The research house said automotive sales in China have fully recovered and exceeded pre-Covid-19 levels with a year-to-date sales growth of 53% for January to April 2021.
The China Association of Automobiles Manufacturer reported 75.1% growth year-on-year (y-o-y) for March and 52.1% y-o-y for April for passenger car sales, which cemented a 12-month growth streak since the rebound in May 2020.
Kenanga expects the demand trend for electric vehicles to continue rising tremendously on the back of the government's push for lowering carbon emissions.
This is in addition to pent-up demand from existing car owners looking to take advantage of incentives provided by car dealerships as well as 8.39 million Chinese citizens who received their driving licence in 1Q 2021.
Kenanga maintained its FY21/22 core Patami forecast of RM131.4mil/RM145.8mil.
"We expect to see another record-breaking performance in FY21 on the back of overwhelming automotive demand.
"Maintain 'outperform' and Target Price of RM5.50 based on FY21E PER of 48x, at +2SD to its 3-year mean," it said.