Perodua, Toyota sales to boost UMW’s profit


Strong demand for the newly launched Perusahaan Otomobil Kedua Sdn Bhd (Perodua) models and Toyota Vios is expected to drive up UMW Holdings Bhd’s net profit for the first quarter of 2019 (1Q19), to between RM83 million and RM90 million.

The conglomerate’s core net profit (CNP) stood at RM67.2 million in 1Q18.

For the first three months of 2019, UMW is expected to benefit from the better margin from higher localisation rate and lesser discounting promotion for outgoing model, said Kenanga Research analyst Wan Mustaqim Wan Ab Aziz.

“Our assumption for the 1Q19 CNP is based on vehicles’ average selling price for the past three quarters and expected better margin from the cost savings derived from higher localisation rate of the all-new Vios (at 80%, compared to previous generation of 50%), as well as lesser discounting promotion for the outgoing- models,” he said in a research note yesterday.

“Our 1Q19 CNP assumption of RM83 million to RM90 million is expected to be within our full-year estimate in the range of 21%-23% (growth); however, this is below consensus’ expectations at 17%-18%.”

According to Wan Mustaqim, Toyota Vios, which was launched in January 2019, contributed 48% of sales for 1Q19, supported by Toyota Hilux (19%), Toyota Rush (5%) and the all-new Toyota Camry.

UMW Toyota Motor Sdn Bhd is also planning to boost its product range by unveiling the new A90 Toyota GR Supra in the second half of the year (2H19).

Meanwhile, Perodua, which is 38%-owned by UMW’s unit — UMW Corp Sdn Bhd, continues to support the net profit growth by the growing demand for its Perodua Myvi and Perodua Aruz.

For 1Q19, Perodua received a total booking of 150,000 units for Perodua Myvi and 15,000 units for Perodua Aruz. Out from the bookings, some 130,000 Perodua Myvi and 6,600 Perodua Aruz have been delivered to date respectively.

As for UMW Aerospace Sdn Bhd, the research house believed that it will trim its losses to RM20 million before reaching a break-even by 2020.

Wan Mustaqim added that UMW has delivered six fan cases for 2017, and expects to ramp up its production to 80-100 fan cases this year and 150 fan cases by 2020 before hitting a full capacity of 250 fan cases by 2021.

Kenanga has placed an unchanged target price of RM5.80 on UMW. The stock closed one sen lower yesterday at RM5.50, valuing the company at RM6.4 billion.