Highlighted Companies
Bermaz Auto Berhad ADD, TP RM2.40, RM1.92 close
We see robust sales from Mazda, Peugeot and Kia, on the back of multiple new model launches and new localisation programmes. We expect the group to deliver 18k/20k/21k units combined for the three marques in FY23F/24F/25F. Bermaz Auto offers decent CY22-23F dividend yields of 5.0-5.5%.
Pedal-to-the-metal TIV delivery in Aug 2022
- TIV in Aug 2022 rose 36% mom due to fulfilment of backlog orders received prior to SST exemption expiry on 30 Jun 2022, while 8M22 TIV rose 63% yoy.
- We raise our 2022F TIV by 10% from 580k to 637k in view of robust backlog orders and new launches. Our revised TIV is in line with MAA’s 630k forecast.
- We remain Neutral on Malaysian autos, with Bermaz as our top sector pick.
Aug 22 TIV surged 36% mom
Total industry volume (TIV) in Aug 22 rose 36% mom to 66,614 units, driven by stronger sales from both passenger vehicle (PV) and commercial vehicle (CV) segments, which grew by 37.1% and 28.5%, respectively. The Malaysian Automotive Association (MAA) attributed the higher mom TIV delivery to order fulfilment for bookings received prior to 30 Jun 2022 that qualified for the sales and services tax (SST) exemption. MAA expects Sep 2022 TIV to stay flattish mom, but it highlighted the ongoing semiconductor chip and component shortages weighing down the domestic automotive industry supply chain.
8M22 TIV rose 63% yoy
TIV jumped 63% yoy to 447,209 units in 8M22, driven by higher sales from the national segment (+54% yoy) and the non-national segment (+77% yoy). Non-national brands’ market share grew 3.4% pts yoy to 42.9% in 8M22, mainly due to stronger sales volume from the Japanese marques. Nevertheless, we expect Perodua to extend its dominant market position in 2022F in view of new launches like the Perodua Alza, which received over 51k registered bookings since launching in Jul 22. Meanwhile, Toyota retained its leading position in non-national brands with a 13.7% market share in 8M22, driven by a 62% yoy volume growth. However, Honda is narrowing the gap with an 11.9% market share, on the back of a 96% yoy volume growth in 8M22. Honda is targeting higher sales volume delivery in 2H22F, driven by new launches such as the new HR-V, which garnered a favourable response with over 23k bookings since the launch in mid-Jul 22.
Raising our 2022F TIV by 10% to 637k
8M22 TIV made up 77% of our full-year projection of 580k (+14% yoy). We deemed 8M22 results to be ahead of our expectation given that TIV continues to stay strong despite the SST exemption expiry. We expect average monthly TIV to hover around 50k per month in Sep-Dec 22, in view of a robust order backlog secured prior to the SST exemption expiry. Hence, we raise our 2022F TIV forecast by 10% (from 580k to 637k). This is also in line with MAA’s revised TIV forecast of 630k for 2022F (compared to 600k previously).
Stay Neutral on Malaysian Auto, with Bermaz as our top pick
We expect the sector to register flattish qoq TIV growth in 3Q22F, in view of robust backlog orders. Despite the strong TIV delivery projection, we expect automakers’ earnings performance to be impacted by higher opex, given the unfavourable forex movement and inflationary cost pressures from rising raw materials and labour costs. To recap, the ringgit has fallen by 2.9% qoq to RM4.48/US$1 in 3Q22F. We stay Neutral on Malaysian autos. Bermaz is our sector top pick due to its attractive 5.0-5.5% CY22-23F yields and growing market share, with the addition of Kia and Peugeot marques to its stable.
