Highlights

MAA reported April 2013 TIV at 52.5k, -8.91% mom due to consumers delaying their decision to purchase car ahead of general election. However, the sales still increased by +9.87% yoy due to low base in 2012 year (driven by Honda and Nissan). We maintained our growth expectation of 3.5% yoy for 2013, despite ytd growth of 12.79% yoy, due to higher base in 2H12.

Comment

The dominant national cars reported higher combined market share of 53.9% in April vs. 48.9% in March. Perodua (UMW and MBMR) reported strong sales of 17.7k units (+24.2% yoy; +8.6% mom) following the launch of Perodua S-Series in the month. Proton (DRB) sales was 20.2k units (+5.6% yoy; -10.9% mom), in line with market trend.

Toyota (UMW) sales slide to 6.6k units (-27.9% yoy; -20.8% mom) in April with market share dropped to 12.6% or ytd market share at 12.7% vs. 16.8% in 2012. The newly launched upgraded Camry and upcoming Vios replacement model by 2H13 will improve Toyota sales for 2013, but still unlikely to meet management sales target for 2013.

Nissan (TCM) sales remained strong at 4.0k units (+56.2% yoy; -25.1% mom) with April market share at 7.6% and ytd 8.9%. This was mainly attributed to highly demanded Almera. Management is confident of achieving its 2013 sales target of 60-65k units (+72-86% yoy), with continued launches of new variants and models in 2H13 (Grand Livina, hybrid MPV and Leaf EV).

Honda (DRB) sales was heavily affected by the election, with -34.6% mom due to significantly low passenger car sales. The strong +49.3% yoy sales was due to lower base as Alor Gajah assembly plant only gradually ramp up production in March 2013 and only recovered by June 2013.

Other foreign marques market share climbed to 19.8% in April from 18.9% in March, as their combined sales only dropped 4.2% mom vs. TIV’s -8.9% mom. Leading the pack are Mitsubishi (DRB & MBM), Naza-Kia, Hyundai-Inokom, Ford, Isuzu (DRB) and VW (DRB & MBM).

Risks

• Slowdown in the Malaysian economy.
• Global automotive supply chain disruption.
• Sudden jump in fuel prices and interest rate.

Rating

Overweight

• Positives –
  • Potential export to regional market, i.e. Malaysia as a hub.
  • Implementation of Energy Efficient Policy.
  • Appreciation of RM.
• Negatives –
  • Implementation of responsible lending guideline
  • Instability of global automotive supply chain.

Valuation

• Top Pick: DRB (TP: RM3.36) and MBM (TP: RM4.35). We will review our TP for MBM as MBM will benefit from the strengthening of RM/JP¥.

Source: Hong Leong Investment Bank Research - 20 May 2013