Auto sector’s TIV to rebound in second half
KUCHING: The automotive sector’s total industry volume (TIV) has been projected to rebound in the second half of 2020 (2H20), on the back of the Sales And Service Tax (SST) exemption and National Economic Recovery Plan (Penjana) measures.
As per Malaysian Automotive Association (MAA) latest figures for June 2020, TIV reached 44,695 units, up five per cent than the similar corresponding month in 2019 and 94.7 per cent higher than May 2020.
“This follows from the relaxation of MCO (to CMCO) from May 4 and implementation of SST exemptions since June 15,” the research arm of Hong Leong Investment Bank Bhd (HLIB Research) said in its automotive sector report.
“However, TIV still dropped 41.2 per cent year to date (YTD) to 172,200 units, affected by MCO and deteriorated consumer sentiment.
“With the introduction of SST exemption (car prices have reduced two to seven per cent; paultan.org) and Penjana measures from June 15 to December 31, 2020, we expect a recovery in TIV for the second half of 2020 (2H20).
“We maintain our 2020 TIV forecast to 492,000 units (down 18.6 per cent year on year), after taking into account of the eased MCO period and government’s stimulus plan.”
As HLIB Research expected a rebound in TIV in 2H20, the research arm maintained its ‘overweight’ rating on the sector with a stock selective approach with four ‘buy’ and three ‘hold’ recommendations.
The research arm’s top picks included DRB-Hicom Bhd and MBM Resources Bhd, leveraging to national marques during the recovering phase in 2H20 to 2021 as well as Sime Darby Bhd for its strong balance sheet and potential leverage to the China market rebound.