares have comfortably surpassed that of the non-national marques. The ongoing strong demand of Perodua’s Myvi and Axia, combined with Proton’s volume-oriented price competitive models like Persona and Iriz will continue to drive the local automobile sector in the short term. We will provide a more detailed breakdown on this once we receive May’s MAA statistics.

• We look forward to the anticipated revised National Automotive Policy 2019 (NAP 2019) which is likely to be announced in 2Q19. The new policy will set the long-term direction of the automotive ecosystem and also provide more clarity on the development of the New National Car Project (NNCP).

• We have BUYs on Bermaz Auto (BAuto), Pecca Group, MBM Resources and Tan Chong Motor. Our HOLD calls are on Sime Darby, DRB-Hicom and UMW Holdings while we are UNDERWEIGHT on APM Automotive.

Source: AmInvest Research - 21 Jun 2019