Affin Hwang Capital Research Highlights
Auto & Autoparts - a Flat 11M19 Performance
Nov-19 Total Industry Volume (TIV) rose by 9% yoy to 52.6k units, thanks to the stronger sales performance from Proton (doubled to 9.6k units) and Toyota (+82% yoy to 7k units). Although the year-end promotional campaigns saw sequential improvement for most key carmakers, the monthly sales were flat (-2% mom) due to a decline in Perodua sales volume (-10% mom). All in, the 11M19 TIV was flat at 549.5k units (-0.2% yoy), accounting for 92.2% of our full-year forecasts, so within expectations. Maintain NEUTRAL.
National’s 11M19 market share stood strong at 56.6%
Notably, Proton’s Nov19 sales volume doubled to 9.6k units (Nov18 sales volume: 4.8k units; +1.5% mom); with 11M19 sales volume of 89k units (+51% yoy). We think Proton will likely exceed its 2019 sales target of 100k units, considering the popular demand for the 2019 Proton Saga (est: 35k bookings since launch in Aug19) and the X70. Meanwhile,Perodua’s Nov19 sales dipped by 3% yoy to 20.4k units (-11% mom), affected by lower sales volume for Perodua passenger cars (-15% yoy; -15% mom) and Perodua MPVs (-40% yoy; -19% mom). Nonetheless, Perodua maintained its dominant position with 11M19 market share of 40.4% (11M18: 37.9%). With 11M19 sales volume of 222k units (+6% yoy), we believe Perodua definitely will exceed its 2019 sales target of 235k units (average 3-year monthly sales volume of 18.7k units).
Sequential sales improvement for most non-nationals (ex. Mazda)
The year-end promotional campaigns saw sequential improvement for most key non-national carmakers, except for Mazda with only 803 units sold in Nov19 (-58% yoy; -20% mom). The blip in Mazda sales volume is likely due to the car pricing approvals issue, which has been resolved recently, we believe. To highlight, Toyota stood as the champion among the Japanese brands, registering 7.1k units in Nov19 (+82% yoy; +7% mom), its highest sales volume since Aug18 of 9k units. The premium brand’s sales performance was also commendable in Nov19: BMW/MINI and Mercedes-Benz sales volumes picked up by 10% mom and 23% mom respectively.
Maintain NEUTRAL; Top Buy / risks
We maintain our NEUTRAL rating on the auto sector. Our sector top pick is MBM Resources for its appealing valuation. Key risks to our sector call include: 1) higher-/lower-than-expected car sales volumes, 2) tighter/looser bank lending policies, 3) intensifying price competition; 4) fluctuation of the RM vs. US$/JPY, 4) delays on new car pricing approvals, and 5) worsethan-expected economic slowdown that affects market sentiment.
National’s 11M19 market share stood strong at 56.6%
Notably, Proton’s Nov19 sales volume doubled to 9.6k units (Nov18 sales volume: 4.8k units; +1.5% mom); with 11M19 sales volume of 89k units (+51% yoy). We think Proton will likely exceed its 2019 sales target of 100k units, considering the popular demand for the 2019 Proton Saga (est: 35k bookings since launch in Aug19) and the X70. Meanwhile,Perodua’s Nov19 sales dipped by 3% yoy to 20.4k units (-11% mom), affected by lower sales volume for Perodua passenger cars (-15% yoy; -15% mom) and Perodua MPVs (-40% yoy; -19% mom). Nonetheless, Perodua maintained its dominant position with 11M19 market share of 40.4% (11M18: 37.9%). With 11M19 sales volume of 222k units (+6% yoy), we believe Perodua definitely will exceed its 2019 sales target of 235k units (average 3-year monthly sales volume of 18.7k units).
Sequential sales improvement for most non-nationals (ex. Mazda)
The year-end promotional campaigns saw sequential improvement for most key non-national carmakers, except for Mazda with only 803 units sold in Nov19 (-58% yoy; -20% mom). The blip in Mazda sales volume is likely due to the car pricing approvals issue, which has been resolved recently, we believe. To highlight, Toyota stood as the champion among the Japanese brands, registering 7.1k units in Nov19 (+82% yoy; +7% mom), its highest sales volume since Aug18 of 9k units. The premium brand’s sales performance was also commendable in Nov19: BMW/MINI and Mercedes-Benz sales volumes picked up by 10% mom and 23% mom respectively.
Maintain NEUTRAL; Top Buy / risks
We maintain our NEUTRAL rating on the auto sector. Our sector top pick is MBM Resources for its appealing valuation. Key risks to our sector call include: 1) higher-/lower-than-expected car sales volumes, 2) tighter/looser bank lending policies, 3) intensifying price competition; 4) fluctuation of the RM vs. US$/JPY, 4) delays on new car pricing approvals, and 5) worsethan-expected economic slowdown that affects market sentiment.
Source: Affin Hwang Research - 23 Dec 2019
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