Affin IB Research maintains Neutral on Automotive sector

Affin IB Research maintains Neutral on Automotive sector
Business & Markets 2013
Written by theedgemalaysia.com
Thursday, 20 June 2013 08:44

KUALA LUMPUR (June 20): Affin IB Research has maintained its Neutral rating on the Automotive sector and said that as expected, buyers continue to adopt a ‘wait-and-see’ stance on expectations of ‘cheaper cars’ ahead.

In a note Thursday, the research house said that with fewer buyers seen in showrooms, May 2013 TIV contracted 5.4% month-on-month and 14.9% year-on-year to 49,634 units.

It said notwithstanding the second consecutive month drop in total industry volume (y-o-y basis), year-to-May 2013 TIV is still up 6.1% y-o-y to 259,787 units.

Annualised, this is within Affin and MAA’s forecast of 630,000 units (flat yoy) and 640,000 units, respectively, it said.

“We opine the recent price discounting by Proton could potentially spark intense price/ promotional offering amongst other autoplayers.

“This is expected to help drive sales into the festive Hari Raya season. We expect most autoplayers to maintain year-end sales targets.

“Thus, whilst the overall TIV is expected to grow, we believe consumers will benefit at the expense of autoplayer’s profit margins. Maintain Neutral on the sector - MBMR (BUY; RM4.40 PT) is our sector top pick,” it said.