Investment Highlights

• December 2019 TIV was up 4% MoM and 14% YoY to 54.8K units. We believe December 2019’s TIV was higher MoM due year-end promotional activities by most major marques. Cumulatively, 2019 TIV was marginally up 1% to 604.3K units from 598.6K units in 2018. It was in line with our full-year forecast of 603K for the year.

• We note the following for the major car marques’ in December’s sales figures:

1) Perodua registered a total sales volume of 18.4K units (-10% MoM, 0% YoY) in December. Perodua sets yet another record-high year with a total sales volume of 240.3K units for 2019, exceeding its full-year target of 235.0K units. The Aruz continued to be the most popular SUV in Malaysia with 2.7K units sold for the month. Cumulatively, 30.1K units of the Aruz have been sold. The 2020 Perodua Bezza has been officially launched in Malaysia and it is priced from RM34.6K–RM50.0K in 4 variants.

2) Proton delivered 11.1K units (+15% MoM, +99% YoY) in December, including 2.6K units for the X70. The total 2019 sales for Proton stood at 100.2K units, recording an outstanding YoY growth of 55%. Proton successfully secured its runner-up position in terms of market share at 16.6% for the year, ahead of Honda’s 14.1%. We note that Proton has introduced its sales volume target for 2020 at 132.0K units.

3) Honda sold a decent 7.2K units (+8% MoM, -10% YoY) in December 2019. For the year 2019, Honda sold a total of 85.4K compared with 102.3K units in 2018, translating into a 16% decline. Honda’s YTD market share of 14.1% put it in the third place behind national carmakers Proton and Perodua. We look forward for the launch of the all-new Honda City 2020 in Malaysia in 1HCY2020.

4) Toyota sold 8.0K units (+16% MoM, +87% YoY) in December. For 2019, Toyota sold 69.0K units (+5% YoY), falling slightly short of its full-year target of 72.0K units. The UMWH management highlighted that Toyota’s top three best-selling models for the year were the volume-driven Vios, Yaris and Hilux, comprising about 73% of its total sales. We continue to be cautious on Toyota’s outlook in CY2020 due to our expectations of fewer new passenger vehicle launches this year. We also anticipate competition to heighten in the passenger vehicle space with the expected launch of the all-new Nissan N18 Almera and Honda City 2020. It is important to note that these two models are direct competitors to the Toyota Vios.

5) Mazda’s sales volume normalized a little to 0.9K units (+12% MoM, -38% YoY) in December. The all-new Mazda CX-30 has been officially launched on 15 January 2020. It is a CBU from Japan based on the Mazda 3 platform and is priced RM143K–RM173K in 3 variants. It is positioned between the CX-3 and CX-5 in terms of size/dimensions but shares the same pricing range as the latter. Bermaz Auto has targeted a total sales volume of 3000 units for the CX-30 in 2020 as the group has intentions of making the model its third CKD vehicle after its flagship products CX-5 and CX-8.

• The approval rate for loans on passenger cars stood at 57.1% in November, a decrease of 1.9% from October and lower than the average rate of 59.6% in 2018.

• We continue to be optimistic on the national car marques Proton and Perodua for 2020, while we stay cautious on the foreign and premium car brands as consumers are more careful and conservative with their discretionary spending, indirectly benefitting cheaper and better value-for-money cars.

• We maintain our NEUTRAL stance on the auto sector with a TIV projection of 610K units for 2020. Our top picks for the sector are DRB-Hicom (FV: RM3.18) and MBM Resources (FV: RM5.54) as we expect Perodua and Proton to continue their strong showing in 2020, commanding the pole position and runner up respectively in terms of TIV market share.

Source: AmInvest Research - 23 Jan 2020