Investment Highlights

• We retain OVERWEIGHT rating as carmakers’ order books remain robust with continuous post-SST bookings, supported by on-going new launches which largely sustain their sales prospects throughout the year.

• MAA February total industry volume (TIV) surged 27% MoM to 62,649 units as sales volume of passenger vehicles increased 26% MoM to 55,555 units and commercial vehicles rose by 28% MoM to 7,094 units due to sturdy demand. YoY, the February TIV was up by 39% as compared to 45,064 units a year ago from robust sales in both passenger (+38%) and commercial vehicles (+43%).

• Perodua’s market share stood at 39.8% (-3.6%-point MoM, +1.1%-point YoY) with February sales of 24,936 units (+16% MoM, +43% YoY). The automaker has officially launched its blockbuster of the year – the all-new Axia on 14 February 2023, clocking in bookings of over 20,000 units since 31 January 2023. For this year, we are not ruling out a potential introduction of a Bezza facelift, which was last updated in 2020.

• Toyota’s market share remained at 14.8% with sales of 9,297 units (+37% MoM, +45% YoY). The foreign marque has introduced its all-new Vios on 20 March 2023 with commendable bookings of more than 5,000 units. In the pipeline could be another 4 models, which we believe may involve a second hybrid electric vehicle (HEV) and battery electric vehicle (BEV) as well as high-margin models including the Lexus brand. Furthermore, taking a cue from the Yaris facelift launch in Thailand just recently, we do not discount the possibility of it being introduced in Malaysia.

• Honda sold 6,154 units (+77% MoM, +2% YoY) in February with a market share of 9.8% (-3.6%-point YoY, +2.8%- point MoM). The carmaker has announced that it will be unveiling 3 all-new models, alongside a facelift in 2023, of which the all-new WR-V is confirmed to be launched in 3QCY23. On our shores, we also think that an all-new CR-V is on the cards, which debuted in Thailand on 21 Mar 2023.

• Mazda delivered 1,426 units (+17% MoM, +3x YoY) with a steady market share of 2.3%. The Japanese brand has unveiled its locally assembled (CKD) variant of the CX-30 on 8 Mar 2023, already garnering orders of more than 1,000 units thus far.

• Proton posted February sales of 13,907 units (+21% MoM, +54% YoY) with a market share of 22.2% (+2.1%-point MoM, -1.1%-point YoY). While we have no visibility on its new model launch pipeline, news of a debut for X90 – the first hybrid model of Proton has surfaced with its camouflaged prototype spotted in the country. Also, according to some of the top auto news sites, the national carmaker has started the production of a 3-row SUV on 14 Mar 2023, fueling order book prospects for the year.

• Nissan lags again. February sales volume stood at 779 units (+18% MoM, -12% YoY), given the prolonged absence of key new model launches which are needed to drive sales volume growth. Nonetheless, a facelifted Nissan Leaf EV was launched on 10 March 2023, almost 4 years since its first introduction to the local market in 2019.

• Our top picks remain Bermaz Auto (FV: RM2.63/share), MBM Resources (FV: RM5.22/share) and UMW Holdings (FV: RM4.70/share), which have bright earnings prospects driven by substantive order backlogs coupled with strong pipeline of new launches. We also like Sime Darby (FV: RM2.58/share) for an EV theme play and attractive dividend yield of 5%.

Source: AmInvest Research - 23 Mar 2023