KUALA LUMPUR (June 20): CIMB IB Research has maintained its “Underweight” rating for the automotive (auto) sector and said May 2017 total industry volume (TIV) rose 13% year-on-year (y-o-y) and 18% month-on-month (m-o-m), driven by new model launches and pre-Hari Raya promotions.
In a note June 19, the research house said MAA expects Jun sales volume to stay flattish m-o-m.
“5M17 TIV grew 7.4% y-o-y, driven by stronger sales volume of passenger vehicles (+8.8%) amidst lower sales of commercial vehicles (-3.8%).
“We expect the TIV volume growth to ease in 2H17 due to a high base in 2H16. Overall, we still project 3% TIV volume growth for 2017.
“Maintain Underweight sector rating due to persistent weakness in consumer sentiment and possible margin erosion from higher opex and intense competition,” it said.
CIMB Research said Bermaz Auto Bhd is its top pick for its attractive yield and strong earnings recovery outlook.
“Bermaz is our top pick for its attractive dividends and strong earnings prospects in FY18F, on the back of new model launches in Malaysia and expansion into the Philippines.
“Higher dividend payout and successful listing of Bermaz Auto Philippines are potential re-rating catalysts,” it said.