CIMB IB Research upgrades Malaysian automotive sector to Neutral

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KUALA LUMPUR (June 29): CIMB IB Research has upgraded the Malaysian automotive sector to “Neutral”(from Underweight) and said total industry volume (TIV) fell 8.7% month-on-month in May as consumers held back purchases in anticipation of reduction in vehicle selling prices following the announcement of zero-rated GST.

In a note June 28, the researhc house said it believes near-term boost from tax holiday and potential reduction in excise duties, may revive TIV growth in 2H18F onwards.

“We upgrade Malaysian auto sector to Neutral following our upgrade on DRB-Hicom Bhd and Tan Chong Motor Holdings Bhd during the last results season in view of improving earnings outlook.

“DRB-Hicom remains our top pick on narrowing losses at Proton, stronger service division contribution and as a proxy for e-commerce play through its logistics assets,” it said.