CGS-CIMB Anticipates Lower Automotive TIV Of 665,000 Units In 2023

The Malaysian automotive industry continues to have a neutral rating from CGS-CIMB Securities, with Bermaz Auto Bhd as its top pick. In February, the total industry volume (TIV) increased by 27% month over month as a result of more working days than in January and the Chinese New Year celebrations.   The research firm said in a note on Monday (March 27) that it anticipates a higher TIV in March as automakers work to fulfil backlog orders, but a lower TIV in the second quarter of 2023 after the SST exemption grace period expires.

“We continue to anticipate a lower year-over-year (y-o-y) TIV delivery in 2023 (665,000 vs. 720,000 in 2022), primarily because the SST holiday grace period will end on April 23 and there is a chance of macroeconomic headwinds”.

"However, we anticipate that in 2023, national brands will perform better than the non-national segment”

“On the strength of large backlog orders from 2022 and recent launches, such as the Axia and Proton X90, Perodua and Proton, respectively, are aiming for 11% and 8% y-o-y sales volume growth in 2023".

“Honda anticipates a flattish sales volume of 80,000 in 2023, whereas UMW Toyota has set a lower y-o-y sales volume target of 93,000 (-8% y-o-y)”, it said According to CGS-CIMB, the recent ringgit strengthening against the US dollar should help to mitigate the effects of the lower sales volume forecast for 2023.

“We remain sector-neutral. The sector's current P/E ratio of 12.1x for the year 2023 is almost 2 SD lower than the sector's three-year mean of 14.9x” With the addition of the Kia and Peugeot brands, Bermaz is expected to gain market share and is the company's top pick, according to the report.