TIV in Dec 2018 was reported flattish MoM at 48.2k units (-11.9% YoY; -0.2% MoM). For full year 2018, TIV managed to reach 598.7k units (+3.8% YoY), making up 99.4% of our full-year forecast of 602.6k units. The growth was due to strong demand during the tax holiday in Jun-Aug 2018. In 2018, Perodua (UMW and MBMR), Nissan (TCM), Mazda (BAuto), BMW (Sime) and Mercedes (DRB & C&C) reported higher YoY sales. We expect 2019 TIV to drop marginally to 596.6k units (-0.35% YoY), given high base in 2018 and moderating consumer sentiment. We maintain NEUTRAL on the sector given the moderating consumer sentiment in 2019 and weakened RM/USD outlook. Our top picks are BAuto (TP: RM2.70), DRB (TP: RM2.80) and Pecca (TP: RM1.35).

Dec 2018 TIV was reported flattish MoM at 48.2k units (-11.9% YoY; -0.2% MoM) as most of the sales was already concluded during the tax holiday between Jun and Aug 2018 coupled with the delay in several new model launches pending price approval from the authorities. However, the strong sales during tax holiday period pushed 2018 sales to 598.7k units (+3.8% YoY) in line with our forecast of 602.6k units (99.4% of forecast). With a high base in 2018 and expectation of moderating consumer sentiment in 2019, we expect 2019 TIV to drop slightly to 596.6k units (-0.35% YoY) vs. MAA’s projection of 600k units (+0.22% YoY).

We maintain our NEUTRAL rating on the sector as we expect TIV to remain relatively flat YoY in 2019 amidst moderating consumer sentiment and high base effect from 2018, as well as weakened RM/USD outlook. 

Our top picks are BAuto (TP: RM2.70), DRB (TP: RM2.80) and Pecca (TP: RM1.35).

Source: Hong Leong Investment Bank Research - 18 Jan 2019