KEY INVESTMENT HIGHLIGHTS

• Facelift Bezza launched, packed with new features

• Targeting 4,000 unit sales a month, in-line with historical sales trend

• In the pipeline are Perodua’s B-segment SUV and potentially, the new Alza; our 1.6%yoy Perodua TIV growth is conservative

• Maintain MBM as our top BUY at unchanged TP of RM4.55/share, solid 6% FY20F yields on the back of just 7x FY20F PER

Facelift Bezza launched. Perodua launched its 2020 Bezza facelift, which comes in 4 variants priced between RM34,580 – RM49,980. The facelift Bezza comes with a redesigned front and rear-end with a much bolder look, while the interior remained largely similar but with revised trim designs. However, a significant change is the incorporation of Perodua’s Advanced Safety Assist 2.0 (ASA) vs. ASA 1.0 in the outgoing model, though this is only available for the top AV variant. ASA 2.0 was first introduced for the latest MyVi and later the Aruz. VSC (Vehicle Stability Control) and ABS (Antilock Brake System) comes standard across all variants vs. for the AV variant only previously. Other equipment features include keyless entry, front corner sensors, reverse sensors and a reverse camera.

Packing up on features. The facelift Bezza is packing up on features and is the most affordable sedan in Malaysia to be equipped with AEB (auto emergency braking). This should help Perodua keep up with Proton which has been doing the same in the past year for it’s A/B segment models. The Bezza is one of Perodua’s key volume drivers, generating ~4000 unit sales/month and accounting for an estimated 20% of Perodua’s TIV. Perodua management’s target sales of 4,000 units/month for the facelift Bezza is in-line with historical sales.

In the pipeline. Other than the facelift Bezza, Perodua is scheduled to introduce its B-segment SUV, possibly in 2H20, positioned below the Aruz which is priced at RM70,000 – RM80,000. The Alza is also long overdue for a replacement, first launched in 2009 with its last facelift in 2018. Our forecast for a 1.6%yoy growth in Perodua’s FY20F TIV at this juncture is conservative.

Recommendation. We re-affirm our BUY on MBM at unchanged TP of RM4.55. At just 7x FY20F earnings coupled with an attractive 6.7% yield, MBM remains a cheap proxy to Perodua’s volume expansion and the spillover on its parts manufacturing and Perodua dealership units. Key catalysts: (1) Launch of Perodua’s new B-segment SUV in FY20F (2) A recovery in industry production driven by the new national car launches (3) Sale of OMIA assets. Risk to our call is weaker than expected demand and a weak Ringgit.

Source: MIDF Research - 9 Jan 2020