Investment Highlights

• We retain OVERWEIGHT rating as record-high sales further cemented carmakers’ prospects, buoyed by robust order books and new launches underway, as well as carmakers ramping up deliveries to fulfil orders before the 31 March 2023 deadline to register sales tax exempted-vehicles under the National Economic Recovery Plan (PENJANA) incentives.

• Malaysian Automotive Association (MAA) March total industry volume (TIV) rose 24% MoM to 78,849 units as sales volume of both passenger and commercial vehicles increased by double-digits. Passenger vehicles increased 26% MoM to 70,958 units while commercial segment rose by 11% MoM to 7,891 units backed by resilient demand. YoY, the TIV was up by 8% as compared to 73,250 units a year ago, again due to higher sales in both passenger (+8%) and commercial vehicles (+7%). Separately, 3M2023 sales reached a record-high of 192,474 units (+20% YoY), attaining 30% of our 2023F target of 650,000.

• Perodua’s cumulative market share improved to 40.8% (+2.2%-point YoY) with year-to-date (YTD) sales of 78,564 units (+28% YoY), achieving 25% of its 2023 sales target of 314,000 units and 26% of our forecast (300,000 units). Individually, March sales registered 32,179 units (+29% MoM, +20% YoY) - the highest achievement since March 2022 in which 26,759 units were sold. We believe the improvement in the market share was boosted by sales of its all-new Axia, which has garnered more than 30,000 units of bookings since 31 January 2023. A potential facelift introduction for Bezza is also on the cards.

• Toyota’s YTD market share declined by 0.9%-point YoY to 13.1% although sales remained strong at 25,219 units (+12% YoY) due to robust sales growth from the national marques. In March alone, 9,136 units were delivered (-2% MoM, +8% YoY). Following the brand new Vios launch in March 2023, the foreign marque could be unveiling 2 green energy vehicles coupled with other high-margin models which are not limited to the Lexus brand. We also think that a potential facelift could be introduced for Yaris in the local market.

• Honda sold 17,507 units in 3M2023 (-14% YoY) and 7,878 units (+28% MoM, -25% YoY) in March, commanding a market share of 9.1% (-3.7%-point YoY). Apart from the all-new WR-V that was confirmed for a debut in 3QCY23, 2 more models and a facelift are in the pipeline, including the all-new CR-V.

• Mazda closed March with 2,018 units sold (+42% MoM, -9% YoY), possessing a steady market share of 2.6%. Our channel checks show that the carmaker sits on an order backlog of nearly 7 months, despite having delivered more than 95% of its PENJANA orders. We reckon that the strong orderbook could be attributable to CKD CX-30, which garnered bookings of at least 2,000 units since its March 2023 launch.

• Proton’s cumulative market share grew 4.7%-point to 20.7% as sales soared 56% YoY to 39,871 units. The national automaker has finally opened bookings for its long-rumoured first hybrid model – X90 on 8 April 2023, brightening prospects for 2H2023.

• Nissan remains sluggish. 3M2023 sales volume declined by 33% YoY to 2,553 units, alongside a squeeze in the market share by 1.1%-point. Without key introduction of new models essential to spur sales volume growth, we do not foresee the carmaker making a comeback anytime soon.

• Our top picks are Bermaz Auto (FV: RM2.63/share), MBM Resources (FV: RM5.22/share) and UMW Holdings (FV: RM4.70/share) on the back of sizeable order backlogs and strong pipeline of new launches. We also like Sime Darby (FV: RM2.58/share) for Its Attractive Dividend Yield of 5%.

Source: AmInvest Research - 19 Apr 2023