Sector Update 23 September 2019 Automotive NEUTRAL Waiting for a Better Promotional Campaign ↔ By Wan Mustaqim Bin Wan Ab Aziz l
[email protected] We maintain our NEUTRAL rating on the AUTOMOTIVE sector . According to the Mala ysian Automotive Association (MAA), TIV for August 2019 registered sales of 51,148 units (+1% MoM, -22% YoY). MoM sales growth was flat with only Proton recording significantly higher MoM growth backed by its popular Proton X70, and further supported by face-lifted Proton Saga, Iriz, and Persona. Meanwhile, YoY sales plunged due to the high base effect from the historic tax holiday from 1st June 2018 to 31 st August 2018. Only Perodua recorded positive YoY growth due to a lower base last year arising from supply constraint for its popular all-new Myvi. 8M19 reported TIV of 398,325 units (-6%), within our expectation, at 66% of our 2019 TIV target of 600,000 units. Sales volume for September 2019 is expected to be weaker compared to August 2019 due to the spate of public holidays but stronger YoY due to tepid demand post tax-holiday last year. Our sector top -pick is BAUTO (OP; TP: RM2.75) which offers a steady dividend yield of 7.2 %. August 2019 registered sales of 51,148 units (+1% MoM, -22% YoY). MoM sales growth was flat with only Proton recording higher MoM growth backed by its popular Proton X70, and further supported by face-lifted Proton Saga, Iriz, and Persona. Meanwhile, YoY sales plunged due to the higher base effect from the historic tax holiday which started from 1st June 2018 to 31 st August 2018.