KUALA LUMPUR (Jan 13): Hong Leong IB Research has maintained its “Underweight” rating on the automotive sector and said it expects 2016 total industry volume to be flat at 665,000 units, driven mainly by national marques Perodua and Proton, from their expected new launches during the year.
In a note today, the research house said demand for cars likely to remain lackluster in 2016 due to deteriorated consumer sentiment as well as continued tight banks’ lending practices, but supported by aggressive sales and marketing campaigns and new launches.
“Weakened ringgit against other major currencies had increased OEMs’ input costs structures in 2016. Several OEMs have decided to raise their car prices by Jan 2016 to protect their margins, but will likely be offset by the aggressive sales and marketing campaigns.
“Maintained Underweight on Automotive sector with Top Picks on DRB-Hicom Bhd (TP: RM1.45) and MBM Resources Bhd (TP: RM3.00),” it said.