RHB Research maintains Neutral on auto sector

KUALA LUMPUR: RHB Research is maintaining its Neutral call on the automobile sector and named Tan Chong Motor Holdings Bhd and DRB-Hicom Bhd
as its top picks. The research house said on Monday the industry
performed better than expected with Malaysian Automotive Association's
(MAA) data revealing total industry volume (TIV) for April reached
52,489 units. Though it contracted 8.9% on-month contraction, it was up
9.9% on-year. "Cumulative sales for the four months to April reached
210,153 units that was 12.8% higher on-year. The on-month decline was
attributed to consumers taking a wait-and-see position ahead of the
General Elections." RHB Research said the cumulative year-to-date (YTD)
jump was attributed to the combined impact from supply constraints and
the newly introduced stricter financing guidelines in the previous
corresponding period. "The election manifesto of both coalitions had
expressed intentions to lower car prices, although the Pakatan Rakyat
manifesto contained explicit pledges to eliminate excise duties within
five years. This could have had significant repercussions for the
automotive industry. "TIV is expected to trend higher in the months
ahead with the macro environment remaining supportive of higher consumer
spending helped by low interest rates and an attractive pipeline of new
models," it said. RHB Research said Perodua sales grew 24.2% on-year
due to its S-Series variants while Proton sales only rose 5.6% on-year.
Nissan and Honda gained 76.1% and 260% on-year of sales respectively.
Toyota however declined 15.9% on-year.