We reiterate our BUY call on UMW Holdings (UMWH) with a higher sum-of-parts (SOP)-derived fair value of RM4.89/share (from RM4.65/share previously). Our FV implies FY23F PE of 13.8x, slightly higher than its 5-year mean. We also retain our neutral 3-star ESG rating.
We raised UMWH’s FY22F earnings higher by 21% as vehicle sales beat our 2022 forecast at +1,035 units for Toyota and +6,219 units for Perodua.
Also, we adjusted our FY23F by +6% and FY24F by +5%, in line with our revised Perodua sales target of 265,000 units (+15,000 units) for 2023 and 260,000 units (+5,000 units) for 2024.
UMW’s 2022 sales volume hit a record-high after UMW Toyota (UMWT) and Perodua reported a combined 383,054 units (+46% YoY) sold during the year. In December 2022, Toyota delivered robust monthly sales of 41,664 units (+7% MoM) whereas Perodua posted 31,224 units (+9% MoM).
Coming from a low base in 2021 which was mainly affected by the movement restriction implemented from 1 June to 15 August 2021, UMWT and Perodua surpassed their sales target for the year underpinned by the tax-free incentive that was ended on 30 June 2022. Recall that UMWT set a sales volume target of 80,000 units while Perodua aimed for 247,800 units for 2022.
Toyota sold 101,035 units in 2022, an increase of 40% YoY from 72,394 units in 2021. Based on November 2022 sales data, the marque continues to retain its leadership in the non-national car segment with a market share of 14.1%. Model-wise, the Toyota Vios, Hilux and Corolla Cross remain its best-selling models.
Meanwhile, Perodua’s 2022 sales grew 48% YoY to 282,019 units from 190,291 units in 2021 as it continues to lead the market with a share of 39% as at November 2022.
In terms of new launches, UMW Toyota is planning to introduce its second hybrid electric vehicle (HEV) in 2023, alongside a potential battery electric vehicle (BEV). Meanwhile, UMWH indicates that Perodua has a hybrid model in the pipeline for 2024 introduction.
The group currently trades at a compelling FY23F PE of 10.7x, 16% below its 5-year mean of 12.7x while offering a fair dividend yield of 2.1%.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....