New vehicle sales in Malaysia, also known as total industry volume (TIV), regained momentum in Aug 2023 at 71,745 units (+13% MoM, +6% YoY), driven largely by various new launches, the National Day promotional campaigns and delivery of booking backlogs. Cumulative 7MCY23 TIV of 501,552 units (+12%) is on track to meet our full-year forecast of 720k units, which will match the record level achieved in CY22. The industry’s earnings visibility is still strong, backed by a booking backlog of 235k units, which is unchanged from a month ago. We now see greater opportunities in the affordable segment as it will be less affected by the introduction of a targeted fuel subsidy while the subsidy reform may dent the demand for mid-market vehicles as it will erode spending power of the M40 group. Our sector top pick is MBMR (OP; TP: RM4.70) which also offers an attractive dividend yield of more than 11%. Reiterate OVERWEIGHT.
TIV regained momentum in Aug 2023 at 71,745 units (+13% MoM, +6% YoY), driven largely by various new launches, the National Day promotional campaigns and delivery of booking backlogs. Honda (+30% MoM, -3% YoY) was back in the game with its all-new Honda WR-V, raking in 7,300 units in bookings and 3,300 units delivered just within a few months after launching, while Mazda’s (+22% MoM, +38% YoY) sales were boosted by larger-than-expected shipment of Mazda 3 CBU from Japan. Cumulative 7MCY23 TIV of 501,552 units (+12%) is on track to meet our full-year forecast of 720k units. The industry’s earnings visibility is still strong, backed by a booking backlog of 235k units, which is unchanged from a month ago. Looking ahead, Sept 2023 TIV should track that of Aug on a comparable production level.
A detailed analysis of the passenger vehicle segment in Aug 2023 at 71,745 units (+13% MoM, +6% YoY), are as follows:
Honda (+30% MoM, -3% YoY) returned to glory with the all-new Honda WR-V driving in 7,300 units in bookings, and delivered 3,300 units within a few months of launching. Overall, sales were driven by the City, Civic and all-new HR-V, although it was still affected by inventory shortages, especially for the newer models. Based on sales projection, Honda currently has 13k backlogged orders (2-4 months). Mazda (+22% MoM, +38% YoY)’s sales were boosted by the unexpected huge shipment delivery of Mazda 3 CBU from Japan, the exceptional response for its Mazda CX-30 CKD, continued to be driven by the CX-5 and CX-8. Based on sales projection, Mazda currently has 4k backlogged orders (3-5 months). Toyota’s (+17% MoM, +13% YoY) sales were mostly from its popular top models, namely the all-new Vios, Yaris, Corolla Cross and Hilux. Based on sales projection, Toyota currently has 30k backlogged orders (3-6 months). Perodua’s (+9% MoM, +19% YoY) sales were propelled by the all-new Perodua Alza (massive booking backlogs of 10k units) and all-new Perodua Axia (another newcomer with 20k units in new bookings), with equally strong sales of the Bezza, MyVi, Ativa models. Based on sales projection, Perodua currently has more than 155k backlogged orders (up to 12 months for the Alza, 4 months for the Ativa/Myvi, and up to 3 months for others). Proton’s (+5% MoM, -8% YoY) sales were mainly driven by the all-new X70, X50 and X90 (4,147 SUV units sold, making up 30% of sales), and supported by the face-lifted Persona, Iriz, Exora and Saga (collectively known as PIES). Based on sales projection, Proton currently has 30k backlogged orders (up to 12 months for the X50 and by 3 months for other models). Nissan (-7% MoM, -27% YoY) managed to entice buyers as evidenced by its fast-moving inventory, but overall is still losing out in the all-new vehicles launching race. Currently, Nissan depends on the face-lifted Nissan Serena S-Hybrid, Navara, and Almera Turbo with 1k backlogged orders (1-2 months).
Record year in CY22 poised to be repeated in CY23. We believe a new car is still an affordable luxury for most Malaysian households despite the high inflation and a slowing global economy. We maintain our CY23 TIV projection of 720k units, matching the record level achieved in CY22. Our projection is in-line with the forecast of 725k units by Malaysia Automotive Association (MAA).
Our optimism is underpinned by: (i) strong consumer confidence supported by a stable economy and a healthy job market, (ii) the affordability of motor vehicle underpinned by stable new car prices thanks to the deferment of new excise duty regulations (that could have resulted in prices of locally assembled vehicles increasing by 8%-20%) and potentially cheaper hire purchase cost with the introduction of the reducing balance method in the calculation of interest charges, and (iii) attractive new models. However, we now see greater opportunities in the affordable segment as it will be less affected by the introduction of a targeted fuel subsidy. This is because the subsidy reform may dent the demand for mid-market vehicles as it will erode the spending power of the M40 group.
The industry’s earnings visibility is still strong, backed by a booking backlog of 235k units which is unchanged from a month ago despite heavy deliveries. More than half of the backlogs are from new model launches and we expect to see similar trends throughout the year. Moreover, the recent new launches of electric vehicles such as BYD Seal, and Tesla Model 3 provide additional choices in the new growth market of electric vehicles.
Our sector top pick is MBMR for: (i) its strong earnings visibility backed by an order backlog of Perodua vehicles of 155k units (almost half of its CY23 target sales of 314k units), (ii) being a good proxy to the mass-market Perodua brand given that it is the largest dealer of Perodua vehicles in Malaysia, as well as its 22.58% stake in Perusahaan Otomobil Kedua Sdn Bhd, the producer of Perodua vehicles, and (iii) its attractive dividend yield of about 11%.
Source: Kenanga Research - 21 Sept 2023
Chart | Stock Name | Last | Change | Volume |
---|
Created by kiasutrader | Aug 23, 2024
Created by kiasutrader | Aug 23, 2024