Wednesday, September 21, 2011

RHB Research: Vehicle sales of 616,000 units attainable

KUALA LUMPUR: RHB Research Institute believes its total industry volume (TIV) forecast of 616,000 units (up 1.8% on-year) for 2011 is attainable.

'We maintain our Neutral call on the sector and see few catalysts to re-rate stocks in the sector higher given the uncertain macroeconomic outlook,' it said.

RHB Research said the market's defensive posture does not favour consumer discretionary stocks.

'Our top pick is Tan Chong on the back of a strong product pipeline and undemanding valuations,' it said.

The research house said the key risks are: 1) Weaker economy affecting car sales; 2) Unfavourable forex trends; and 3) Heightened competition.

RHB Research said vehicles sales bounced back in August to 58,382 units according to Malaysian Automotive Association (MAA) data.

Sales rose a solid 16.2% on-month, gaining for the second consecutive month since the onset of supply constraints following the Japan earthquake and tsunami in March.

The TIV for the month comprised 52,559 units of passenger vehicles (+17.2% on-month and +5.9% on-year) and 5,823 units of commercial vehicles (+7.5% on-month and +4.6% on-year).

The sales rebound was attributed by the MAA to the higher demand during the run up to the Raya festive holidays, helped by the ongoing normalisation of vehicle supply and the elimination of bottlenecks relating to the Hire Purchase Act amendments.

Although cumulative sales for the year to date of 405,837 units is still 1.0% lower on-year, it expects cumulative TIV to register on-year gains by next month, given that the MAA is guiding for the stronger sales momentum to be sustained into September.

RHB Research said the improved new vehicles registrations for the month was helped by higher Perodua (to 18,174 units, +11.0% on-month mom and +9.9% on-year) and Proton (to 16,185 units, +32.0% on-month and +15.3% on-year) sales.

Of the three non-national majors, Toyota/Lexus recorded the strongest bounce with sales of 9,139 units (+15.2% on-month and 18.9% on-year) taking cumulative sales to 59,193 units (-2.2% on-year).

RHB Research said Nissan sales disappointed somewhat after registering only 2,736 units (+7.4% on-month and -6.6% on-year) with cumulative sales of 22,680 units (-3.9% on-year).

'Nonetheless, we expect Nissan sales to pick up in the coming months given the stronger-than-expected response to the keenly-priced new Livina X-Gear launched just a fortnight ago,' it said.

Honda sales were also weak in August reaching just 2,782 units, up 6.7% on-month but down a significant 39.4% on-year with cumulative sales languishing at 24,636 units, down 21.3% on-year.

'We suspect Honda Malaysia is still beset with supply issues with its principal the slowest to normalise its production and supply chain,' it said.

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