Affin Research maintains Underweight on Malaysian automobile sector


  • Business
  • Wednesday, 08 Jan 2014

KUALA LUMPUR: Affin Investment Research is maintaining its Underweight outlook on the Malaysian automotive sector due to the lack of earnings catalysts.

It said on Wednesday it expects a challenging operating landscape over the next few years as autoplayers will continue to vie or maintain its market share as total industry vehicles TIV growth moderates to 2%-3% annually against a backdrop of high penetration and maturity.

“Importantly, intensifying competition may also see operating margins come under pressure and the absence of a stronger Ringgit vis-à-vis Yen and/ or US$ (to alleviate cost pressures) suggests little scope for potential earnings upgrade in the near term.

“Top pick: MBM (BUY; RM4.07 price target) for its well executed vertical expansion, and attractive valuations,” it said.

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