by FAYYADH JAAFAR / pic source: perodua.com.my
THE Malaysian automotive industry’s total industry volume (TIV) dropped by 12% month-on-month (MoM) to 49,603 units in May, caused by a shorter working month and a lack of inventory.
According to the Malaysian Automotive Association (MAA), the drop in May’s TIV was due to the country celebrating the Hari Raya Aidilfitri holiday and inventory shortages stemming from the ongoing China lockdown.
However, AmInvestment Bank Bhd analyst Muhammad Afif Zulkaplly expected a rebound in June and July, boosted by the introduction of several key models such as the new Honda HR-V and Perodua Alza.
He added that while supply disruption and inventory shortage issues remain the sector’s key concerns, carmakers and distributors with a more resilient supply chain such as Perusahaan Kedua Sdn Bhd (Perodua) and UMW Toyota have a competitive advantage to gain market share.
He maintained his ‘Overweight’ recommendation and 2022 TIV forecast of 590,000 units, implying a 16% YoY growth.
In addition, the government’s recent decision to allow prospective buyers who have placed orders before June 30, 2022, and registered their vehicles before March 31, 2023 to enjoy the sales tax exemption bodes well for the sector.
“This will provide a nine-month sales visibility for the sector while preventing a hard industry sales landing as automakers will have time to replenish their orderbook,” he explained.
As for specific stocks, he has a ‘Buy’ call on Bermaz Auto Bhd (fair value [FV] of RM2.25) and UMW Holdings Bhd (FV of RM4.60).
“We also have a ‘Buy’ call on MBM Resources Bhd (FV of RM5),” he suggested.
Looking at Perodua, the auto company faced a 26% lower sales volume in May. However, with the launch of the new Perodua Alza, it is expected to see a recovery as bookings have started.
Meanwhile, Proton delivered 9,279 passenger vehicles in May, an 11% improvement compared to the prior month but its sales volume was capped by worsening inventory shortages due to the China lockdown.
In comparison, before the supply issue worsened, the automaker sold between 10,000 and 13,000 units from September to December 2021.
Mazda sales fell back to 1,306 units (-29% MoM, -4% YoY) from a high in April.
The sales volume of 1,830 units was exceptionally higher due to backloads from lower January and February deliveries.
“Given the supply shortage, we expect a more normalised level of 1,000 to 1,200 unit monthly deliveries for upcoming months,” Muhammad Afif added.
On the other hand, Nissan/Renault’s sales volume declined 10% MoM to 1,402 units.