Gestation period a-coming for UMW Holdings
KUCHING: Analysts anticipate a gestation period for UMW Holdings Bhd (UMW) following the launch of its new Bukit Raja plant in January 2019 with the new Vios as the first model, to be followed by the Yaris in early-2Q19.
The Bukit Raja plant entails 45 per cent automation rate, a capacity of 50,000 units on 1-shift and will produce UMW’s passenger cars on the B and C platforms while the old Shah Alam plant will focus on larger models and commercial vehicles such as Hilux, Fortuner, Innova and Hiace.
MIDF Amanah Investment Bank Bhd (MIDF Research) said a capital expenditure (capex) of RM1.8 billion was invested into Bukit Raja, inclusive of land, civil structure and equipments.
“We learnt that RM600 million of the RM1.8 billion capex was funded by debt. Staff force was also transferred from the Shah Alam plant. Both plants now entail almost similar staff count,” it said in a note yesterday.
“Volume target more conservative than expected. In a recent briefing, UMW unveiled its FY19F UMW Toyota target volume of 75,000 units, representing a 14 per cent growth against FY18 volume of 65,551 units.
“The FY19F target however was below our earlier forecast of 80,000 units – primarily given lower volume forecast of the new Vios at 30,000 (FY19F) versus our earlier expectation of up to 35,000.”
UMW Toyota aims to regain top position in the non-national segment, but MIDF Research expects this to take a couple of years.
The research firm also expects to see hHigh localisation rate for future models as the new Vios entails very high localisation rate of 80 per cent versus 58 for the previous generation Vios.
“This is one of the highest localisation achieved for a nonnational B-segment sedan,” it added. “UMW Toyota expects all future models at Bukit Raja to be as highly localised.
“While the localisation achievement was better than expected, this in-line with our thesis of UMW catching up in the EEV bandwagon, having lagged behind key competitor, Honda on this front.
“We think UMW Toyota is on the right track and we foresee structural improvements in market share going forward, notwithstanding near-term gestation on earnings growth.”
MIDF Research believed Bukit Raja is already running at breakeven capacity even with just the Vios being produced currently, and thus forecasted utilisation rate to hit 80 to 90 per cent in FY19F (on single-shift) with the Yaris included.