According to the Malaysian Automotive Association (MAA), TIV for December 2020 registered sales of 68,836 units (+22% MoM, +26% YoY). Both MoM and YoY sales growths were driven by the exceptional delivery of SSTexempted vehicles, with higher production volume at the respective automotive plants and exciting promotional campaigns. This is the highest monthly sales since December 2015 from last-minute buying frenzy capitalizing on the SST-exempted period which was initially scheduled to end December 2020. All in, 2020 TIV ended at 529,434 units (-12% YoY) above our expectation of 515k units and also MAA initial target of 470k units. Maintain OVERWEIGHT with 2021 TIV target of 585k units (+11% YoY). We believe the new volume-driven launches in 4QCY20 (i.e. Proton X50, Honda City and Nissan Almera) could help improve sales with back-logged booking overflowing into 2021 and boosted by the extension of SST exemption to 30th June 2021, seasonal promotions and new launches in the 2H of the year. Our sector pick is MBMR (OP; TP: RM4.10) for its pure proxy to national carmakers as the largest Perodua dealerships and deep value in its 22.58% stake in Perodua.

TIV for December 2020 registered sales of 68,836 units (+22% MoM, +26% YoY). Both MoM and YoY sales growth was driven by the exceptional delivery of SST-exempted vehicles, with higher production volume at the respective automotive plants, as well as promotional campaigns by carmakers enticing buyers. This is the highest monthly sales since December 2015 which we believe came from consumer last-minute buying frenzy to capitalize on the SST-exempted period which was initially scheduled to end December 2020. We expect a seasonally slower January 2021 sales, affected by the MCO 2.0 but mitigated by SST-exempted sales delivery.

Taking a detailed look at the passenger vehicles segment (+21% MoM, +26% YoY), both MoM and YoY performances tracked the overall unit sales trend on the above-mentioned reasons. The strongest MoM take-up rate came from Toyota, Honda and Mazda, while the strongest YoY growth came from Mazda and Honda. Toyota’s (+39% MoM, -12% YoY) sales growth was contributed by the all-new Toyota Vios, Yaris, and the all-new Toyota Hilux (launched on 8th October 2020), with overwhelming delivery of face-lifted Vios and Yaris which were officially launched on 17th December 2020. Honda’s (+32% MoM, +60% YoY) sales mostly came from its top models Honda City, Civic and BR-V with exceptional sales growth coming from the launch of most anticipated all-new Honda City (13th October 2020). Mazda (+29% MoM, +88% YoY) reported increased delivery for face-lifted CX-5 and all-new CX-8 especially with its attractive 6-year/120,000- km warranty and free maintenance (including labour, parts and lubricants) package for new Mazdas purchased (except the BT-50) up to December 2020. On other hand, Proton (+14% MoM, +15% YoY) was buoyed by the all-new X70 CKD and X50 CKD (3,384 units sold at 26% of sales), and further supported by the face-lifted Proton Saga, Iriz, and Persona. Proton has officially launched the all-new Proton X50 on 27th October 2020, with the first delivery to customers on November 2020. Perodua (+9% MoM, +37% YoY) was driven by the all-new Perodua Axia, Myvi, and Bezza, and supported by ARUZ (3,057 units sold at 12% of sales). Note that, Perodua has reached its current maximum limit, producing up to 25k unit/month or running at 98-99% of its plant capacity from August 2020, which will be maintained until all back-orders are fulfilled; consequently, pushing the launching of Perodua D55L to 2021. Nissan’s (+9% MoM, -7% YoY) all-new Nissan Almera has started to propel positive growth for the brand, despite overall growth still lagging behind other brands from the dearth of all-new model launches.

Maintain OVERWEIGHT with 2021 TIV target of 585k units (+11% YoY). We believe the new volume-driven launches in 4QCY20 (i.e. Proton X50, Honda City and Nissan Almera) could help improve sales with back-logged booking overflowing into 2021 and boosted by the extension of SST exemption to 30th June 2021, seasonal promotions and new launches in the 2H of the year. Overall, 2021 could potentially be a better year supported by new launches (e.g. Perodua D55L) along with better incentives program under NAP 2020, positive impact from BNM’s overnight policy rate (OPR) cut and pre-emptive measures to assist those whom might be financially challenged by Covid-19 impact. Our economics research team have the view that an expected global growth recovery and the impact of the large fiscal stimulus on domestic economy would result in a projected GDP rebound growth of 3.9% (MoF: 6.5% - 7.5%) in 2021 compared to 2020 GDP growth forecast at -5.3% (MoF: -4.5%).

Source: Kenanga Research - 26 Jan 2021