- We re-affirm our OVERWEIGHT call on the auto sector ahead
of the announcement of June TIV later this week. UMW (BUY, FV: RM11.00/share)
and MBM (BUY, FV: RM4.70/share) remain our top sector picks as key proxies to
improving auto sales and given transformational growth taking place at both
companies.
- We anticipate the strong rebound in May sales volumes to
be sustained in June – confirming the industry’s sales rebound as it crawls out
of: (1) Supply chain crisis; (2) Normalisation of the impact of longer loan
approval period; (3) New model launches; (4) Perodua’s strategy to focus on
MyVI sales given better loan approval rates.
- Holding up well after a strong rebound in May: We expect
growth on YoY basis to accelerate to +36% at an estimated June TIV of 57,000
units (from +27% YoY in May). On a sequential basis, growth would have been
flattish (-2% MoM). Coming off a very strong base in May however, June TIV
would be impressive and confirms the rebound in industry-wide sales – these
arrests concerns previously on whether June sales will hold up against a strong
rebound in May. July TIV should stage a further improvement ahead of the Raya
festivities in August.
- YTD sales now turning positive: YTD June’s estimated sales
of 301,573 units will be the first time this year that the industry would show
a positive YTD growth (+1.5% YTD) after two exceptionally strong months of YoY
growth in May (+27%) and June (+36%). We expect this trend to sustain as 2011
TIV from June onwards (except August 2011) were impacted by two rounds of
supply crisis coming from the Japan earthquake in March and Thai floods in
4Q11.
- Room for upwards revision: 1H12 TIV would account for 50%
of our full-year forecast of 607,625 units. Note that 1H12 entails
exceptionally weak numbers from January to March given short working months,
supply shortage and the initial impact of tighter lending guidelines. We see
room for upside to our forecasts depending on the strength of take-up of new
model launches in the coming months i.e. Proton Preve, new Civic, new Camry,
facelift Vios and facelift City.
- Toyota to outperform peers in June: More importantly, we
expect Toyota to have continued outperforming the industry in June, staging
sales growth of 5% MoM versus the industry’s 2% contraction. Toyota is the best
performing marque YTD June, registering a 23% YTD growth versus the industry’s
1.5% growth. Toyota’s market share has expanded to 18% in June vs. 15% a year
ago.
- Re-affirm BUY on UMW (FV: RM11/share): UMW is a key proxy
to the rebound in auto sales given its dominant share of the market (46%) and
given its exposure via Toyota and Perodua marques, which are two key industry
outperformers YTD (See Table 2). Our forecast is currently 6%-7% higher than
consensus. A revision by management of its 2012 target sales for Toyota post
June TIV release (from the current target of 93K units) should catalyse a major
consensus earnings revision, in our opinion. Auto earnings account for 78% of
UMW’s group-wide earnings, while UMW Toyota accounts for 74% of UMW auto’s
earnings.
Source: AmeSecurities
No comments:
Post a Comment