AUTOMOTIVE
$BAUTO / 5248 (BERMAZ AUTO BERHAD) $DRBHCOM / 1619 (DRB-HICOM BERHAD) $HIL / 8443 (HIL INDUSTRIES BERHAD) $HLIND / 3301 (HONG LEONG INDUSTRIES BERHAD) $MBMR / 5983 (MBM RESOURCES BHD)
Research by Kenanga
Neutral

"YoY Growth in TIV in Jan 2024"

New vehicle sales in Malaysia, also known as total industry volume (TIV), came in at 65,499 units in Jan 2024 (-16% MoM, +31% YoY), eased MoM against a seasonally high base in Dec 2023, but remained on a growth trajectory YoY. With Jan 2024 TIV making up 9% of our full-year projection of 710k units (-11% YoY), we consider the number meeting our expectation. Our full-year projection is a tad lower than the 740k units projected by Malaysia Automotive Association (MAA). We hold the view that the impending fuel subsidy rationalisation will likely hurt the demand for mid-market models, while remaining optimistic on the sales of affordable vehicles. The industry’s earnings visibility will be backed by a booking backlog of 200k units, unchanged compared to a month ago. Our sector top pick is MBMR (OP; TP: RM5.50), which focuses on the affordable segment. It also offers an attractive dividend yield of about 11%.

Analyst(s):
Wan Mustaqim Bin Wan Ab Aziz
wanmustaqim@kenanga.com.my