KUALA LUMPUR, Oct 8 — MIDF Research expects the local automotive sector to rebound from the fourth quarter (Q4) of 2021 onwards as demand remains intact, backed by strong outstanding bookings, tax holiday, low-interest rates and cash transfers under stimulus programmes.
Although sales are still lower year-on-year (y-o-y) due to the supply chain operating constraints, the contraction is narrowing sharply, it said.
“We estimate a year-to-date total industry volume (TIV) contraction of seven to eight per cent before rebounding from October onwards.
“This is relative to our expectation of a -3.7 per cent y-o-y contraction in 2021 TIV to 510,000 units,” it said in a note today.
MIDF Research projects that non-national marques are likely to see faster recovery as they are less reliant on the domestic vendor network, given the overall lower localisation rate of their models and efficiency in vaccinating vendors.
“Additionally, completely built-up (CBUs) and completely knocked-down (CKD) kits were still being shipped in throughout the Movement Control Order 3.0, allowing the non-nationals to build up sufficiently high inventory level to ramp-up production.
“We estimate the non-nationals to have registered just a three to four per cent y-o-y contraction in September, versus a -33 per cent y-o-y contraction for the national cars.
“Nonetheless, we think the national cars should be able to catch up post-September as the vaccination rate of its supply chain gains pace and operating constraints are removed,” it added.
MIDF Research reiterated its positive rating on the sector, with top picks including UMW Holdings Bhd with a buy recommendation at an unchanged target price (TP) of RM4.35, Bermaz Auto Bhd (buy, TP: RM2.35) and MBM Resources (buy, TP: 4.30). — Bernama
