According to the Malaysian Automotive Association (MAA), TIV for May 2021 registered 46,663 units (-19% MoM, +100% YoY). YoY, sales rebounded strongly off last year’s MCO 1.0 impacted low base when almost all businesses were closed till 12th May 2020. Whilst, MoM lower sales was due mainly to enforcement of MCO 3.0, reducing traffic flows into showrooms, the shorter working month due to Hari Raya festive holidays, and global chip shortage impacted sales of some makes. We expect June to record close to zero sales from the closure of all the marques’ showrooms and vehicle production for the Phase 1 lockdown period. However, some units can be registered through JPJ e-Daftar system for vehicle purchases for which loans have already been approved with an issued Letter of Undertaking (LoU), and the completion of the registration was to ensure no lapse in the agreement, which would entail going through the whole process again. Maintain NEUTRAL with 2021 TIV target of 545k units (+3% YoY). Our TIV growth will be driven by the extension of SST-exemption until end-2021, despite a hiccup in sales from the closure of showrooms and vehicle production halt during the Phase 1 lockdown period, which will be offset by sufficient supply for the newer models that garner better margins. Our sector pick is MBMR (OP; TP: RM3.50) as a pure proxy to the largest national Perodua dealership and deep value in its 22.58% stake in Perodua.

TIV for May 2021 registered 46,663 units (-19% MoM, +100% YoY). YoY superb growth was due to last year MCO 1.0 when almost all businesses were closed till 12th May 2020. Whilst, MoM lower sales was due to enforcement of MCO 3.0 reducing traffic flows into showrooms, shorter working month due to Hari Raya festive holidays, and global chip shortage which has impacted sales of some makes. We expect June sales to record close to zero sales from the closure of all the marques’ showrooms and vehicle production for the Phase 1 lockdown period. However, some units can be registered through JPJ e-Daftar system for vehicle purchases which loans have already been approved with an issued Letter of Undertaking (LoU), and the completion of the registration was to ensure no lapse in the agreement, which would entail going through the whole process again.

A detailed look at the passenger vehicles segment (-20% MoM, +101% YoY). Outperformers in terms of YoY growth; Mazda’s (- 15% MoM, +171% YoY) sales were mostly contributed by face-lifted CX-5 and all-new CX-8 with a recovery starting February after the surprise termination of its attractive promotional campaign hampered its January sales significantly. Perodua (-12% MoM, +128% YoY) was driven by the all-new Axia, Myvi, and Bezza, and boosted by ARUZ and Ativa (4,368 units sold at 24% of sales). The global chip shortage has only affected its older models especially Myvi while the newer models’ inventory is sufficient up to six months. Toyota’s (-15% MoM, +116% YoY) sales mostly came from its top models namely all-new Toyota Vios, Yaris, and Toyota Hilux with overwhelming delivery of face-lifted Vios and Yaris. UMW introduced the all-new Toyota Corolla Cross, on 25 March 2021 to positive response, which is a CBU model from Thailand with local assembly expected to start in the second half of the year. Nissan’s (-23% MoM, +114% YoY) all-new Almera has started to propel positive growth for the brand, but overall growth still lags behind other marques from the dearth of all-new model launches. Honda’s (-5% MoM, +91% YoY) sales mostly came from City, Civic and BR-V with exceptional response for the all-new City. The global chip shortage has affected its older models while the newer models’ inventory is sufficient up to six months. Proton (-40% MoM, +55% YoY) was buoyed by the all-new X70 and X50 (3,149 units sold at 36% of sales), with bulk of sales coming from X50 CKD (1,899 units, total 17,226 units delivered since launches) and further supported by the face-lifted Persona, Iriz, Exora and Saga (collective known as PIES).

Maintain NEUTRAL with 2021 TIV target 545k units (+3% YoY). Our TIV growth will be driven by the extension of SST-exemption until end-2021, despite a hiccup in sales from the closure of showrooms and vehicle production halt during the Phase 1 lockdown period, which will be offset by sufficient supply for the newer models that garner better margins. We still believe the new volume-driven launches could help spur sales along with overflowing back-logged bookings and further boosted by the extension of SST exemption, and seasonal promotions. Our economics research team have the view that an expected global growth recovery and the impact of the large fiscal stimulus on the domestic economy would result in a projected GDP growth rebound of 5.0-6.0% in 2021 (BNM estimates: 6.0% - 7.5%; 2020: -5.6%), for now.

Source: Kenanga Research - 22 Jun 2021