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

“Chinese New Year Lull in Feb 2024”

New vehicle sales in Malaysia, also known as total industry volume (TIV), came in at 62,833 units in Feb 2024 (-4% MoM, -1% YoY), easing MoM on a shorter working month due to the Chinese New Year break. With 2MCY24 TIV making up 18% 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 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: RM5.80), which focuses on the affordable segment. It also offers an attractive dividend yield of about 9%.

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