We maintain OVERWEIGHT rating on the sector in anticipation of continued strong sales of motor vehicles throughout 2023. Our positive outlook is underpinned by a range of factors, including strong order backlogs, favorable booking trends, and imminent launches of new models. We believe new models launched this year (notably Perodua Axia, Proton X90, Honda WR-V and Toyota Vios) will continue to drive new orders. Our recommendation is also premised on an improving economy and robust job market conditions, which create a favorable environment for resilient domestic consumption.
Malaysian Automotive Association (MAA) July total industry volume (TIV) rose 1.8% MoM to 63,676 units as sales volume of passenger cars increased 4% MoM to 57,939 units while commercial segment plunged 17% MoM to 5,737 units. On a YoY basis, TIV surged 28%, driven by substantial YoY increase in most major marques. Notably, Perodua witnessed a remarkable growth of 55%, Mazda +41%, Toyota/Lexus +26%, Proton +18% and Honda +13%. However, this growth was partially offset by a YoY decline of 29% in Nissan/ Renault.
Perodua’s cumulative market share improved to 40.5% (+2.3%-point YoY) with year-to-date (YTD) sales of 173,121 units (+19% YoY), achieving 55% of its 2023 sales target of 314,000 units and 58% of our forecast (300,000 units). We believe that Axia, Myvi, Bezza, Alza and Ativa supported Perodua’s sales of 28,431 units in July (+26% MoM and +55% YoY).
Toyota’s YTD market share declined by 0.5%-point YoY to 13.3% although sales remained strong at 57,008 units (+8.5% YoY) due to robust sales growth from national marques. In July alone, 8,349 units were sold (-4% MoM, +26% YoY), comprising mainly all-new Vios, Yaris, Corolla Cross and Hilux.
Honda’s cumulative market share declined by 2.5%-point YoY to 9.3%. July sales of 5,989 units improved 19% MoM and 13% YoY. On 13 July 2023, Honda officially launched a new model, WR-V, which has garnered strong interest with 2,500 units booked since reservations commenced on 12 June 2023.
1,576 Mazda cars were sold during the month (-6.2% MoM, +40.7% YoY), translating to a steady YTD market share of 2.6%. Going forward, we anticipate that the introduction of the more affordable Mazda CX-30 CKD model could play a crucial role in bolstering 2023 sales volume.
Proton’s cumulative market share grew 2.9%-point to 20.9% as sales declined 6% MoM but grew 18% YoY to 13,095 units in July. Within a span of less than 3 months since the launch of Proton X90 launch on 7 May 2023, a total of 2,225 units of the Proton X90 have been sold, with 886 units sold in the month of July alone.
No surprise from decline in Nissan sales. July sales volume dropped 2.2% MoM and 29% YoY to 804 units. YTD market share was a small 1.4%. In the absence of new model launches to stimulate sales volume growth, we do not foresee a resurgence in the foreseeable future.
Our top picks are Bermaz Auto (BUY, FV:RM2.77/share) and MBM Resources (BUY, FV:RM5.22/share) on the back of sizeable order backlogs. We like Bermaz Auto as the introduction of the more affordable Mazda CX-30 CKD model will positively impact sales volume, while bookings of Kia and Peugeot cars should continue growing from a low base. FY23F dividend yields are also highly attractive at 7% for Bermaz Auto and 9% for MBM Resources.
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