Mar 2019 TIV recorded strong sales at 54.8k units (+9.5% YoY; +37.5% MoM) and YTD sales was 143.1k units (+5.8% YoY). The strong YTD growth was mainly driven by strong demand for new national SUV models, namely X70 (Proton) and Aruz (Perodua). We maintain our 2019 TIV expectation at 596.6k units (-0.35% YoY), as we expect slower growth by May 2019 due to high base effect in 2018 on GST zerorisation period. We maintain NEUTRAL on automotive sector given the moderating consumer sentiment in 2019 and weakened RM/USD outlook. Our top picks are BAuto (TP: RM3.08), DRB (TP: RM2.78) and Pecca (TP: RM1.35).

Malaysian Automotive Association (MAA) reported that Mar 2019 TIV has rebounded strongly to 54.8k units (+9.5% YoY; +37.5% MoM) while YTD 2019 TIV to 143.1k units (+5.8% YoY). The YoY and YTD growth were mainly driven by new models contribution from Perodua Aruz and Proton X70. On the other hand, the MoM growth was due to recovery from government approval backlogs as well as higher number of working days in Mar as compare to the long holidays in Feb. We maintain our 2019 TIV forecast at 596.6k units (-0.35% YoY) as we expect lower sales growth by mid- 2019 due to high base effect from 2018 on front-loaded purchases during the tax holiday period.

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: RM3.08), DRB (TP: RM2.78) and Pecca (TP: RM1.35).

Perodua (UMW and MBMR) reported stronger Mar sales at 23.3k units (+12.3% YoY; +35.0% MoM). The YoY growth was driven by new Aruz contribution (launched in mid-Jan 2019) while the MoM growth was attributed to higher number of working days. YTD, sales was 60.7k units, a growth of 9.2% YoY, driven by new Aruz of 6,557 units being registered during the period. Demand for Aruz remained strong with over 14k units of bookings by mid Mar since its launch in Jan. At the meantime, Perodua is working for an update for its long dated MPV Alza model to address the declining sales volume. Perodua remains on track to achieve its 235k units of sales target for 2019.

Proton (DRB) also posted similar stronger Mar sales at 6.1k units (+46.0% YoY; +16.1% MoM), bringing YTD sales to 18.3k units (+42.3% YoY), mainly attributed to continued strong demand for its X70 SUV, partially offset by lower sales volume of other models. We expect a sales recovery for other models with the recent new launch of Iriz facelift and Persona facelift in Apr, having received encouraging bookings of 8,000 units. Proton is also slated to introduce X70 CKD, Saga facelift and another new Geely based small SUV model (likely X50) in 2H19. We believe Proton restructuring is on track and expected to turnaround in 2019 with a targeted sales volume of 100k units in 2019.

Honda (DRB) sales slipped 4.1% YoY in Mar to 8.7k units and 8.2% for YTD to 22.2k units affected by new models introduction by other major OEMs as well as the delay in government approvals for Honda’s pricing. The strong rebound of +44.7% MoM was attributed to higher number of working days and government approvals attainted for its pricing during the month. We expect Honda sales in 2019 to be supported by the newly launched HR-V facelift as well as the new Accord. Honda is slightly behind its target sales of 95k units for 2019.

Toyota (UMW) sales improved further in Mar to 5.9k units (+14.4% YoY; +25.8% MoM), bringing YTD sales to 13.7k units (+8.2% YoY), driven by higher delivery of its new Vios model. Toyota has also recently launched new model Yaris in Apr, which is expected to tag along Vios to support Toyota sales target of 75k units in 2019. The new Yaris model is designed with sporty look, targeting different market segment from Vios model.

Nissan (TCM) recorded Mar sales of 2.1k units (+2.5% YoY; +85.0% MoM) and YTD sales at 5.2k units (-2.7% YoY). Nissan is banking on its recent launched X-Trail facelift model in Apr as well as on-going resilient demand for Serena Hybrid model to support its 2019 sales. We believe Nissan sales will remain challenging due to its aged model line-up and lack of volume driving models that can boost its sales.

Mazda (BAuto) sales in Mar rebounded 45.1% MoM to 1.0k units mainly due to higher number of working days. However, sales volume declined 10.2% YoY and 3.7% YTD, as Mazda is phasing off the current Mazda 3 model. The market is anticipating for the attractive model line-up, consisting of Mazda 3 (Jun), CX-8 (Aug) and CX-30 (2H19).

Others. BMW (Sime) reported higher Mar sales at 0.9k units (+6.4% YoY; +8.9% MoM), bringing YTD sales to 2.6k units (+1.8% YoY). On the other hand, Mercedes (DRB & C&C) posted stronger Mar sales at 1.4k units (41.3% YoY; 131.4% MoM), but YTD sales still declined by 11.1% to 3.0k units.

Source: Hong Leong Investment Bank Research - 22 Apr 2019