Kenanga maintains "neutral" call on automotive sector

May 24, 2018 | By | Reply More

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KUALA LUMPUR: Kenanga Research has maintained its neutral call on the automotive sector following the drop in total industry volume (TIV) in April 2018.

Latest data from the Malaysian Automotive Association showed TIV declined six per cent month-on-month.

In a note, Kenanga said the slowdown in car sales was due to consumers adopting a “wait-and-see” stance prior to the 14th General Election.

“Nevertheless, year-on-year, TIV grew by 10 per cent, boosted by stronger Perodua, Mazda and Honda sales of the new Perodua Myvi, new Mazda CX-5 and current best-selling Honda variants, respectively,” it said.

The research house said the sales volume for May 2018 was expected to be higher than April 2018, as some car-makers offered early discounts and rebates ahead of the implementation of zero-rated Good and Services Tax (GST) on June 1.

The projection was also supported by Hari Raya Aidilfitri promotional campaigns.

“Furthermore, sales volume for the next two to three months is expected to be boosted by the zero-rated GST holiday transition period until the new SST is gazetted, which may increase car prices, depending on the new mechanism,” it added.

On stock selection, Kenangan Research named MBM Resources Bhd (MBMR) as its top pick for the sector, with a target price of RM3.30.

“This is backed by MBMR’s expected strong turn-around in the alloy-wheel division segment, underpinned by the all-new MyVi and expected launch of the all-new Perodua SUV (D38L),” it added.


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