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Robust yearly gross sales forecast for auto {industry}

PETALING JAYA: The robust gross sales registered by the automotive sector in August foretell a robust yr for the sector, whereas robust steadiness sheets of listed firms sign enticing dividend payouts.

MIDF Analysis mentioned the auto sector may be seen as a significant beneficiary of the restoration in home consumption, regardless of the dangers posed by increased rates of interest and inflation pressures.

“The sector’s prospects are underpinned by robust order banks and an enhancing labour market and family earnings situation, whereas valuations are 25% to 40% under the historic imply.

“Bermaz Auto Bhd (rated a ‘purchase’ with a goal value (TP) of RM2.36), MBM Assets Bhd (‘purchase’ name with a TP of RM4.28) and UMW Holdings Bhd (‘purchase’ name with a TP of RM4.78) stay our high sector picks,” the analysis agency said in a report yesterday.

Past the reopening thematic, it said that Bermaz might additionally achieve from its model growth following the acquisition of the Kia and Peugeot franchise which is able to assist the automaker’s growth in market share and above-industry progress.

MIDF Analysis views MBM and UMW as proxies to the sector restoration, given their publicity to Perodua and Toyota (for UMW) which collectively managed some 55% of market share in August.

“Most gamers below our protection are sitting on robust web money piles, which make up 20% to 25% of their respective market caps. This underpins enticing dividend payouts for the yr, we imagine,” MIDF Analysis added.

It mentioned automakers have been sitting on an implied seven to 12-month ready checklist and the robust order banks offered good income visibility for the sector shifting into 2023.

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The Malaysian Automotive Affiliation (MAA) said complete {industry} quantity (TIV) for August registered 66,614 unit gross sales (up 36% month-on-month and 272% year-on-year or y-o-y) as automakers continued to fulfil reserving backlogs as {industry} provide chain supply improved.

Kenanga Analysis said the robust {industry} quantity for August was underpinned by reserving backlogs that had hit some 400,000 models (principally automobiles of newer fashions which might be presently out of inventory), coupled with a low base in July 2022 after a bumper June 2022.

The exponential progress within the y-o-y determine for August was because of the low base as a result of lockdown final yr for the interval.

“Transferring ahead, month-to-month gross sales are anticipated to see intermittent progress amid persistent scarcity of chips and elements however will proceed to be anchored by the reserving backlogs.

“Our sector high picks are MBM (TP: RM4.30) given its market chief place within the nationwide marques and Bermaz (TP: RM2.30) for its enticing new fashions within the pipeline,” Kenanga Analysis said in its report on the sector.

The robust year-to-date TIV variety of 447,209 models had led Kenanga Analysis to revise up {industry} gross sales numbers for the yr by 8% to 650,000 models, which is increased than MAA’s goal of 630,000 models.

“Our revision is premised on sooner supply of backlog orders with the easing of elements provide scarcity for sure fashions.

“We anticipate earnings in subsequent quarters to step by step normalise to pre-pandemic ranges, backing our forecast sector earnings progress of 23% in monetary yr 2023, which ought to justify sector value earnings a number of step by step reverting nearer to the imply,” it famous.

Kenanga Analysis forecasts sustainable automobile gross sales into 2023, pushed by new mannequin launches and expects minimal order cancellations with demand outweighing provide given the huge backlog orders (to the tune of 400,000 models).