Maybank IB maintains ‘positive’ call on automotive sector

KUALA LUMPUR: Maybank Investment Bank Research (Maybank IB) has maintained its “positive” call on the Malaysian automotive sector, following an 18 per cent month-on-month rebound in May car sales to 50,600 units.

In a research note yesterday, Maybank IB said this brought the total industry volume (TIV) for the first five months of this year to 234,200 units (+ 7 per cent year-on-year), which was slightly ahead of its 2017 TIV forecast of 610,000 (+5 per cent y-o-y).

“Going forward, we expect the June TIV to strengthen further, supported by pre- Hari Raya sales campaigns.

“We expect slower TIV sales in July to September before picking up again on year-end sales campaigns and massmarket launches such as the Perodua Myvi, Honda CR-V and Mazda CX-5,” it added.

Maybank IB added that auto parts players would likely see the first wave of earnings recovery, coupled with potential volume boost, following the Geely-Proton union.

Meanwhile, Hong Leong Investment Bank ( HLIB) maintained it “neutral” call for the sector, saying it is expected to continue being undermined by the ongoing subdued consumer sentiment and weak ringgit in 2017, which affected cost structures and margins.

Nevertheless, it said national original equipment manufacturers are expected to sustain their sales volume this year.

“We maintain our 2017 TIV assumption of 600,600 units +3.5 per cent y-o-y, as we expect slower growth in the second half of this year due to a high base effect,” it said.

The research firm named MBM and DRB as its top picks for the sector with “buy” calls, and a target price of RM2.68 and RM2.58 respectively. — Bernama