The research house noted that China experienced a surge in demand with 11.6% year-on-year (y-o-y) growth in August to mark its fifth consecutive month of car sales growth.
Meanwhile, Europe's car sales have also exhibited encouraging momentum after coming off a low of minus-76% y-o-y in April to the current level of minus-18.9% y-o-y in August.
Electric vehicle sales in both China and Europe have recorded growth.
"To a certain extent, we believe that the emphasis on social distancing has also contributed to the growing preference for private transportation," said Kenanga.
The research house kept its core net profit forecast for FY21 and introduced a core net profit porjection of RM24.8mil for FY22, representing growth of 34%.
It said gradual improvement is expected for KESM from here on with better prospects in 2021 despite the group's slow recovery compared to its peers.
Kenanga maintained its "market perform" recommendation on the stock with a higher target price of RM8.60 from RM7.40.
In 4QFY20, KESM recorded a core net loss of RM3.3mil due to lower FY20 core net profit of RM100,000, which was a 99% plunge from the previous corresponding quarter.
The result accounted for only 1.8% and 2.4% of Kenanga's and consensus full-year estimates respectively.
According to kenanga, the group was heavily impacted by the global lockdown, which led to a 22% y-o-y decline in revenue to RM241mil while its high operating leverage also exacerbated the impact.
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