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Auto sector TIV to grow moderately at 2% in 2014 - Kenanga Research.

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Post by Cals Fri 21 Feb 2014, 11:06

Auto sector TIV to grow moderately at 2% in 2014 - Kenanga Research.
Business & Markets 2014
Written by Jeffrey Tan of theedgemalaysia.com   
Friday, 21 February 2014 10:37

KUALA LUMPUR (Feb 21): Kenanga IB Research expects total industry volume (TIV) for the auto sector to grow moderately at 2% this year.

In a note Friday, the research house said it does not expect TIV to head south on the assumption of favourable macro factors, but that forecasts TIV to only grow moderately at 2% to 668,900 units amidst rising living cost.

Kenanga Research said TIV for the auto sector had declined by 17% month-on-month (MoM) in January to 50,273 units.

The research house said it had not discounted the possibility of cost push inflationary factor that exacerbated the already slowing consumer spending which has slowed to 9% year-on-year.

On consumer sentiment, the research house had commented: “We believe consumers will be more price-sensitive and thus preference may incline towards lower priced cars.”

“Coupled with ongoing stiff competition, all these are pointing to the trend of continued margin erosion for the automotive players,” they added.

The research house maintained its “neutral” outlook on the sector in the absence of immediate re-rating catalysts.

The research house has a “trading buy” rating on Berjaya Auto with a target price of RM1.92 per share citing superior growth prospects, potential EEV qualified models and targeted dividend payout policy of 40%.
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