According to the Malaysian Automotive Association (MAA), TIV for February 2021 registered sales of 42,784 units (+30% MoM, +4% YoY). Both MoM and YoY sales growth revved stronger with the recovery in showroom traffic volume after upliftment of MCO for certain states, boosted by exciting promotions to entice buyers and full re-opening of automotive factories. We expect stronger March sales with the rush of deliveries for players with FYE March 2021, resumption of JPJ’s full services for all types of vehicle transactions and delivery of the highly sought all-new Perodua ATIVA (6k outstanding bookings as of 1st week of March, 100 units delivered). Maintain OVERWEIGHT with 2021 TIV target of 585k units (+11% YoY) and 3% ahead of MAA’s target of 570k units. We believe the new volume-driven launches (i.e. Perodua ATIVA, Proton X50, Honda City and Nissan Almera) could help spur sales along with the overflowing backlogged bookings and further boosted by the extension of SST exemption to 30 June 2021, seasonal promotions and more new launches in the 2H of the year. Our sector pick is MBMR (OP; TP: RM4.60) as a pure proxy to the largest national Perodua dealership and deep value in its 22.58% stake in Perodua.

TIV for February 2021 registered 42,784 units (+30% MoM, +4% YoY). Both MoM and YoY sales growth revved stronger with the recovery in showroom traffic volume after upliftment of MCO for certain states, boosted by exciting promotions to entice buyers and full re-opening of automotive factories. We expect stronger March sales with the rush of deliveries for players with FYE March 2021, resumption of JPJ’s full services for all types of vehicle transactions and delivery of the highly sought all-new Perodua ATIVA (6k outstanding bookings as of 1st week of March, 100 units delivered).

Taking a detailed look at the passenger vehicles segment (+31% MoM, +2% YoY), both MoM and YoY performances tracked the overall unit sales trend on the above-mentioned reasons. Honda’s (+201% MoM, +150% YoY) sales mostly came from Honda City, Civic and BR-V with exceptional response for the all-new Honda City (13th October 2020). The outstanding growth was from full-recovery of production line in February compared to January when it was hit by insufficient ready stocks from the closure of automotive factories during the first week of MCO 2.0. Proton (+96% MoM, +17% YoY) was buoyed by the all-new X70 and X50 (4,776 units sold at 41% of sales), with bulk of sales coming from X50 CKD (3,345 units, total 8,141 units delivered since launches) and further supported by the face-lifted Proton Saga, Iriz, and Persona. Proton has officially launched the all-new Proton X50 in November 2020 and recently introduced limited-edition variant of its older line-ups. Mazda’s (+58% MoM, -36% YoY) sales were mostly contributed by face-lifted CX-5 and allnew CX-8 with the recovery in February after a surprise ending of its attractive 6-year/120,000-km warranty and free maintenance (including labour, parts and lubricants) package for new vehicles purchased (except the BT-50) hampered its January sales significantly. Toyota’s (+6% MoM, -8% YoY) sales mostly came from its top models all-new Toyota Vios, Yaris, and the all-new Toyota Hilux with overwhelming delivery of face-lifted Vios and Yaris which were officially launched on 17th December 2020. Perodua (-2% MoM, -12% YoY) was driven by the all-new Perodua Axia, Myvi, and Bezza, and supported by ARUZ (1,502 units sold at 9% of sales) with a slight negative reduction in February numbers as consumers held back purchases for its all-new Perodua ATIVA SUV (6k outstanding bookings as of 1st week of March, 100 units delivered). Nissan’s (+0% MoM, -27% YoY) all-new Almera has started to propel positive growth for the brand, despite its overall growth still lagging behind other marques 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 (i.e. Perodua ATIVA, Proton X50, Honda City and Nissan Almera) could help spur sales along with the overflowing back-logged bookings and further boosted by the extension of SST exemption to 30th June 2021, seasonal promotions and more new launches expected in the 2H of the year. Overall, 2021 could potentially be a better year along with better incentives program under NAP 2020, positive impact from BNM’s overnight policy rate (OPR) cut and pre-emptive measures that soften the 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 growth rebound of 4.5% in 2021 (MoF: 6.5% - 7.5%; 2020: -5.6%).

Source: Kenanga Research - 24 Mar 2021