- Seasonal weakness, but strongest November month sales by
historical record: MAA reported weaker TIV in November at 53,365 units,
representing a 3.6% MoM decline. The
weaker numbers can be attributed to seasonality as sales typically weaken
towards year end, but we note that this is the strongest November month sales
compared to past 3 years’ November sales of 40K-48K. The November 2012 TIV was
11% higher YoY as 4Q11 sales were negatively impacted by supply disruption as a
result of the Thai floods.
- YTD TIV of 567,121 units (+2.7% YTD) accounts for 93% of
our FY12F TIV, implying a meagre 40,504 unit
sales in December to hit our target of 607K units. We see possibilities
of TIV outperformance, but any changes to our forecast will mainly affect other
marques not under our coverage.
- Nissan overtakes Honda as second largest non-national:
Following the launch of the Almera, Nissan has overtaken Honda as the 2nd
largest non-national marque with an 8% market share – a significant jump
vs.5.4% share in October 2012 and 4.8% in Nov 2011. Nissan’s passenger car
segment – which purely reflects the launch of its new B-segment – grew by some
85% MoM, or an absolute volume increase of >1800 units.
- Toyota resilient despite new competition: Toyota sales
were resilient (+7% MoM), despite its Vios having been over 5 years in the
market and despite the entry of a lower priced competing model. However, we
note that UMW has much leeway to respond in terms of promotional rebates given
that margins for an end-of-life model tends to be higher as much value chain depreciation
would have been taken in the early years.
- Where’s the volume coming from?: We believe that Nissan
Almera is currently taking away market share from Proton in particular, and to
a certain extent Honda and Korean marques. Pricing of the Almera (at RM64K-77K)
overlaps that of Proton Preve (RM60-73K), while we suspect there was uptrading
from Persona buyers (priced at RM50K-59K). Estimated November sales volume of
circa 2K for the Almera could not have possibly come entirely from non-national
B-segments as Honda sales was only down by 199 units (-5% MoM) in November
while Toyota sales remained pretty strong (+7% MoM). Proton sales as a
comparison fell 21% MoM in November, or an absolute volume decline of 2,797
units.
- TCM (BUY, FV; RM5.30/share) positioned for strong
outperformance: While UMW is still a BUY (FV: RM13.20/share), recent strong
price rally leaves less upside relative to our other BUY calls in the sector.
We see scope for strong outperformance by TCM in the near-term (raised to BUY,
FV: 5.30/share on 29th November), driven by strong sales of the Almera. Our
FY13F projection is 7% above consensus and a turn in earnings revision cycle
will be a key catalyst for the stock, having underperformed the index by 10%
over the past 12 months.
- We expect strong 4Q12 results for TCM, marking an
inflection point in its earnings trend following 4 consecutive quarters of earnings
disappointments. A doubling in earnings QoQ should not be ruled out, though
this depends on December invoicing of the Almera. So far, bookings are already
exceeded the 10K level, while 5K units have rolled out of the Serendah plant as
of mid November. This compares positively vs. management target of 1K-2K
monthly sales. Valuation of 9x FY13F earnings is at 20% discount to sector PE
of 11x, despite c. 80% earnings growth expected over the next 12 months.
Source: AmeSecurities
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