KUALA LUMPUR – RHB Investment Bank Bhd (RHB IB) has maintained its “overweight” call on the auto and auto parts sector, based on the sector’s earnings visibility and attractive yields of between 4% and 10%.
In a research note, the firm said that the overall sector demand remains healthy, especially the key marques and the interest in recently launched models should continue to fuel future orders.
Its expectations were reinforced by the public’s response to the Malaysia Autoshow 2023, where some booths were more packed than others.
“Honda, Toyota, Chery, Great Wall Motors (GWM), BMW and Mercedes had noticeably crowded booths.
“While not packed, Perodua’s booth had a lot of car buyers awaiting loan approval and at the same time, Chinese brands were making their presence felt,” said RHB IB.
At the same time, it noted that demand for electric vehicles (EVs) is still soft, and although many EVs in the market are readily available, some EVs have a long and uncertain waiting period mainly because the dealerships lack visibility on when they will receive their imported units.
“Our discussions with sales personnel confirmed that consumers generally still prefer petrol-fuelled cars over EVs,” it said.
RHIB IB added that Bermaz Auto and UMW remain its top picks for the sector with the target price of RM3.45 and RM5, respectively, with the latter being a clear beneficiary of the strong demand for Toyota and Perodua.
At 10.22 am, Bermaz’s shares were flat at RM2.28 per unit with 108,600 shares traded, while UMW’s shares rose one sen to RM3.80 with 6,400 shares traded. – Bernama, May 8, 2023
