Manufacturing sector output expanded moderately by 4.1% in November 2015 after registering a strong growth of 6.2% in October 2015.
KUALA LUMPUR: Maybank Investment Bank Research has maintained a “neutral” on the automotive sector but cut its 2016 total industry volume (TIV) forecast to 620,000 units from 645,000 units.
The research house said its revised forecast was to account for the weaker-than-expected first quarter TIV weighed down by poor consumer sentiment and higher car prices.
“We remain neutral on the sector with bottom-up ‘buys’ on Pecca (top rick) and Berjaya Auto. Sell UMW Holdings due to the negative outlook for its key auto and oil and gas divisions,” Maybank said.
Despite a 29% month-on-month rebound, Maybank said March 2016 TIV of 48,800 units was still subpar, having considered an unusually strong March 2015 TIV driven by pre-GST sales.
The month-on-month recovery was led by the non-national marques as all major marques, except Hyundai, saw double-digit growth, led by Mazda and Nissan.
Meanwhile, Perodua led recovery in the national segment and overall TIV, amid further contraction in Proton.
“We expect TIV to strengthen in April on new launches and aggressive sales campaign (i.e. discounts and freebies –leather seat upgrades). Sales should pick-up further as consumer sentiment shows signs of improvement over the next few months approaching Hari Raya festivity,” Maybank said.
The research house said the magnitude of the weaker TIV was a negative surprise as first quarter 2016 TIV was down 22% year-on-year to 131,000 units, making up only 20% of its initial 2016 TIV forecast of 645,000 units.
“The downside surprises emanated from Proton and Toyota, affecting DRB-Hicom and UMW Holdings respectively. Positively, the premium car segment (Mercedes Benz, BMW and VW) remained unfazed by weak consumer sentiment, recording year-on-year growth in first quarter of 2016.
“Elsewhere, Cycle & Carriage Bintang reported a 43% year-on-year jump in first quarter 2016 earnings from stronger Mercedes Benz sales. Having lowered our 2016 TIV forecast to 620,000 units, we see downside to our UMW Holdings earnings forecasts,” Maybank said.
Maybank is also excited about Perodua’s entry into the sedan car market in second half of 2016 which could boost second half sales while at the same time consolidate Perodua’s position within the national car segment.
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