PETALING JAYA: Intense price competition is expected to pressure margins, suggesting that the automotive market share gains by any brands are likely achieved at the expense of profitability.
Sales momentum is expected to consolidate this month, impacted by fewer working days due to four public holidays and a “wait-and-see” stance ahead of Budget 2026, including details on petrol subsidy rationalisation.
TA Research said the planned plant shutdowns by major industry players could further weigh on September total industry volume (TIV).
Its TIV forecast for 2025 remained at 750,000 units, representing an 8.2% year-on-year (y-o-y) decline, underscoring the cautious outlook for the automotive sector.
It downgraded its sector rating to “underweight” from “neutral,” driven by a lack of near-term catalysts to reverse the current overpriced valuation. It maintained its “sell” call for Bermaz Auto Bhd
(BAuto) and MBM Resources Bhd with target price (TP) of 51 sen and RM4.31 sen a share respectively.
It downgraded Sime Darby Bhd (TP: RM1.97 a share) to “sell” from “hold,’’ reflecting heightened downside risks amid challenging market conditions.
BIMB Research reiterated its “neutral” stance on the automotive sector and also expects sales to moderate in September.
While new model launches and national original equipment manufacturer electric vehicl rollouts should lend support, demand headwinds from subsidy rationalisation, and tighter consumer spending are likely to cap upside.
It maintained its “hold” call on MBM Resources (TP: RM5.28 a share) and “sell” on BAuto (TP: 54 sen a share).
For Sime Darby, it maintained its “hold” stance with a new TP of RM2.27 a share. This is anchored on a 12.9 times price earnings ratio (PER) previous at 10 times PER at its five-year average, applied to its financial year 2026 earnings per share estimate of 17.6 sen.
The revised valuation showed that the industrial segment is entering a stronger growth phase supported by rising aftermarket/after-sales service contributions.
For August, the TIV stood at 73,000 units, up 4.2% month-on-month.
