Auto players' shares soar after PM announces sales tax exemption

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KUALA LUMPUR (June 5): Shares of automotive players shot up in late trading, after the prime minister announced a sales tax exemption on new car purchases.

In a televised speech on the nation's short-term economic recovery plan, Tan Sri Muhyiddin Yassin said the government will be granting a 100% sales tax exemption for locally-assembled or completely knocked-down cars and 50% for imported or completely built-up cars, from June 15 to the Dec 31.

This is to promote the growth of the country’s automotive industry, the prime minister said.

At 4.41pm, the clear winner in this sector was UMW Holdings Bhd, which was up 19.66% or 46 sen at RM2.80.

This was followed by Bermaz Auto Bhd which grew 13.64% or 18 sen to RM1.50, and DRB-Hicom Bhd which jumped 12.73% or 21 sen to RM1.86.

MBM Resources Bhd was up 8.57% or 27 sen at RM3.42; Tan Chong Motor Holdings Bhd leaped 8.41% or nine sen to RM1.16; while Cycle & Carriage Bintang Bhd rose 5.07% or seven sen to RM1.45. 

In April, as the country was under the movement control order (MCO) to contain the Covid-19 outbreak, there were only 141 vehicles sold, a mere 0.3% of the monthly sales of 49,935 units recorded in April last year.

Total sales from January to April stood at 106,601 units, compared with 192,971 in the same period last year.

During the same period, vehicle production dropped to 108,719 units, versus 196,111 last year.

MBM Resources saw its net profit for the first quarter ended March 31, 2020, slump 45.2% to RM27.23 million, from RM49.66 million a year earlier as the MCO weighed on its sales volume. Quarterly revenue dropped 27.94% to RM374.04 million from RM519.07 million.

Likewise, Cycle & Carriage reported a wider first quarter net loss of RM9.63 million, against RM4.36 million last year, while quarterly revenue fell 26.35% to RM215.91 million from RM293.19 million. The group blamed the MCO for the weaker performance and softening demand in the premium luxury segment of the automotive industry.

The other listed automotive companies have yet to report their first quarter results.

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