May 2019 TIV registered strong Raya sales at 60.8k units (+41.4% YoY; +21.6% MoM), expanding YTD sales to 253.8k units (+12.7% YoY). The strong YTD growth was mainly driven by strong demand for Proton (on X70 and Persona) and Toyota (on Vios and Yaris). However, we are still maintaining our 2019 TIV forecast at 596.6k units (-0.35% YoY), as we expect slower growth by mid-2019 due to high base effect in 2018 during the tax holiday 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: RM3.03) and Pecca (TP: RM1.40).

Malaysian Automotive Association (MAA) reported a strong May 2019 TIV at 60.8k units (+41.4% YoY; +21.6% MoM), expanding YTD 2019 TIV to 253.8k units (+12.7% YoY). The YoY and YTD growth were mainly driven by Proton and Toyota on new model launches, as well as low base effect in May 2018 (election month). The MoM growth was due seasonal strong Raya sales month. 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: RM3.03) and Pecca (TP: RM1.40).

Source: Hong Leong Investment Bank Research - 24 Jun 2019