KUALA LUMPUR (Dec 20): CIMB IB Research has maintained its “Neutral” rating on the automotive sector and said 11M18 total industry volume (TIV) grew above expectations at 5.5% year-on-year (y-o-y), mainly due to a tax holiday and new model launches.
In a note Dec 19, the research house raised its 2018F TIV growth from 2.5% to 4%.
“We expect a flat TIV delivery in 2019. We forecast resilient sales in passenger vehicles on the back of new model launches in the passenger car and SUV segments from Perodua, Proton, Honda and Toyota.
“However, we see downside risk to TIV from potential interest rate hikes in 2019, implementation of Automated Price Mechanism, leading to higher pump prices and weak consumer sentiment due to uncertainty in global and domestic economy.
“Maintain a Neutral rating on the sector. Bermaz is our top pick in view of its undemanding valuation, attractive yield and proxy to export sales growth,” it said.