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New NAP will not be a re-rating catalyst for Auto sector, says RHB Research
by Cals Wed 20 Nov 2013, 18:47
| New NAP will not be a re-rating catalyst for Auto sector, says RHB Research |
| Business & Markets 2013 |
| Written by Jonathan Gan of theedgemalaysia.com |
| Wednesday, 20 November 2013 14:25 |
KUALA LUMPUR (Nov 20): RHB Research has maintained its Neutral rating for the Malaysian automotive sector and said it the new National Automotive Policy (now expected to be announced by the Government in mid-Jan 2014) will not be a re-rating catalyst for the sector in the near-term.
In a note Wednesday, the research house said it expects a solid 4Q13, aided by a competitive market place and strong pipeline of forthcoming new models.
RHB Research however cautioned that the year-end sales push could result in some margin erosion.
“Headwinds for the sector going forward include higher: i) interest rates, ii) fuel prices, and iii) inflationary pressure, which will reduce disposable income and cap discretionary consumer spending.
“The new National Automotive Policy (now expected to be announced by the Government in mid-Jan 2014) will not be a re-rating catalyst for the sector in the near-term, as the benefits to the industry from a well-conceived policy will only accrue over the medium-to longer-term,” it said.
The research house added that macroeconomic headwinds and a relatively saturated market would limit volume growth in 2014.
RHB Research’s top pick for the sector is Tan Chong Motor Holdings Bhd with a fair value of RM6.80.
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